Securities

12 Months Ended

Dec. 31, 2023

Investments, Debt and Equity Securities [Abstract]

Note 3 – Securities

The amortized cost and fair value of securities, with gross unrealized gains and losses, follows:


	(In Thousands)
	2023
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available-for-Sale:
U.S. Treasury	$	87,182	$	1	$	(6,913	)	$	80,270
U.S. Government agencies		140,960		-		(12,738	)		128,222
Mortgage-backed securities		94,061		-		(11,929	)		82,132
State and local governments		73,000		135		(5,281	)		67,854
Total available-for-sale securities	$	395,203	$	136	$	(36,861	)	$	358,478


	(In Thousands)
	2022
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available-for-Sale:
U.S. Treasury	$	104,507	$	-	$	(9,829	)	$	94,678
U.S. Government agencies		156,817		-		(17,050	)		139,767
Mortgage-backed securities		101,068		-		(14,141	)		86,927
State and local governments		76,794		69		(7,446	)		69,417
Total available-for-sale securities	$	439,186	$	69	$	(48,466	)	$	390,789

Investment securities will at times depreciate to an unrealized loss position. The Bank utilizes the following criteria to assess whether the unrealized loss requires an allowance for credit losses on investment securities. No one item by itself will necessarily signal that an allowance for credit losses on investment securities should be established.

The fair value of the security has significantly declined from book value.

A downgrade has occurred that lowered the credit rating to below investment grade (below Baa3 by Moody and BBB – by Standard and Poors.)

Dividends have been reduced or eliminated or scheduled interest payments have not been made.

Management does not possess both the intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

If the unrealized loss is determined to be the result of a credit loss, the present value of the cash flows expected to be collected is compared to the amortized cost basis. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Adjustments to the allowance are recorded in the Company's consolidated statement of income as a component of the provision for credit losses. The table below is presented by category of security and length of time in a continuous loss position. The Company did not record an allowance for credit losses on its investment securities available for sale as the unrealized losses were attributed to changes in interest rates, not credit quality.

Information pertaining to securities with gross unrealized losses at December 31, 2023 and 2022, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:


	2023
	(In Thousands)					(In Thousands)
	Less Than Twelve Months					Twelve Months & Over
	Gross					Gross
	Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value
U.S. Treasury	$	(4	)	$	494	$	(6,909	)	$	79,528
U.S. Government agencies		-			-		(12,738	)		128,222
Mortgage-backed securities		(20	)		4,372		(11,909	)		77,759
State and local governments		(2	)		931		(5,279	)		60,402
Total available-for-sales securities	$	(26	)	$	5,797	$	(36,835	)	$	345,911


	2022
	(In Thousands)					(In Thousands)
	Less Than Twelve Months					Twelve Months & Over
	Gross					Gross
	Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value
U.S. Treasury	$	(207	)	$	9,121	$	(9,622	)	$	85,557
U.S. Government agencies		(1,081	)		24,560		(15,969	)		114,906
Mortgage-backed securities		(2,454	)		26,905		(11,687	)		60,022
State and local governments		(3,223	)		38,771		(4,223	)		25,610
Total available-for-sales securities	$	(6,965	)	$	99,357	$	(41,501	)	$	286,095

Unrealized losses on securities have not been recognized into income because the issuers’ bonds are of high credit quality, values have only been impacted by rate changes, and the Company has the intent and ability to hold the securities for the foreseeable future. The fair value is expected to recover as the bonds approach the maturity date.

Sales of $22.0 and $9.3 million for 2023 and 2021, respectively, generated gross realized gains and losses for the years ended December 31, as presented below:


	(In Thousands)
	2023			2022		2021
Gross realized gains	$	-		$	-	$	293
Gross realized losses		(891	)		-		-
Net realized gains (losses)	$	(891	)	$	-	$	293
Tax expense (benefit) related to net realized gains (losses)	$	(187	)	$	-	$	62

The net realized gain (loss) on sales and related tax expense (benefit) is a reclassification out of accumulated other comprehensive income (loss). The net realized gain (loss) is included in net gain (loss) on sale of securities available-for-sale and the related tax expense (benefit) is included in income taxes in the consolidated statements of income.

The amortized cost and fair value of debt securities at December 31, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	(In Thousands)
	Amortized
	Cost		Fair Value
One year or less	$	24,878	$	24,274
After one year through five years		244,319		223,135
After five years through ten years		31,945		28,937
After ten years		-		-
Total	$	301,142	$	276,346
Mortgage-backed securities		94,061		82,132
Total	$	395,203	$	358,478

Investments with a carrying value and fair value of $255.8 million at December 31, 2023 and $134.8 million at December 31, 2022 were pledged to secure public deposits and securities sold under repurchase agreements. In addition, investments with a carrying value of $61.7 million and a par value of $69.9 million were pledged to the Federal Reserve Bank's Term Funding Program (BTFP) to secure additional borrowing capacity as of December 31, 2023. The BTFP utilizes the par value of securities pledged to collateralize loans it has made to member banks.