Securities

3 Months Ended

Mar. 31, 2024

Debt Securities, Available-for-Sale [Abstract]

NOTE 4. Securities

On January 1, 2023, the Company adopted Accounting Standards Codification ("ASC") 326, which made changes to accounting for available for sale debt securities whereby credit losses should be presented as an allowance, rather than as a write-down when management does not intend to sell and does not believe that it is more likely than not they will be required to sell a security prior to maturity. In addition, ASC 326 requires financial assets measured at amortized cost to measure an expected credit loss under the current expected credit losses ("CECL") methodology that requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. All securities information presented below is in accordance with ASC 326.

Amortized costs and fair values of securities available for sale at March 31, 2024 and December 31, 2023 were as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	March 31, 2024
	(in thousands)
Obligations of U.S. government corporations and agencies	$	8,960	$	—	$	(739	)	$	8,221
Mortgage-backed securities		137,061		—		(23,330	)		113,731
Obligations of states and political subdivisions		6,191		—		(360	)		5,831
Subordinated debt		4,750		—		(666	)		4,084
	$	156,962	$	—	$	(25,095	)	$	131,867


	December 31, 2023
	(in thousands)
Obligations of U.S. government corporations and agencies	$	9,258	$	—	$	(667	)	$	8,591
Mortgage-backed securities		140,052		—		(21,230	)		118,822
Obligations of states and political subdivisions		6,191		1		(261	)		5,931
Subordinated debt		4,750		—		(651	)		4,099
	$	160,251	$	1	$	(22,809	)	$	137,443

The amortized cost and estimated fair value of securities at March 31, 2024, by the earlier of contractual maturity or expected maturity, are shown below. The Company has elected to exclude accrued interest receivable, totaling $380 thousand at March 31, 2024, from the amortized cost basis of securities. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.


	Amortized Cost		Fair Value
	(in thousands)
Due in one year or less	$	1,269	$	1,263
Due after one year through five years		7,446		7,033
Due after five years through ten years		17,473		15,512
Due after ten years		130,774		108,059
	$	156,962	$	131,867

There have been no sales of available for sale securities during the three months ended March 31, 2024, or 2023.

The fair value and gross unrealized losses for securities available for sale, totaled by the length of time that individual securities have been in a continuous gross unrealized loss position, at March 31, 2024 and December 31, 2023 were as follows:


	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	March 31, 2024
	(in thousands)
Obligations of U.S. government corporations and agencies	$	—	$	—	$	8,221	$	739	$	8,221	$	739
Mortgage-backed securities		—		—		113,731		23,330		113,731		23,330
Obligations of states and political subdivisions		496		4		5,335		356		5,831		360
Subordinated debt		—		—		3,584		666		3,584		666
	$	496	$	4	$	130,871	$	25,091	$	131,367	$	25,095


	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	December 31, 2023
	(in thousands)
Obligations of U.S. government corporations and agencies	$	—	$	—	$	8,591	$	667	$	8,591	$	667
Mortgage-backed securities		—		—		118,822		21,230		118,822		21,230
Obligations of states and political subdivisions		—		—		5,430		261		5,430		261
Subordinated debt		221		29		3,378		622		3,599		651
	$	221	$	29	$	136,221	$	22,780	$	136,442	$	22,809

The reference point for determining when securities are in an unrealized loss position is month end. As such, it is possible that a security's market value exceeded its amortized cost on other days during the past twelve-month period.

There were 104 debt securities with a fair value below the amortized cost basis, totaling $131.4 million of aggregate fair value as of March 31, 2024. The Company concluded that a credit loss does not exist in its securities portfolio at March 31, 2024, and no impairment loss has been recognized based on the fact that (1) changes in fair value were caused primarily by fluctuations in interest rates, (2) securities with unrealized losses had generally high credit quality, (3) the Company intends to hold these investments in debt securities to maturity and it is more-likely-than-not that the Company will not be required to sell these investments before a recovery of its investment, and (4) issuers have continued to make timely payments of principal and interest. Additionally, the Company’s mortgage-backed securities are entirely issued by either U.S. government agencies or U.S. government-sponsored enterprises. Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. government, that investors in such mortgage-backed securities will receive timely principal and interest payments.

Securities having a carrying value of $7.4 million at March 31, 2024 were pledged as security for trust accounts.

The composition of restricted investments at March 31, 2024 and December 31, 2023 was as follows:


	March 31, 2024		December 31, 2023
	(in thousands)
Federal Reserve Bank Stock	$	344	$	344
Federal Home Loan Bank Stock		8,755		9,084
Community Bankers’ Bank Stock		140		140
	$	9,239	$	9,568