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Securities

3 Months Ended

Mar. 31, 2023

NOTE 6. Securities

This table provides the major components of debt securities available for sale ("AFS") and held to maturity (“HTM”) at amortized cost and estimated fair value at March 31, 2023 and December 31, 2022:


	March 31, 2023								December 31, 2022
			Gross		Gross						Gross		Gross
	Amortized		unrealized		unrealized		Estimated		Amortized		unrealized		unrealized		Estimated
(In thousands)	cost		gains		losses		fair value		cost		gains		losses		fair value
Available for sale:
U.S. Government sponsored entities	$	16,969	$	—	$	(571)	$	16,398	$	16,961	$	—	$	(656)	$	16,305
State and political subdivisions		633		—		(40)		593		635		—		(22)		613
Residential mortgage-backed securities		16,734		31		(1,355)		15,410		17,097		32		(1,654)		15,475
Corporate and other securities		65,213		121		(3,622)		61,712		66,495		106		(3,601)		63,000
Total debt securities available for sale	$	99,549	$	152	$	(5,588)	$	94,113	$	101,188	$	138	$	(5,933)	$	95,393
Held to maturity:
U.S. Government sponsored entities	$	28,000	$	—	$	(4,222)	$	23,778	$	28,000	$	—	$	(5,310)	$	22,690
State and political subdivisions		1,128		74		—		1,202		1,115		67		—		1,182
Residential mortgage-backed securities		6,696		—		(1,844)		4,852		6,645		—		(1,939)		4,706
Total securities held to maturity	$	35,824	$	74	$	(6,066)	$	29,832	$	35,760	$	67	$	(7,249)	$	28,578

This table provides the remaining contractual maturities within the investment portfolios. The carrying value of securities at March 31, 2023 is distributed by contractual maturity. Mortgage-backed securities and other securities, which may have principal prepayment provisions, are distributed based on contractual maturity. Expected maturities will differ materially from contractual maturities as a result of early prepayments and calls.


				After one through		After five through				Total carrying
		Within one year		five years		ten years		After ten years		value
(In thousands)
Available for sale at fair value:
U.S. Government sponsored entities	$	1,218	$	15,180	$	—	$	—	$	16,398
State and political subdivisions		201		160		—		232		593
Residential mortgage-backed securities		2		358		986		14,064		15,410
Corporate and other securities		—		12,365		12,642		36,705		61,712
Total debt securities available for sale	$	1,421	$	28,063	$	13,628	$	51,001	$	94,113
Held to maturity at cost:
U.S. Government sponsored entities	$	—	$	—	$	3,000	$	25,000	$	28,000
State and political subdivisions		—		—		—		1,128		1,128
Residential mortgage-backed securities		—		—		—		6,696		6,696
Total securities held to maturity	$	—	$	—	$	3,000	$	32,824	$	35,824

The fair value of debt securities with unrealized losses by length of time that the individual securities have been in a continuous unrealized loss position at March 31, 2023 and December 31, 2022 are as follows:

March 31, 2023

Less than 12 months

12 months and greater

Total

Estimated

Unrealized

Estimated

Unrealized

Estimated

Unrealized

(In thousands)

fair value

loss

fair value

loss

fair value

loss

Available for sale:

U.S. Government sponsored entities

15,905

(567)

493

(4)

16,398

(571)

State and political subdivisions

—

393

(40)

393

(40)

Residential mortgage-backed securities

8,623

(665)

6,647

(690)

15,270

(1,355)

Corporate and other securities

13,166

(466)

45,925

(3,156)

59,091

(3,622)

Total

37,694

(1,698)

53,458

(3,890)

91,152

(5,588)

Held to maturity:

U.S. Government sponsored entities

10,394

(606)

13,384

(3,616)

23,778

(4,222)

Residential mortgage-backed securities

150

(72)

4,702

(1,772)

4,852

(1,844)

Total

10,544

(678)

18,086

(5,388)

28,630

(6,066)


	December 31, 2022
	Less than 12 months				12 months and greater				Total

	Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
(In thousands)	fair value		loss		fair value		loss		fair value		loss
Available for sale:
U.S. Government sponsored entities	$	15,817	$	(622)	$	1,432	$	(34)	$	17,249	$	(656)
State and political subdivisions		160		(5)		253		(17)		413		(22)
Residential mortgage-backed securities		14,023		(1,448)		1,311		(206)		15,334		(1,654)
Corporate and other securities		23,445		(966)		31,948		(2,635)		55,393		(3,601)
Total temporarily impaired AFS securities	$	53,445	$	(3,041)	$	34,944	$	(2,892)	$	88,389	$	(5,933)
Held to maturity:
U.S. Government sponsored entities	$	15,659	$	(2,341)	$	7,031	$	(2,969)	$	22,690	$	(5,310)
Residential mortgage-backed securities		4,707		(1,939)		—		—		4,707		(1,939)
Total temporarily impaired HTM securities	$	20,366	$	(4,280)	$	7,031	$	(2,969)	$	27,397	$	(7,249)

Unrealized losses in each of the categories presented in the tables above were primarily driven by market interest rate fluctuations. Residential mortgage-backed securities are guaranteed by either Ginnie Mae, Freddie Mac or Fannie Mae.

Allowance for Credit Losses

The Company has zero-loss expectation for certain securities within the held to maturity and available for sale portfolios, and therefore is not required to estimate an allowance for credit losses related to these securities under the CECL standard. The Company does not provide credit quality indicators for held to maturity securities that have zero-loss expectation. After an evaluation of quantitative factors, the following securities types are believed to qualify for this exclusion: U.S Government sponsored entities, residential mortgage-backed securities issued by Ginnie Mae, Fannie Mae or Freddie Mac.

Management recognized no impairment for held to maturity debt securities during the three months ended March 31, 2023 and 2022. There was no allowance for credit losses for held to maturity debt securities at March 31, 2023 and 2022.

Available for sale debt securities in unrealized loss positions are evaluated for impairment on a quarterly basis. The Company has evaluated available for sale securities that are in an unrealized loss position and has determined that the declines in fair value are attributable to market volatility, not credit quality or other factors. Management recognized no

impairment during the three months ended March 31, 2023 and 2022. There was no allowance for credit losses for available for sale debt securities at March 31, 2023 and 2022.

Realized Gains and Losses on Debt Securities

Net realized gains are included in noninterest income in the Consolidated Statements of Income as net security gains. There were no realized gains or losses on available sale securities three months ended March 31, 2023 and March 31, 2022. There was no gross realized gain or loss for held for maturity debt securities during the three months ended March 31, 2023 and 2022.

Equity Securities

Included in this category are Community Reinvestment Act ("CRA") investments and the Company’s current other equity holdings of financial institutions. Equity securities are defined to include (a) preferred, common and other ownership interests in entities including partnerships, joint ventures and limited liability companies and (b) rights to acquire or dispose of ownership interests in entities at fixed or determinable prices.

The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three months ended March 31, 2023 and 2022:


	For the three months ended March 31,
(In thousands)	2023		2022
Net unrealized losses occurring during the period on equity securities	$	(544)	$	(557)
Net realized gains recognized during the period on equity securities sold during the period		222		—
Net losses recognized during the reporting period on equity securities	$	(322)	$	(557)