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SECURITIES | 9 Months Ended
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Sep. 30, 2023
Investments, Debt and Equity Securities [Abstract] |
SECURITIES | SECURITIES Debt securities available-for-sale ("AFS") at September 30, 2023 and December 31, 2022 were as follows:
| September 30, 2023
| Amortized |  | Unrealized |  | Allowance For |  | Fair
| Cost |  | Gains |  | Losses |  | Credit Losses |  | Value
U.S. Government sponsored entities | $ | 3,887 |  |  | $ | — |  |  | $ | (62) |  |  | $ | — |  |  | $ | 3,825 |
State & political subdivisions | 106,651 |  |  | — |  |  | (18,215) |  |  | — |  |  | 88,436 |
Residential & multi-family mortgage | 233,464 |  |  | — |  |  | (44,355) |  |  | — |  |  | 189,109 |
Corporate notes & bonds | 48,639 |  |  | 4 |  |  | (5,737) |  |  | — |  |  | 42,906 |
Pooled SBA | 12,047 |  |  | — |  |  | (1,201) |  |  | — |  |  | 10,846 |
Total | $ | 404,688 |  |  | $ | 4 |  |  | $ | (69,570) |  |  | $ | — |  |  | $ | 335,122 |
| December 31, 2022
| Amortized |  | Unrealized |  | Allowance For |  | Fair
| Cost |  | Gains |  | Losses |  | Credit Losses |  | Value
U.S. Government sponsored entities | $ | 3,213 |  |  | $ | — |  |  | $ | (84) |  |  | $ | — |  |  | $ | 3,129 |
State & political subdivisions | 112,734 |  |  | 24 |  |  | (17,095) |  |  | — |  |  | 95,663 |
Residential & multi-family mortgage | 256,111 |  |  | — |  |  | (38,564) |  |  | — |  |  | 217,547 |
Corporate notes & bonds | 47,111 |  |  | — |  |  | (4,720) |  |  | — |  |  | 42,391 |
Pooled SBA | 13,823 |  |  | — |  |  | (1,144) |  |  | — |  |  | 12,679 |
Total | $ | 432,992 |  |  | $ | 24 |  |  | $ | (61,607) |  |  | $ | — |  |  | $ | 371,409 |
Debt securities held-to-maturity ("HTM") at September 30, 2023 and December 31, 2022 were as follows:
| September 30, 2023
| Amortized |  | Unrealized |  | Allowance For |  | Fair
| Cost |  | Gains |  | Losses |  | Credit Losses |  | Value
U.S. Government sponsored entities | $ | 302,871 |  |  | $ | — |  |  | $ | (26,628) |  |  | $ | — |  |  | $ | 276,243 |
Residential & multi-family mortgage | 88,430 |  |  | — |  |  | (12,604) |  |  | — |  |  | 75,826 |
Total | $ | 391,301 |  |  | $ | — |  |  | $ | (39,232) |  |  | $ | — |  |  | $ | 352,069 |
| December 31, 2022
| Amortized |  | Unrealized |  | Allowance For |  | Fair
| Cost |  | Gains |  | Losses |  | Credit Losses |  | Value
U.S. Government sponsored entities | $ | 307,711 |  |  | $ | — |  |  | $ | (27,276) |  |  | $ | — |  |  | $ | 280,435 |
Residential & multi-family mortgage | 97,054 |  |  | — |  |  | (10,101) |  |  | — |  |  | 86,953 |
Total | $ | 404,765 |  |  | $ | — |  |  | $ | (37,377) |  |  | $ | — |  |  | $ | 367,388 |
The Corporation elected to transfer 74 AFS securities with an aggregate fair value of $213.7 million to a classification of HTM during the twelve months ended December 31, 2022. In accordance with FASB ASC 320-10-55-24, the transfer from AFS to HTM must be recorded at the fair value of the AFS securities at the time of transfer. The net unrealized holding loss of $5.6 million, net of tax, at the date of transfer was retained in accumulated other comprehensive income (loss), with the associated pre-tax amount retained in the carrying value of the HTM securities. Such amounts will be amortized to comprehensive income over the remaining life of the securities. Information pertaining to security sales on AFS securities is as follows:
| Proceeds |  | Gross Gains |  | Gross Losses
Three months ended September 30, 2023 | $ | — |  |  | $ | — |  |  | $ | — |
Three months ended September 30, 2022 | — |  |  | — |  |  | — |
Nine months ended September 30, 2023 | 13,151 |  |  | 52 |  |  | — |
Nine months ended September 30, 2022 | 22,164 |  |  | 651 |  |  | — |
The tax provision related to these net realized gains was zero and $11 thousand for the three and nine months ended September 30, 2023 and zero and $137 thousand for the three and nine months ended September 30, 2022, respectively. The table below illustrates the maturity distribution of debt securities at amortized cost and fair value as of September 30, 2023:
| Available-for-sale |  | Held-to-maturity
| Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
1 year or less | $ | 10,533 |  |  | $ | 10,388 |  |  | $ | 53,827 |  |  | $ | 52,288 |
1 year – 5 years | 43,540 |  |  | 40,467 |  |  | 203,661 |  |  | 186,750 |
5 years – 10 years | 82,397 |  |  | 68,505 |  |  | 45,383 |  |  | 37,205 |
After 10 years | 22,707 |  |  | 15,807 |  |  | — |  |  | — |
| 159,177 |  |  | 135,167 |  |  | 302,871 |  |  | 276,243 |
Residential & multi-family mortgage | 233,464 |  |  | 189,109 |  |  | 88,430 |  |  | 75,826 |
Pooled SBA | 12,047 |  |  | 10,846 |  |  | — |  |  | — |
Total debt securities | $ | 404,688 |  |  | $ | 335,122 |  |  | $ | 391,301 |  |  | $ | 352,069 |
Mortgage securities and pooled SBA securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral. On September 30, 2023 and December 31, 2022, securities carried at $470.9 million and $561.8 million, respectively, were pledged to secure public deposits and for other purposes as provided by law. At September 30, 2023 and December 31, 2022, there were no holdings of securities of any one issuer, other than the U.S. Government sponsored entities, in an amount greater than 10% of shareholders’ equity. The Corporation’s residential and multi-family mortgage securities are issued by government sponsored entities. AFS debt securities with unrealized losses at September 30, 2023 and December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows: September 30, 2023
| Less than 12 Months |  | 12 Months or More |  | Total
Description of Securities | Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss
U.S. Government sponsored entities | $ | 389 |  |  | $ | (5) |  |  | $ | 1,536 |  |  | $ | (57) |  |  | $ | 1,925 |  |  | $ | (62) |
State & political subdivisions | 2,944 |  |  | (20) |  |  | 85,246 |  |  | (18,195) |  |  | 88,190 |  |  | (18,215) |
Residential & multi-family mortgage | 210 |  |  | (6) |  |  | 188,812 |  |  | (44,349) |  |  | 189,022 |  |  | (44,355) |
Corporate notes and bonds | 1,770 |  |  | (230) |  |  | 40,477 |  |  | (5,507) |  |  | 42,247 |  |  | (5,737) |
Pooled SBA | — |  |  | — |  |  | 10,754 |  |  | (1,201) |  |  | 10,754 |  |  | (1,201) |
| $ | 5,313 |  |  | $ | (261) |  |  | $ | 326,825 |  |  | $ | (69,309) |  |  | $ | 332,138 |  |  | $ | (69,570) |
December 31, 2022
| Less than 12 Months |  | 12 Months or More |  | Total
| Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss
U.S. Government sponsored entities | $ | 3,129 |  |  | $ | (84) |  |  | $ | — |  |  | $ | — |  |  | $ | 3,129 |  |  | $ | (84) |
State & political subdivisions | 34,667 |  |  | (1,887) |  |  | 54,546 |  |  | (15,208) |  |  | 89,213 |  |  | (17,095) |
Residential & multi-family mortgage | 48,996 |  |  | (3,122) |  |  | 168,551 |  |  | (35,442) |  |  | 217,547 |  |  | (38,564) |
Corporate notes and bonds | 31,730 |  |  | (3,403) |  |  | 10,661 |  |  | (1,317) |  |  | 42,391 |  |  | (4,720) |
Pooled SBA | 5,107 |  |  | (314) |  |  | 7,572 |  |  | (830) |  |  | 12,679 |  |  | (1,144) |
| $ | 123,629 |  |  | $ | (8,810) |  |  | $ | 241,330 |  |  | $ | (52,797) |  |  | $ | 364,959 |  |  | $ | (61,607) |
HTM debt securities with unrealized losses at September 30, 2023 and December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows: September 30, 2023
| Less than 12 Months |  | 12 Months or More |  | Total
Description of Securities | Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss
U.S. Government sponsored entities | $ | — |  |  | $ | — |  |  | $ | 276,243 |  |  | $ | (26,628) |  |  | $ | 276,243 |  |  | $ | (26,628) |
Residential & multi-family mortgage | — |  |  | — |  |  | 75,826 |  |  | (12,604) |  |  | 75,826 |  |  | (12,604) |
| $ | — |  |  | $ | — |  |  | $ | 352,069 |  |  | $ | (39,232) |  |  | $ | 352,069 |  |  | $ | (39,232) |
December 31, 2022
| Less than 12 Months |  | 12 Months or More |  | Total
| Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss |  | Fair Value |  | Unrealized Loss
U.S. Government sponsored entities | $ | 143,556 |  |  | $ | (10,063) |  |  | $ | 136,879 |  |  | $ | (17,213) |  |  | $ | 280,435 |  |  | $ | (27,276) |
Residential & multi-family mortgage | 24,132 |  |  | (2,253) |  |  | 62,821 |  |  | (7,848) |  |  | 86,953 |  |  | (10,101) |
| $ | 167,688 |  |  | $ | (12,316) |  |  | $ | 199,700 |  |  | $ | (25,061) |  |  | $ | 367,388 |  |  | $ | (37,377) |
At September 30, 2023 and December 31, 2022, management performed an assessment for possible impairment related to credit losses of the Corporation’s debt securities, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. Based on the results of the assessment, management believes there is no credit related impairment of these debt securities at September 30, 2023 and December 31, 2022. For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for potential credit impairment. For financial institution issuers, management monitors information from quarterly “call” report filings that are used to generate Uniform Bank Performance Reports. All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed as appropriate given the following considerations; the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred, the length of time and extent to which fair value has been less than cost, and whether management does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery. As of September 30, 2023 and December 31, 2022, management concluded the debt securities described in the previous paragraphs were not impaired for reasons due to credit quality for the following reasons: •There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities. •All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received. •The unrealized losses were deemed to be temporary changes in value related to market movements in interest yields. The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis. Equity securities at September 30, 2023 and December 31, 2022 were as follows:
| September 30, 2023 |  | December 31, 2022
Corporate equity securities | $ | 5,327 |  |  | $ | 6,973 |
Mutual funds | 2,086 |  |  | 1,406 |
Money market funds | 865 |  | 479 |
Corporate notes | 670 |  |  | 757 |
Total | $ | 8,948 |  |  | $ | 9,615 |

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