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Securities

3 Months Ended

Mar. 31, 2024

Securities [Abstract]

Securities

Note 3. Securities

Available-for-Sale Securities (“AFS”), which include any security for which the Company has no immediate plan to sell, but which may be sold in the future, are carried at fair value. Realized gains and losses, based on specifically identified amortized cost of the individual security, are included in other income. Unrealized gains and losses are recorded, net of related income tax effects, in accumulated other comprehensive income (loss). Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the estimated life of the security. Prepayments are anticipated for mortgage-backed and Small Business Administration (“SBA”) securities. Premiums on callable securities are amortized to their earliest call date.

Held-to-Maturity Securities (“HTM”), which include any security for which the Company has both the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts. Premiums and discounts are amortized and accreted, respectively, to interest income using the constant effective yield method over the security’s estimated life. Prepayments are anticipated for mortgage-backed and SBA securities. Premiums on callable securities are amortized to their earliest call date.

The amortized cost, gross unrealized gains and losses and fair value of securities AFS and HTM are summarized as follows (in thousands):


		March 31, 2024
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
Available-for-sale:		Cost			Gains			Losses			Value
U.S. Treasury		$	84,065		$	—		$	(8,790)		$	75,275
U.S. Government-sponsored enterprises (GSEs)			48,393			725			(169)			48,949
Municipal securities			18,407			98			(487)			18,018
Other debt securities			39,321			164			(3,546)			35,939
Mortgage-backed securities (GSEs)			319,389			699			(23,922)			296,166
Total		$	509,575		$	1,686		$	(36,914)		$	474,347


		March 31, 2024
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
Held-to-maturity:		Cost			Gains			Losses			Value
U.S. Treasury		$	50,030		$	—		$	(227)		$	49,803
U.S. Government-sponsored enterprises (GSEs)			49,032			—			(7,897)			41,135
Municipal securities			52,423			—			(6,582)			45,841
Mortgage-backed securities (GSEs)			28,684			—			(4,250)			24,434
Total		$	180,169		$	—		$	(18,956)		$	161,213


		December 31, 2023
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
Available-for-sale:		Cost			Gains			Losses			Value
U.S. Treasury		$	84,307		$	—		$	(8,274)		$	76,033
U.S. Government-sponsored enterprises (GSEs)			46,983			1,256			(146)			48,093
Municipal securities			18,616			135			(475)			18,276
Other debt securities			36,863			93			(3,887)			33,069
Mortgage-backed securities (GSEs)			254,288			588			(21,937)			232,939
Total		$	441,057		$	2,072		$	(34,719)		$	408,410


		December 31, 2023
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
Held-to-maturity:		Cost			Gains			Losses			Value
U.S. Treasury		$	150,066		$	—		$	(1,482)		$	148,584
U.S. Government-sponsored enterprises (GSEs)			49,336			—			(7,143)			42,193
Municipal securities			52,680			—			(6,178)			46,502
Mortgage-backed securities (GSEs)			29,154			—			(3,895)			25,259
Total		$	281,236		$	—		$	(18,698)		$	262,538

At March 31, 2024 and December 31, 2023, securities with a carrying value totaling approximately $444.6 million and $358.3 million, respectively, were pledged to secure public funds and securities sold under agreements to repurchase.

For the three months ended March 31, 2024, and 2023 there were no gross gains or gross losses related to the sale of investment securities.

The amortized cost and estimated fair value of securities at March 31, 2024, by contractual maturity for non-mortgage backed securities are shown below (in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


		March 31, 2024
		Amortized			Fair
Available-for-sale:		Cost			Value
Due in one year or less		$	1,280		$	1,274
Due from one year to five years			88,430			79,446
Due from five years to ten years			87,487			84,734
Due after ten years			12,989			12,727
			190,186			178,181
Mortgage-backed securities			319,389			296,166
Total		$	509,575		$	474,347

Held-to-maturity:
Due in one year or less		$	50,030		$	49,802
Due from one year to five years			745			701
Due from five years to ten years			47,201			40,121
Due after ten years			53,509			46,155
			151,485			136,779
Mortgage-backed securities			28,684			24,434
Total		$	180,169		$	161,213

The following tables present the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities AFS and HTM have been in a continuous unrealized loss position (in thousands):


		March 31, 2024
		Less than 12 Months								12 Months or Greater								Total
					Gross			Number					Gross			Number					Gross			Number
		Fair			Unrealized			of		Fair			Unrealized			of		Fair			Unrealized			of
Available-for-sale:		Value			Losses			Securities		Value			Losses			Securities		Value			Losses			Securities
U.S. Treasury		$	—		$	—		—		$	75,276		$	(8,790)		9		$	75,276		$	(8,790)		9
U.S. Government-sponsored enterprises (GSEs)			9,906			(141)		3			6,532			(28)		5			16,438			(169)		8
Municipal securities			2,156			(11)		5			12,565			(476)		19			14,721			(487)		24
Other debt securities			2,408			(41)		2			29,415			(3,505)		26			31,823			(3,546)		28
Mortgage-backed securities (GSEs)			63,256			(831)		21			177,765			(23,091)		87			241,021			(23,922)		108
Total		$	77,726		$	(1,024)		31		$	301,553		$	(35,890)		146		$	379,279		$	(36,914)		177

		March 31, 2024
		Less than 12 Months								12 Months or Greater								Total
					Gross			Number					Gross			Number					Gross			Number
		Fair			Unrealized			of		Fair			Unrealized			of		Fair			Unrealized			of
Held-to-maturity:		Value			Losses			Securities		Value			Losses			Securities		Value			Losses			Securities
U.S. Treasury		$	—		$	—		—		$	49,802		$	(227)		2		$	49,802		$	(227)		2
U.S. Government-sponsored enterprises (GSEs)			—			—		—			41,135			(7,897)		13			41,135			(7,897)		13
Municipal securities			—			—		—			45,840			(6,582)		35			45,840			(6,582)		35
Mortgage-backed securities (GSEs)			—			—		—			24,434			(4,250)		5			24,434			(4,250)		5
Total		$	—		$	—		—		$	161,211		$	(18,956)		55		$	161,211		$	(18,956)		55


		December 31, 2023
		Less than 12 Months								12 Months or Greater								Total
					Gross			Number					Gross			Number					Gross			Number
		Fair			Unrealized			of		Fair			Unrealized			of		Fair			Unrealized			of
Available-for-sale:		Value			Losses			Securities		Value			Losses			Securities		Value			Losses			Securities
U.S. Treasury		$	—		$	—		—		$	76,033		$	(8,274)		9		$	76,033		$	(8,274)		9
U.S. Government-sponsored enterprises (GSEs)			9,743			(137)		3			1,482			(9)		3			11,225			(146)		6
Municipal securities			2,786			(2)		2			9,849			(473)		17			12,635			(475)		19
Other debt securities			2,986			(17)		2			29,057			(3,870)		26			32,043			(3,887)		28
Mortgage-backed securities (GSEs)			16,401			(229)		8			176,351			(21,708)		88			192,752			(21,937)		96
Total		$	31,916		$	(385)		15		$	292,772		$	(34,334)		143		$	324,688		$	(34,719)		158

		December 31, 2023
		Less than 12 Months								12 Months or Greater								Total
					Gross			Number					Gross			Number					Gross			Number
		Fair			Unrealized			of		Fair			Unrealized			of		Fair			Unrealized			of
Held-to-maturity:		Value			Losses			Securities		Value			Losses			Securities		Value			Losses			Securities
U.S. Treasury		$	—		$	—		—		$	148,584		$	(1,482)		4		$	148,584		$	(1,482)		4
U.S. Government-sponsored enterprises (GSEs)			—			—		—			42,194			(7,143)		13			42,194			(7,143)		13
Municipal securities			—			—		—			46,500			(6,178)		35			46,500			(6,178)		35
Mortgage-backed securities (GSEs)			—			—		—			25,258			(3,895)		5			25,258			(3,895)		5
Total		$	—		$	—		—		$	262,536		$	(18,698)		57		$	262,536		$	(18,698)		57

For any securities classified as available-for-sale that are in an unrealized loss position at the balance sheet date, the Company assesses whether it intends to sell the security, or more likely than not will be required to sell the security before recovery of its amortized cost basis which would require a write-down to fair value through net income. Because the

Company currently does not intend to sell those available-for-sale securities that have an unrealized loss at March 31, 2024, and it is not likely that they we will be required to sell the securities before recovery of their amortized cost bases, which may be maturity, the Company has determined that no write-down is necessary. In addition, the Company evaluates whether any portion of the decline in fair value of available-for-sale securities is the result of credit deterioration, which would require the recognition of an allowance for credit losses. The unrealized losses associated with available-for-sale securities at March 31, 2024, are driven by changes in interest rates and are not due to the credit quality of the securities, and accordingly, no allowance for credit losses is considered necessary related to available-for-sale securities at March 31, 2024. Management evaluates the financial performance of the issuers on a quarterly basis to determine if it is probable that the issuers can make all contractual principal and interest payments.

The unrealized losses in the Company’s held-to-maturity portfolio were caused by changes in the interest rate environment. The Company has a zero-loss expectation for its U.S. treasury securities in addition to U.S. Government-sponsored enterprises (GSEs) and mortgage-backed securities (GSEs), and accordingly, no allowance for credit losses is estimated for these securities. The held-to-maturity state and municipal securities are general obligation bonds which have a very low historical default rate due to issuers generally having unlimited taxing authority to service the debt. All debt securities in an unrealized loss position as of March 31, 2024, continue to perform as scheduled and we do not believe an allowance for credit losses is necessary.

The Company utilizes bond credit ratings assigned by third party ratings agencies to monitor the credit quality of debt securities held-to-maturity. At March 31, 2024, all debt securities classified as held-to-maturity were rated AA- or higher by the ratings agencies. Updated credit ratings are obtained as they become available from the ratings agencies.

Allowance for Credit Losses (ACL”)

There were no past due or nonaccrual AFS or HTM securities at March 31, 2024, or December 31, 2023. Based on the analysis of the underlying risk characteristics of its AFS and HTM portfolios, including credit ratings and other qualitative factors, there was no provision for credit losses related to AFS or HTM securities recorded during the three months ended March 31, 2024, and 2023, respectively, because the ACL was deemed immaterial.

Other Investments:

Our other investments consist of restricted non-marketable equity securities that have no readily determinable market value. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. As of March 31, 2024, the Company determined that there was no impairment on its other investment securities.

The following is the amortized cost and carrying value of other investments (in thousands):


		March 31,			December 31,
		2024			2023
Federal Reserve Bank stock		$	9,532		$	9,526
Federal Home Loan Bank stock			3,836			3,786
First National Bankers Bank stock			350			350
Total		$	13,718		$	13,662