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Securities

9 Months Ended

Sep. 30, 2024

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 September 30, 2024 and December 31, 2023:

September 30, 2024

Gross

Allowance

Amortized

unrealized

for credit

Estimated

(In thousands)

cost

gains

losses

fair value

Available for sale:

U.S. Government sponsored entities

15,000

—

(162)

—

14,838

State and political subdivisions

368

—

(23)

—

345

Residential mortgage-backed securities

14,067

(1,095)

—

13,002

Asset backed securities

41,750

(11)

—

41,802

Corporate and other securities

31,742

173

(2,322)

(1,929)

27,664

Total debt securities available for sale

102,927

266

(3,613)

(1,929)

97,651

Held to maturity:

U.S. Government sponsored entities

28,000

—

(3,652)

—

24,348

State and political subdivisions

1,218

—

1,317

Residential mortgage-backed securities

7,007

—

(2,126)

—

4,881

Total debt securities held to maturity

36,225

(5,778)

—

30,546


	December 31, 2023
			Gross		Gross			Allowance
	Amortized		unrealized		unrealized			for credit	Estimated
(In thousands)	cost		gains		losses			losses	fair value
Available for sale:
U.S. Government sponsored entities	$	16,490	$	—	$	(457)	$	—	$	16,033
State and political subdivisions		388		—		(28)		—		360
Residential mortgage-backed securities		15,473		30		(1,426)		—		14,077
Asset backed securities		35,750		—		(347)		—		35,403
Corporate and other securities		29,453		251		(2,529)		(1,283)		25,892
Total debt securities available for sale	$	97,554	$	281	$	(4,787)	$	(1,283)	$	91,765
Held to maturity:
U.S. Government sponsored entities	$	28,000	$	—	$	(4,419)	$	—	$	23,581
State and political subdivisions		1,272		90		—		—		1,362
Residential mortgage-backed securities		6,850		—		(2,137)		—		4,713
Total debt securities held to maturity	$	36,122	$	90	$	(6,556)	$	—	$	29,656

For nine months ended September 30, 2024 there was $0.6 million provision for credit loss on AFS debt securities compared to no provision for credit loss on AFS debt securities for the nine months ended September 30, 2023. The provision was entirely attributable to the same corporate debt security for which a partial provision was taken in the fourth quarter of 2023. The company owns $5 million in par of this position and moved the position into non-accrual status during the three months ending June 30, 2024.

The contractual maturities of available for sale and held for maturity debt securities at September 30, 2024 are set forth in the following table. Maturities may differ from contractual maturities in residential mortgage-backed securities because the mortgages underlying the securities may be prepaid without any penalties. Therefore, residential mortgage-backed securities are not included in the maturity categories in the following summary.



		Amortized		Fair
(In thousands)		Cost		Value
Available for sale:
Due in one year	$	3,285	$	3,239
Due after one year through five years		30,283		27,524
Due after five years through ten years		19,289		17,836
Due after ten years		36,003		36,050
Residential mortgage-backed securities		14,067		13,002
Total	$	102,927	$	97,651
Held to maturity:
Due in one year	$	—	$	—
Due after one year through five years		3,000		2,977
Due after five years through ten years		—		—
Due after ten years		26,218		22,688
Residential mortgage-backed securities		7,007		4,881
Total	$	36,225	$	30,546

Actual maturities of available for sale and held to maturity debt securities may differ from those presented above since certain obligations provide the issuer the right to call or prepay the obligation prior to scheduled maturitiy without penalty.

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 September 30, 2024 and December 31, 2023 are as follows:

September 30, 2024

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

—

14,838

(162)

14,838

(162)

State and political subdivisions

—

345

(23)

345

(23)

Residential mortgage-backed securities

—

12,852

(1,095)

12,852

(1,095)

Asset backed securities

13,290

(10)

5,998

(1)

19,288

(11)

Corporate and other securities

—

17,357

(2,322)

17,357

(2,322)

Total

13,290

(10)

51,390

(3,603)

64,680

(3,613)

Held to maturity:

U.S. Government sponsored entities

—

24,348

(3,652)

24,348

(3,652)

Residential mortgage-backed securities

—

4,881

(2,126)

4,881

(2,126)

Total

—

29,229

(5,778)

29,229

(5,778)


	December 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	$	—	$	—	$	16,033	$	(457)	$	16,033	$	(457)
State and political subdivisions		—		—		360		(28)		360		(28)
Residential mortgage-backed securities		—		—		13,949		(1,426)		13,949		(1,426)
Asset backed securities		—		—		35,403		(347)		35,403		(347)
Corporate and other securities		—		—		24,424		(2,529)		24,424		(2,529)
Total temporarily impaired AFS securities	$	—	$	—	$	90,169	$	(4,787)	$	90,169	$	(4,787)
Held to maturity:
U.S. Government sponsored entities	$	—	$	—	$	23,581	$	(4,419)	$	23,581	$	(4,419)
Residential mortgage-backed securities		—		—		4,713		(2,137)		4,713		(2,137)
Total temporarily impaired HTM securities	$	—	$	—	$	28,294	$	(6,556)	$	28,294	$	(6,556)

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.

The Company is using the practical expedient to exclude accrued interest receivable from credit loss measurement. At September 30, 2024, there was $1.7 million of accrued interest on securities. At December 31, 2023, there was $1.5 million of accrued interest on securities.

Realized Gains and Losses on Debt Securities

Net realized gains on debt securities are included in noninterest income in the Consolidated Statements of Income as net security gains. There were no realized gains or losses on available for sale debt securities during the three and nine months ended September 30, 2024 and 2023. There were no realized gains or losses for held to maturity debt securities during the three and nine months ended September 30, 2024 and 2023.

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 and nine months ended September 30, 2024 and 2023:


	For the three months ended September 30,				For the nine months ended September 30,
(In thousands)	2024		2023		2024		2023
Net unrealized gains (losses) occurring during the period on equity securities	$	466	$	(144)	$	478	$	(853)
Net gains recognized during the period on equity securities sold during the period		33		21		95		243
Gains (losses) recognized during the reporting period on equity securities	$	499	$	(123)	$	573	$	(610)