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SECURITIES AVAILABLE FOR SALE

12 Months Ended

Dec. 31, 2023

SECURITIES AVAILABLE FOR SALE

SECURITIES AVAILABLE FOR SALE

NOTE 2. SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale:


					Gross			Gross
					Unrealized			Unrealized
(in thousands)		Amortized Cost			Gains			Losses			Fair Value
December 31, 2023
Debt securities:
Obligations of US Government-sponsored enterprises		$	2,021		$	—		$	(29)		$	1,992
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			223,602			12			(30,332)			193,282
US Government agency			85,005			145			(10,937)			74,213
Private label			60,888			18			(1,855)			59,051
Obligations of states and political subdivisions thereof			119,857			4,515			(14,204)			110,168
Corporate bonds			105,552			19			(9,703)			95,868
Total securities available for sale		$	596,925		$	4,709		$	(67,060)		$	534,574


					Gross			Gross
					Unrealized			Unrealized
(in thousands)		Amortized Cost			Gains			Losses			Fair Value
December 31, 2022
Debt securities:
Obligations of US Government-sponsored enterprises		$	2,692		$	5		$	(37)		$	2,660
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			249,838			14			(34,825)			215,027
US Government agency			90,318			16			(10,728)			79,606
Private label			64,056			34			(3,936)			60,154
Obligations of states and political subdivisions thereof			121,939			7,149			(21,351)			107,737
Corporate bonds			102,505			33			(8,206)			94,332
Total securities available for sale		$	631,348		$	7,251		$	(79,083)		$	559,516

Credit Quality Information

We monitor the credit quality of available for sale debt securities through credit ratings from various rating agencies and substantial price changes. In an effort to make informed decisions, we utilize credit ratings that express opinions about the credit quality of a security. Securities are triggered for further review in the quarter if the security has significant fluctuations in ratings, drops below investment-grade, or significant pricing changes. For securities without credit ratings, we utilize other financial information indicating the financial health of the underlying municipality, agency, or organization associated with the underlying security.

As of December 31, 2023 and 2022, we carried no allowance on available for sale debt securities in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments.

The amortized cost and estimated fair value of available for sale securities segregated by contractual maturity at December 31, 2023 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable.


		Available for sale
(in thousands)		Amortized Cost			Fair Value
Within 1 year		$	3,038		$	3,017
Over 1 year to 5 years			50,471			47,138
Over 5 years to 10 years			45,706			44,887
Over 10 years			128,215			112,986
Total bonds and obligations			227,430			208,028
Mortgage-backed securities and collateralized mortgage obligations			369,495			326,546
Total securities available for sale		$	596,925		$	534,574

The following table summarizes proceeds from the sale of AFS securities and realized gains and losses:


		Proceeds from Sale
		of Securities
(in thousands)		Available for Sale			Realized Gains			Realized Losses			Net
2023		$	2,000		$	34		$	—		$	34
2022			7,130			151			(98)			53
2021			92,723			2,933			(63)			2,870

There were no sales of securities in 2023, the $2.0 million represents proceeds from a called security with a $34 thousand realized gain.

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:


		Less Than Twelve Months						Over Twelve Months						Total
		Gross						Gross						Gross
		Unrealized			Fair			Unrealized			Fair			Unrealized			Fair
(in thousands)		Losses			Value			Losses			Value			Losses			Value
December 31, 2023
Debt securities:
Obligations of US Government-sponsored enterprises		$	1		$	1,084		$	28		$	907		$	29		$	1,991
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			10			3,439			30,322			188,611			30,332			192,050
US Government agency			2			120			10,935			68,891			10,937			69,011
Private label			—			26			1,855			59,007			1,855			59,033
Obligations of states and political subdivisions thereof			26			3,099			14,178			101,036			14,204			104,135
Corporate bonds			156			4,913			9,547			84,950			9,703			89,863
Total securities available for sale		$	195		$	12,681		$	66,865		$	503,402		$	67,060		$	516,083


		Less Than Twelve Months						Over Twelve Months						Total
		Gross						Gross						Gross
		Unrealized			Fair			Unrealized			Fair			Unrealized			Fair
(in thousands)		Losses			Value			Losses			Value			Losses			Value
December 31, 2022
Debt securities:
Obligations of US Government-sponsored enterprises		$	32		$	435		$	6		$	790		$	38		$	1,225
Mortgage-backed securities and collateralized mortgage obligations:
US Government-sponsored enterprises			7,005			82,483			27,820			127,745			34,825			210,228
US Government agency			2,870			42,430			7,857			34,198			10,727			76,628
Private label			841			15,694			3,095			44,396			3,936			60,090
Obligations of states and political subdivisions thereof			7,990			48,799			13,361			55,702			21,351			104,501
Corporate bonds			4,733			65,279			3,473			25,027			8,206			90,306
Total securities available for sale		$	23,471		$	255,120		$	55,612		$	287,858		$	79,083		$	542,978

A summary of securities pledged as collateral for certain deposits and borrowing arrangements for the years ended December 31, 2023 and 2022 is as follows:


		December 31, 2023						December 31, 2022
		Carrying			Estimated			Carrying			Estimated
(in thousands)		Value			Fair Value			Value			Fair Value
Securities pledged for deposits		$	24,347		$	21,341		$	26,807		$	23,430
Securities pledged for repurchase agreements			18,841			16,230			21,001			17,964
Securities pledged for borrowings ⁽¹⁾			113,775			95,318			40,686			33,962
Total securities pledged		$	156,963		$	132,889		$	88,494		$	75,356

(1)	The Bank pledged securities as collateral for certain borrowing arrangements with the Federal Home Loan Bank of Boston and Federal Reserve Bank of Boston.

We expect to recover the amortized cost basis on all securities in our AFS portfolio. Furthermore, we do not intend to sell nor do we anticipate that we will be required to sell any securities in an unrealized loss position as of December 31, 2023, prior to this recovery. Our ability and intent to hold these securities until recovery is supported by our capital and liquidity positions as well as historically low portfolio turnover.

The following summarizes, by investment security type, the impact of securities in an unrealized loss position at December 31, 2023:

Obligations of US Government-sponsored enterprises

8 out of the total 8 securities in our portfolio of AFS obligations of US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 1.44% of the amortized cost of securities in unrealized loss positions. The US Small Business Administration guarantees the contractual cash flows of all of our obligations of US Government-sponsored enterprises. The securities are investment-grade rated and there were no material underlying credit downgrades during the quarter.

US Government-sponsored enterprises

448 out of the total 493 securities in our portfolio of AFS US Government-sponsored enterprises were in unrealized loss positions. Aggregate unrealized losses represented 13.64% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation guarantee the contractual cash flows of all of our US Government-sponsored enterprises. The securities are investment grade rated and there were no material underlying credit downgrades during the year.

US Government agency

130 out of the total 151 securities in our portfolio of AFS US Government agency securities were in unrealized loss positions. Aggregate unrealized losses represented 13.68% of the amortized cost of securities in unrealized loss positions. The Government National Mortgage Association guarantees the contractual cash flows of all of our US government agency securities. The securities are rated investment grade and there were no material underlying credit downgrades during the year.

Private label

26 of the total 28 securities in our portfolio of AFS private label mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 3.05% of the amortized cost of securities in unrealized loss positions. We expect to receive all of the future contractual cash flows related to the amortized cost on these securities.

Obligations of states and political subdivisions thereof

52 of the total 69 securities in our portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 12.48% of the amortized cost of securities in unrealized loss positions. We continually monitor the municipal bond sector of the market carefully and periodically evaluate the appropriate level of exposure to the market. At this time, we believe the bonds in this portfolio carry minimal risk of default and we are appropriately compensated for that risk. There were no material underlying credit downgrades during the year.

Corporate bonds

30 of the total 35 securities in our portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 9.75% of the amortized cost of securities in unrealized loss positions. We review the financial strength of all of these bonds and have concluded that the amortized cost remains supported by the expected future cash flows of these securities. The most recent review includes all bond issuers and their current credit ratings, financial performance and capitalization.