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Investment securities

9 Months Ended

Sep. 30, 2023

Investment securities

Investment securities

4. Investment securities:

The amortized cost and fair value of investment securities aggregated by investment category at September 30, 2023 and December 31, 2022 are summarized as follows:


		September 30, 2023
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
(Dollars in thousands)		Cost			Gains			Losses			Value
Available for sale:
U.S. Treasury securities		$	197,833		$			$	18,687		$	179,146
U.S. government-sponsored enterprises			2,542						504			2,038
State and municipals:
Taxable			67,866						13,879			53,987
Tax-exempt			76,343						14,545			61,798
Residential mortgage-backed securities:
U.S. government agencies			796						47			749
U.S. government-sponsored enterprises			91,814						22,398			69,416
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises			12,054						578			11,476
Corporate debt securities			4,000						383			3,617
Total		$	453,248		$			$	71,021		$	382,227
Held to maturity:
Tax-exempt state and municipals		$	11,210		$			$	1,304		$	9,906
Residential mortgage-backed securities:
U.S. government agencies			15,752						3,344			12,408
U.S. government-sponsored enterprises			59,284						12,790			46,494
Total		$	86,246		$			$	17,438		$	68,808


		December 31, 2022
					Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
(Dollars in thousands)		Cost			Gains			Losses			Value
Available for sale:
U.S. Treasury securities		$	199,937		$			$	19,640		$	180,297
U.S. government-sponsored enterprises			16,955						585			16,370
State and municipals:
Taxable			68,946						13,588			55,358
Tax-exempt			99,774			93			11,460			88,407
Residential mortgage-backed securities:
U.S. government agencies			982						40			942
U.S. government-sponsored enterprises			141,231						20,112			121,119
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises			12,128						544			11,584
Corporate debt securities			4,000						374			3,626
Total		$	543,953		$	93		$	66,343		$	477,703
Held to maturity:
Tax-exempt state and municipals		$	11,237		$	1		$	841		$	10,397
Residential mortgage-backed securities:
U.S. government agencies			17,304						3,016			14,288
U.S. government-sponsored enterprises			62,638						10,760			51,878
Total		$	91,179		$	1		$	14,617		$	76,563

The Company had net unrealized losses on available for sale securities of $55.7 million net of deferred income taxes of $15.3 million at September 30, 2023 and net unrealized losses on available for sale securities of $52.0 million net of deferred income taxes of $14.3 million at December 31, 2022. During the nine month period ended September 30, 2023, investment securities, including U.S. Treasury bonds and mortgage-backed securities, with a par value of $65.6 million were sold at a net gain of $81 thousand. The proceeds were used to pay-down higher cost short-term borrowings.

The maturity distribution of the fair value, which is the net carrying amount, of the debt securities classified as available for sale at September 30, 2023, is summarized as follows:


		Fair
(Dollars in thousands)		Value
Within one year		$	9,592
After one but within five years			182,610
After five but within ten years			45,829
After ten years			60,516
			298,547
Mortgage-backed and other amortizing securities			83,680
Total		$	382,227

The maturity distribution of the amortized cost and fair value, of debt securities classified as held to maturity at September 30, 2023, is summarized as follows:


		Amortized			Fair
(Dollars in thousands)		Cost			Value
After one but within five years		$	569		$	510
After five but within ten years			9,451			8,420
After ten years			1,190			976
			11,210			9,906
Mortgage-backed securities			75,036			58,902
Total		$	86,246		$	68,808

Securities with a carrying value of $137.9 million and $168.0 million at September 30, 2023 and December 31, 2022, respectively, were pledged to secure public deposits and certain other deposits as required or permitted by law.

Securities and short-term investment activities are conducted with a diverse group of government entities, corporations and state and local municipalities. The counterparty’s creditworthiness and type of collateral is evaluated on a case-by-case basis. At September 30, 2023 and December 31, 2022, there were no significant concentrations of credit risk from any one issuer, with the exception of U.S. government agencies and sponsored enterprises, which exceeded 10.0 percent of stockholders’ equity.

The fair value and gross unrealized losses of investment securities with unrealized losses at September 30, 2023 and December 31, 2022, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, are summarized as follows:


		September 30, 2023
		Less Than 12 Months								12 Months or Greater								Total
		Number of								Number of								Number of
		Securities in a		Fair			Unrealized			Securities in a		Fair			Unrealized			Securities in a		Fair			Unrealized
(Dollars in thousands)		Loss Position		Value			Losses			Loss Position		Value			Losses			Loss Position		Value			Losses
U.S. Treasury securities				$			$			43		$	179,146		$	18,687		43		$	179,146		$	18,687
U.S. government-sponsored enterprises										2			2,038			504		2			2,038			504
State and municipals:
Taxable		1			985			16		65			53,002			13,863		66			53,987			13,879
Tax-exempt		10			5,083			265		103			66,465			15,584		113			71,548			15,849
Residential mortgage-backed securities:
U.S. government agencies										8			13,157			3,391		8			13,157			3,391
U.S. government-sponsored enterprises										41			115,911			35,188		41			115,911			35,188
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises										4			11,476			578		4			11,476			578
Corporate debt securities										6			3,617			383		6			3,617			383
Total		11		$	6,068		$	281		272		$	444,812		$	88,178		283		$	450,880		$	88,459


		December 31, 2022
		Less Than 12 Months								12 Months or Greater								Total
		Number of								Number of								Number of
		Securities in a		Fair			Unrealized			Securities in a		Fair			Unrealized			Securities in a		Fair			Unrealized
(Dollars in thousands)		Loss Position		Value			Losses			Loss Position		Value			Losses			Loss Position		Value			Losses
U.S. Treasury securities		5		$	23,700		$	1,887		40		$	156,597		$	17,753		45		$	180,297		$	19,640
U.S. government-sponsored enterprises		4			14,104			197		1			2,266			388		5			16,370			585
State and municipals:
Taxable		21			19,919			2,908		45			34,464			10,680		66			54,383			13,588
Tax-exempt		39			30,973			1,690		84			59,664			10,611		123			90,637			12,301
Residential mortgage-backed securities:
U.S. government agencies		5			904			39		4			14,326			3,017		9			15,230			3,056
U.S. government-sponsored enterprises		19			57,166			2,029		25			115,831			28,843		44			172,997			30,872
Commercial mortgage-backed securities:
U.S. government-sponsored enterprises		4			11,584			544										4			11,584			544
Corporate debt securities		1			953			47		5			2,673			327		6			3,626			374
Total		98		$	159,303		$	9,341		204		$	385,821		$	71,619		302		$	545,124		$	80,960

As described in Note 1, on January 1, 2023 the Company adopted amended accounting guidance that requires an allowance for credit losses be deducted from the amortized cost basis of financial assets, including investment securities held to maturity, to present the net carrying value at the amount that is expected to be collected over the contractual term of the asset. The Company estimated no allowance for credit losses for its investment securities classified as held to maturity at January 1, 2023 or September 30, 2023, as the portfolio of held to maturity securities consists entirely of U.S. government sponsored enterprises, agencies and states and political subdivisions investments.

The unrealized losses on securities are primarily due to the changes in market interest rates subsequent to purchase. In addition, the Company does not intend to sell and does not believe that it is more likely than not that it will be required to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. The Company estimated no allowance for credit losses for its investment securities classified as available for sale debt securities at January 1, 2023 or September 30, 2023.