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Securities

9 Months Ended

Sep. 30, 2023

Note 3: Securities

The following tables present the amortized cost and estimated fair value of securities with gross unrealized gains and losses at September 30, 2023 and December 31, 2022:


		September 30, 2023
					Gross			Gross
		Amortized			Unrealized			Unrealized
(dollars in thousands)		Cost			Gains			Losses			Fair Value
Securities Available for Sale:
U.S. Treasury Securities		$	2,883		$	—		$	(19)		$	2,864
Municipal Bonds			148,725			—			(26,228)			122,497
Mortgage-Backed Securities			233,920			137			(23,682)			210,375
Corporate Securities			134,369			268			(12,920)			121,717
SBA Securities			19,779			312			(125)			19,966
Asset-Backed Securities			75,616			388			(347)			75,657
Total Securities Available for Sale		$	615,292		$	1,105		$	(63,321)		$	553,076


		December 31, 2022
					Gross			Gross
		Amortized			Unrealized			Unrealized
(dollars in thousands)		Cost			Gains			Losses			Fair Value
Securities Available for Sale:
U.S. Treasury Securities		$	2,621		$	—		$	(41)		$	2,580
Municipal Bonds			156,506			62			(25,214)			131,354
Mortgage-Backed Securities			252,919			2,465			(17,600)			237,784
Corporate Securities			116,871			45			(7,089)			109,827
SBA Securities			20,957			79			(159)			20,877
Asset-Backed Securities			46,623			188			(620)			46,191
Total Securities Available for Sale		$	596,497		$	2,839		$	(50,723)		$	548,613

Securities with a carrying value of $164.3 million at September 30, 2023 were pledged to secure borrowing capacity. The securities portfolio was unencumbered at December 31, 2022.

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


				Less Than 12 Months						12 Months or Greater						Total
		Number of					Unrealized						Unrealized						Unrealized
(dollars in thousands, except number of holdings)		Holdings		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
September 30, 2023
U.S. Treasury Securities		5		$	886		$	(5)		$	880		$	(14)		$	1,766		$	(19)
Municipal Bonds		218			8,358			(232)			114,139			(25,996)			122,497			(26,228)
Mortgage-Backed Securities		140			68,938			(2,205)			135,408			(21,477)			204,346			(23,682)
Corporate Securities		109			18,899			(1,024)			94,731			(11,896)			113,630			(12,920)
SBA Securities		47			2,319			(6)			6,811			(119)			9,130			(125)
Asset-Backed Securities		16			17,215			(130)			14,173			(217)			31,388			(347)
Total Securities Available for Sale		535		$	116,615		$	(3,602)		$	366,142		$	(59,719)		$	482,757		$	(63,321)


				Less Than 12 Months						12 Months or Greater						Total
		Number of					Unrealized						Unrealized						Unrealized
(dollars in thousands, except number of holdings)		Holdings		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses
December 31, 2022
U.S. Treasury Securities		6		$	2,330		$	(41)		$	—		$	—		$	2,330		$	(41)
Municipal Bonds		225			59,912			(5,321)			69,424			(19,893)			129,336			(25,214)
Mortgage-Backed Securities		130			123,224			(5,427)			62,882			(12,173)			186,106			(17,600)
Corporate Securities		100			88,486			(5,121)			17,054			(1,968)			105,540			(7,089)
SBA Securities		49			2,498			(6)			9,750			(153)			12,248			(159)
Asset-Backed Securities		20			21,919			(396)			6,186			(224)			28,105			(620)
Total Securities Available for Sale		530		$	298,369		$	(16,312)		$	165,296		$	(34,411)		$	463,665		$	(50,723)

Beginning January 1, 2023, the Company evaluates all securities quarterly to determine if any securities in a loss position require an allowance for credit losses on securities in accordance with ASC 326 - Measurement of Credit Losses on Financial Instruments.

At September 30, 2023, 535 debt securities had unrealized losses with aggregate depreciation of approximately 11.6% from the Company’s amortized cost basis. These unrealized losses have not been recognized into income because management does not intend to sell these securities, and it is not more likely than not it will be required to sell the securities before recovery of its amortized cost basis. Furthermore, the unrealized losses are due to changes in interest rates and other market conditions and were not reflective of credit events. To make this determination, consideration is given to such factors as the credit rating of the issuer, level of credit enhancement, changes in credit ratings, market conditions such as current interest rates, any adverse conditions specific to the security, and delinquency status on contractual payments. As of September 30, 2023, there was no allowance for credit losses carried on the Company’s securities portfolio.

Accrued interest receivable on securities, which is recorded within accrued interest on the balance sheet, totaled $4.3 million at September 30, 2023 and is excluded from the estimate of credit losses.

At December 31, 2022, 530 debt securities had unrealized losses with aggregate depreciation of approximately 9.9% from the Company’s amortized cost basis. For periods prior to the adoption of ASC 326, management conducted a quarterly review and evaluation of its securities for other than temporary impairment. In analyzing whether unrealized losses on debt securities were other than temporary, management considered the length of time and the extent to which the fair value was less than amortized cost, whether the securities are issued by a government body or agency, whether a rating agency has downgraded the securities, industry analysts’ reports, the financial condition and performance of the issuer, the quality of any underlying assets or credit enhancements, and the Company’s intent and ability to hold the security for a period of time sufficient to allow for a recovery in fair value. No declines were deemed to be other than temporary as of December 31, 2022.

The following table presents a summary of amortized cost and estimated fair value of debt securities by the lesser of expected call date or contractual maturity as of September 30, 2023. Call date is used when a call of the debt security is expected, as determined by the Company when the security has a market value above its amortized cost. Contractual maturities will differ from expected maturities for mortgage-backed, SBA securities and asset-backed securities because borrowers may have the right to call or prepay obligations without penalties.


(dollars in thousands)		Amortized Cost			Fair Value
September 30, 2023
Due in One Year or Less		$	9,779		$	9,833
Due After One Year Through Five Years			44,811			42,665
Due After Five Years Through 10 Years			179,590			155,444
Due After 10 Years			51,797			39,136
Subtotal			285,977			247,078
Mortgage-Backed Securities			233,920			210,375
SBA Securities			19,779			19,966
Asset-Backed Securities			75,616			75,657
Totals		$	615,292		$	553,076

The following table presents a summary of the proceeds from sales of securities available for sale, as well as gross gains and losses, for the three and nine months ended September 30, 2023 and September 30, 2022:


		Three Months Ended						Nine Months Ended
		September 30,						September 30,
(dollars in thousands)		2023			2022			2023			2022
Proceeds From Sales of Securities		$	—		$	—		$	26,976		$	25,066
Gross Gains on Sales			—			—			247			234
Gross Losses on Sales			—			—			(253)			(182)