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Note 2 - Securities | 9 Months Ended
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Sep. 30, 2022
Notes to Financial Statements |
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block] | NOTE 2 – SECURITIES On January 1, 2022, ChoiceOne reassessed and transferred, at fair value $428.4 million of securities classified as available for sale to the held to maturity classification. The net unrealized after-tax loss of $2.7 million as of the transfer date remained in accumulated other comprehensive income to be amortized over the remaining life of the securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses were recognized at the time of the transfer. The remaining net unamortized unrealized loss on transferred securities included in accumulated other comprehensive income was $2.5 million after tax as of September 30, 2022. The fair value of equity securities and the related gross unrealized gains and (losses) recognized in noninterest income were as follows:
|  | September 30, 2022 |
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
(Dollars in thousands) |  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
Equity securities |  | $ | 8,445 |  |  | $ | 272 |  |  | $ | (740 | ) |  | $ | 7,977 |
|  | December 31, 2021 |
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
(Dollars in thousands) |  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
Equity securities |  | $ | 7,953 |  |  | $ | 665 |  |  | $ | (126 | ) |  | $ | 8,492 |
The following tables present the amortized cost and fair value of investment securities at the dates indicated and the corresponding amounts of gross unrealized gains and losses, including the corresponding amounts of gross unrealized gains and losses on investment securities available for sale recognized in accumulated other comprehensive income:
|  | September 30, 2022 |
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
(Dollars in thousands) |  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
Available for Sale: |  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
U.S. Treasury notes and bonds |  | $ | 90,926 |  |  | $ | - |  |  | $ | (13,372 | ) |  | $ | 77,554 |
State and municipal |  |  | 281,298 |  |  |  | - |  |  |  | (57,311 | ) |  |  | 223,987 |
Mortgage-backed |  |  | 242,095 |  |  |  | - |  |  |  | (27,404 | ) |  |  | 214,691 |
Corporate |  |  | 757 |  |  |  | - |  |  |  | (41 | ) |  |  | 716 |
Asset-backed securities |  |  | 13,653 |  |  |  | - |  |  |  | (508 | ) |  |  | 13,145 |
Total |  | $ | 628,729 |  |  | $ | - |  |  | $ | (98,636 | ) |  | $ | 530,093 |
Held to Maturity: |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government and federal agency |  | $ | 2,965 |  |  | $ | - |  |  | $ | (415 | ) |  | $ | 2,550 |
State and municipal |  |  | 202,406 |  |  |  | - |  |  |  | (42,485 | ) |  |  | 159,921 |
Mortgage-backed |  |  | 202,131 |  |  |  | - |  |  |  | (31,296 | ) |  |  | 170,835 |
Corporate |  |  | 19,597 |  |  |  | - |  |  |  | (2,068 | ) |  |  | 17,529 |
Asset-backed securities |  |  | 1,106 |  |  |  | - |  |  |  | (83 | ) |  |  | 1,023 |
Total |  | $ | 428,205 |  |  | $ | - |  |  | $ | (76,347 | ) |  | $ | 351,858 |
|  | December 31, 2021 |
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
(Dollars in thousands) |  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
Available for Sale: |  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
U.S. Government and federal agency |  | $ | 2,001 |  |  | $ | 7 |  |  | $ | - |  |  | $ | 2,008 |
U.S. Treasury notes and bonds |  |  | 93,267 |  |  |  | 23 |  |  |  | (1,311 | ) |  |  | 91,979 |
State and municipal |  |  | 528,252 |  |  |  | 10,704 |  |  |  | (4,109 | ) |  |  | 534,847 |
Mortgage-backed |  |  | 441,383 |  |  |  | 781 |  |  |  | (9,049 | ) |  |  | 433,115 |
Corporate |  |  | 20,856 |  |  |  | 19 |  |  |  | (233 | ) |  |  | 20,642 |
Asset-backed securities |  |  | 16,387 |  |  |  | - |  |  |  | (93 | ) |  |  | 16,294 |
Total |  | $ | 1,102,146 |  |  | $ | 11,534 |  |  | $ | (14,795 | ) |  | $ | 1,098,885 |
Available for sale securities with unrealize losses as of September 30, 2022 and 2021, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:
|  | September 30, 2022 |
|  | Less than 12 months |  |  | More than 12 months |  |  | Total |
(Dollars in thousands) |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |
Available for Sale: |  | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
U.S. Government and federal agency |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
U.S. Treasury notes and bonds |  |  | - |  |  |  | - |  |  |  | 77,554 |  |  |  | 13,372 |  |  |  | 77,554 |  |  |  | 13,372 |
State and municipal |  |  | 181,857 |  |  |  | 44,576 |  |  |  | 40,756 |  |  |  | 12,735 |  |  |  | 222,613 |  |  |  | 57,311 |
Mortgage-backed |  |  | 86,499 |  |  |  | 4,410 |  |  |  | 125,765 |  |  |  | 22,994 |  |  |  | 212,264 |  |  |  | 27,404 |
Corporate |  |  | 716 |  |  |  | 41 |  |  |  | - |  |  |  | - |  |  |  | 716 |  |  |  | 41 |
Asset-backed securities |  |  | - |  |  |  | - |  |  |  | 13,145 |  |  |  | 508 |  |  |  | 13,145 |  |  |  | 508 |
Total temporarily impaired |  | $ | 269,072 |  |  | $ | 49,027 |  |  | $ | 257,220 |  |  | $ | 49,609 |  |  | $ | 526,292 |  |  | $ | 98,636 |
|  | December 31, 2021 |
|  | Less than 12 months |  |  | More than 12 months |  |  | Total |
(Dollars in thousands) |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |
Available for Sale: |  | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
U.S. Government and federal agency |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
U.S. Treasury notes and bonds |  |  | 89,958 |  |  |  | 1,311 |  |  |  | - |  |  |  | - |  |  |  | 89,958 |  |  |  | 1,311 |
State and municipal |  |  | 130,001 |  |  |  | 3,253 |  |  |  | 15,237 |  |  |  | 856 |  |  |  | 145,238 |  |  |  | 4,109 |
Mortgage-backed |  |  | 261,560 |  |  |  | 5,709 |  |  |  | 86,974 |  |  |  | 3,340 |  |  |  | 348,534 |  |  |  | 9,049 |
Corporate |  |  | 17,369 |  |  |  | 233 |  |  |  | - |  |  |  | - |  |  |  | 17,369 |  |  |  | 233 |
Asset-backed securities |  |  | 16,294 |  |  |  | 93 |  |  |  | - |  |  |  | - |  |  |  | 16,294 |  |  |  | 93 |
Total temporarily impaired |  | $ | 515,182 |  |  | $ | 10,599 |  |  | $ | 102,211 |  |  | $ | 4,196 |  |  | $ | 617,393 |  |  | $ | 14,795 |
Held to maturity securities with unrealize losses as of September 30, 2022, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, in the table below. There were no held to maturity securities as of December 31, 2021.
|  | September 30, 2022 |
|  | Less than 12 months |  |  | More than 12 months |  |  | Total |
(Dollars in thousands) |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |
Held to Maturity: |  | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
U.S. Government and federal agency |  | $ | - |  |  | $ | - |  |  | $ | 2,550 |  |  | $ | 415 |  |  | $ | 2,550 |  |  | $ | 415 |
U.S. Treasury notes and bonds |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
State and municipal |  |  | 105,390 |  |  |  | 25,177 |  |  |  | 54,531 |  |  |  | 17,308 |  |  |  | 159,921 |  |  |  | 42,485 |
Mortgage-backed |  |  | 59,007 |  |  |  | 6,495 |  |  |  | 111,828 |  |  |  | 24,801 |  |  |  | 170,835 |  |  |  | 31,296 |
Corporate |  |  | 11,371 |  |  |  | 1,512 |  |  |  | 4,909 |  |  |  | 556 |  |  |  | 16,280 |  |  |  | 2,068 |
Asset-backed securities |  |  | - |  |  |  | - |  |  |  | 1,023 |  |  |  | 83 |  |  |  | 1,023 |  |  |  | 83 |
Total temporarily impaired |  | $ | 175,768 |  |  | $ | 33,184 |  |  | $ | 174,841 |  |  | $ | 43,163 |  |  | $ | 350,609 |  |  | $ | 76,347 |
ChoiceOne reviews its securities portfolio on a quarterly basis to determine whether unrealized losses are considered to be temporary or other-than-temporary. No other-than-temporary impairment charges were recorded in the three and nine months ended September 30, 2022, or in the same periods in 2021. ChoiceOne believes that unrealized losses on securities were temporary in nature and were due to changes in interest rates and reduced market liquidity and not as a result of credit quality issues. Presented below is a schedule of maturities of securities as of September 30, 2022, and the fair value of securities available for sale and the amortized cost of securities held to maturity as of September 30, 2022. Callable securities in the money are presumed called and matured at the callable date.
|  | Available for Sale Securities maturing within: |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Fair Value |
|  | Less than |  |  | 1 Year - |  |  | 5 Years - |  |  | More than |  |  | at September 30, |
(Dollars in thousands) |  | 1 Year |  |  | 5 Years |  |  | 10 Years |  |  | 10 Years |  |  | 2022 |
U.S. Treasury notes and bonds |  | $ | - |  |  | $ | - |  |  | $ | 77,554 |  |  | $ | - |  |  | $ | 77,554 |
State and municipal |  |  | 9,609 |  |  |  | 7,929 |  |  |  | 38,202 |  |  |  | 168,247 |  |  |  | 223,987 |
Corporate |  |  | - |  |  |  | 497 |  |  |  | 219 |  |  |  | - |  |  |  | 716 |
Asset-backed securities |  |  | - |  |  |  | 9,481 |  |  |  | 3,664 |  |  |  | - |  |  |  | 13,145 |
Total debt securities |  |  | 9,609 |  |  |  | 17,907 |  |  |  | 119,639 |  |  |  | 168,247 |  |  |  | 315,402 |
Mortgage-backed securities |  |  | 19,362 |  |  |  | 98,970 |  |  |  | 90,161 |  |  |  | 6,198 |  |  |  | 214,691 |
Total Available for Sale |  | $ | 28,971 |  |  | $ | 116,877 |  |  | $ | 209,800 |  |  | $ | 174,445 |  |  | $ | 530,093 |
|  | Held to Maturity Securities maturing within: |  |  |  |  |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Amortized Cost |
|  | Less than |  |  | 1 Year - |  |  | 5 Years - |  |  | More than |  |  | at September 30, |
(Dollars in thousands) |  | 1 Year |  |  | 5 Years |  |  | 10 Years |  |  | 10 Years |  |  | 2022 |
U.S. Government and federal agency |  | $ | - |  |  | $ | - |  |  | $ | 2,965 |  |  | $ | - |  |  | $ | 2,965 |
State and municipal |  |  | 2,348 |  |  |  | 5,180 |  |  |  | 68,447 |  |  |  | 126,431 |  |  |  | 202,406 |
Corporate |  |  | - |  |  |  | 250 |  |  |  | 18,347 |  |  |  | 1,000 |  |  |  | 19,597 |
Asset-backed securities |  |  | - |  |  |  | 1,106 |  |  |  | - |  |  |  | - |  |  |  | 1,106 |
Total debt securities |  |  | 2,348 |  |  |  | 6,536 |  |  |  | 89,759 |  |  |  | 127,431 |  |  |  | 226,074 |
Mortgage-backed securities |  |  | - |  |  |  | 56,033 |  |  |  | 146,098 |  |  |  | - |  |  |  | 202,131 |
Total Held to Maturity |  | $ | 2,348 |  |  | $ | 62,569 |  |  | $ | 235,857 |  |  | $ | 127,431 |  |  | $ | 428,205 |
Following is information regarding unrealized gains and losses on equity securities for the three and nine months ended September 30, 2022 and 2021:
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Net gains and (losses) recognized during the period |  | $ | (323 | ) |  | $ | (28 | ) |  | $ | (1,006 | ) |  | $ | 461 |
Less: Net gains and (losses) recognized during the period on securities sold |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Unrealized gains and (losses) recognized during the reporting period on securities still held at the reporting date |  | $ | (323 | ) |  | $ | (28 | ) |  | $ | (1,006 | ) |  | $ | 461 |

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