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Note 2 - Securities

9 Months Ended

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