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Note 2 - Securities | 12 Months Ended
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Dec. 31, 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 $2.4 million after tax as of December 31, 2022. The fair value of equity securities and the related gross unrealized gains and losses recognized in noninterest income at December 31 were as follows:
|  | December 31, 2022 |
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
(Dollars in thousands) |  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
Equity securities |  | $ | 8,982 |  |  | $ | 305 |  |  | $ | (721 | ) |  | $ | 8,566 |
|  | 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 fair value of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:
|  | December 31, 2022 |
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
(Dollars in thousands) |  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
Available for Sale: |  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
U.S. Government and federal agency |  | $ | - |  |  | $ | - |  |  | $ | - |  |  | $ | - |
U.S. Treasury notes and bonds |  |  | 90,810 |  |  |  | - |  |  |  | (12,606 | ) |  |  | 78,204 |
State and municipal |  |  | 277,489 |  |  |  | - |  |  |  | (47,551 | ) |  |  | 229,938 |
Mortgage-backed |  |  | 236,703 |  |  |  | - |  |  |  | (28,140 | ) |  |  | 208,563 |
Corporate |  |  | 757 |  |  |  | - |  |  |  | (46 | ) |  |  | 711 |
Asset-backed securities |  |  | 13,031 |  |  |  | - |  |  |  | (698 | ) |  |  | 12,333 |
Total |  | $ | 618,790 |  |  | $ | - |  |  | $ | (89,041 | ) |  | $ | 529,749 |
|  | 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 |
The fair value of securities held to maturity and the related gross unrealized gains and losses were as follows:
|  | December 31, 2022 |
|  |  |  |  |  | Gross |  |  | Gross |  |  |  |  |
(Dollars in thousands) |  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
Held to Maturity: |  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
U.S. Government and federal agency |  | $ | 2,966 |  |  | $ | - |  |  | $ | (421 | ) |  | $ | 2,545 |
State and municipal |  |  | 201,890 |  |  |  | 1 |  |  |  | (39,355 | ) |  |  | 162,536 |
Mortgage-backed |  |  | 200,473 |  |  |  | - |  |  |  | (29,868 | ) |  |  | 170,605 |
Corporate |  |  | 19,603 |  |  |  | - |  |  |  | (2,285 | ) |  |  | 17,318 |
Asset-backed securities |  |  | 974 |  |  |  | - |  |  |  | (77 | ) |  |  | 897 |
Total |  | $ | 425,906 |  |  | $ | 1 |  |  | $ | (72,006 | ) |  | $ | 353,901 |
There were no securities held to maturity at December 31, 2021. Information regarding sales of securities available for sale for the year ended December 31 follows:
(Dollars in thousands) |  |  |  |  |  |  |  |  |  |  |  |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Proceeds from sales of securities |  | $ | 47,167 |  |  | $ | 29,742 |  |  | $ | 121,942 |
Gross realized gains |  |  | - |  |  |  | - |  |  |  | 1,308 |
Gross realized losses |  |  | (809 | ) |  |  | (40 | ) |  |  | - |
Contractual maturities of securities available for sale at December 31, 2022 were as follows:
(Dollars in thousands) |  | Amortized |  |  | Fair |
|  | Cost |  |  | Value |
Due within one year |  | $ | 6,035 |  |  | $ | 5,972 |
Due after one year through five years |  |  | 17,069 |  |  |  | 16,176 |
Due after five years through ten years |  |  | 149,578 |  |  |  | 130,215 |
Due after ten years |  |  | 209,405 |  |  |  | 168,823 |
Total debt securities |  |  | 382,087 |  |  |  | 321,186 |
Mortgage-backed securities |  |  | 236,703 |  |  |  | 208,563 |
Total |  | $ | 618,790 |  |  | $ | 529,749 |
Contractual maturities of securities held to maturity at December 31, 2022 were as follows:
(Dollars in thousands) |  | Amortized |  |  | Fair |
|  | Cost |  |  | Value |
Due within one year |  | $ | 2,417 |  |  | $ | 2,389 |
Due after one year through five years |  |  | 6,262 |  |  |  | 5,834 |
Due after five years through ten years |  |  | 109,263 |  |  |  | 92,553 |
Due after ten years |  |  | 107,491 |  |  |  | 82,520 |
Total debt securities |  |  | 225,433 |  |  |  | 183,296 |
Mortgage-backed securities |  |  | 200,473 |  |  |  | 170,605 |
Total |  | $ | 425,906 |  |  | $ | 353,901 |
Certain securities were pledged as collateral for participation in a program that provided Community Reinvestment Act credits. The carrying amount of the securities pledged as collateral at December 31 was as follows:
(Dollars in thousands) |  | 2022 |  |  | 2021 |
Securities pledged for Community Reinvestment Act credits |  | $ | 250 |  |  | $ | 273 |
Securities with unrealized losses at year-end 2022 and 2021, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:
|  | 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 |  |  | - |  |  |  | - |  |  |  | 78,204 |  |  |  | 12,606 |  |  |  | 78,204 |  |  |  | 12,606 |
State and municipal |  |  | 89,158 |  |  |  | 12,612 |  |  |  | 140,390 |  |  |  | 34,939 |  |  |  | 229,548 |  |  |  | 47,551 |
Mortgage-backed |  |  | 63,249 |  |  |  | 3,093 |  |  |  | 144,318 |  |  |  | 25,047 |  |  |  | 207,567 |  |  |  | 28,140 |
Corporate |  |  | 711 |  |  |  | 46 |  |  |  | - |  |  |  | - |  |  |  | 711 |  |  |  | 46 |
Asset-backed securities |  |  | - |  |  |  | - |  |  |  | 12,333 |  |  |  | 698 |  |  |  | 12,333 |  |  |  | 698 |
Total temporarily impaired |  | $ | 153,118 |  |  | $ | 15,751 |  |  | $ | 375,245 |  |  | $ | 73,290 |  |  | $ | 528,363 |  |  | $ | 89,041 |
|  | 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 |
|  | 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 |  | $ | - |  |  | $ | - |  |  | $ | 2,545 |  |  | $ | 421 |  |  | $ | 2,545 |  |  | $ | 421 |
State and municipal |  |  | 13,457 |  |  |  | 1,899 |  |  |  | 149,016 |  |  |  | 37,456 |  |  |  | 162,473 |  |  |  | 39,355 |
Mortgage-backed |  |  | 25,582 |  |  |  | 822 |  |  |  | 145,024 |  |  |  | 29,046 |  |  |  | 170,606 |  |  |  | 29,868 |
Corporate |  |  | 5,296 |  |  |  | 603 |  |  |  | 10,771 |  |  |  | 1,682 |  |  |  | 16,067 |  |  |  | 2,285 |
Asset-backed securities |  |  | - |  |  |  | - |  |  |  | 897 |  |  |  | 77 |  |  |  | 897 |  |  |  | 77 |
Total temporarily impaired |  | $ | 44,335 |  |  | $ | 3,324 |  |  | $ | 308,253 |  |  | $ | 68,682 |  |  | $ | 352,588 |  |  | $ | 72,006 |
There were no securities classified as held to maturity as of December 31, 2021. ChoiceOne evaluates all securities on a quarterly basis to determine whether unrealized losses are temporary or other than temporary. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of ChoiceOne to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value of amortized cost basis. Management believed that unrealized losses as of December 31, 2022 were temporary in nature and were caused primarily by changes in interest rates, increased credit spreads, and reduced market liquidity and were not caused by the credit status of the issuer. No other than temporary impairments were recorded in 2022 or 2021. Following is information regarding unrealized gains and losses on equity securities for the years ending December 31:
|  | 2022 |  |  | 2021 |  |  | 2020 |
Net gains and losses recognized during the period |  | $ | (955 | ) |  | $ | 479 |  |  | $ | (155 | )
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 |  | $ | (955 | ) |  | $ | 479 |  |  | $ | (155 | )
At December 31, 2022, there were 611 securities with an unrealized loss, compared to 247 securities with an unrealized loss as of December 31, 2021. Unrealized losses on corporate and municipal bonds have not been recognized into income because the issuers’ bonds are of high credit quality, and management does not intend to sell prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity. The majority of unrealized losses at December 31, 2022, are related to U.S. Treasury notes and bonds, State and municipal bonds and mortgage backed. U.S. Treasury notes are guaranteed by the U.S. government and of which 100% are rated AA or better. State and municipal bonds are backed by the taxing authority of the bond issuer or the revenues from the bond. On December 31, 2022, 86% of state and municipal bonds held are rated AA or better. Agency issued securities are generally guaranteed by a U.S. government agency, such as the government national mortgage association which give 100% of these AA ratings or better. Of the mortgage-backed securities held on December 31, 2022, 38% were issued by US government sponsored entities and agencies, and rated AA, 31% are AAA rated private issue, and 13% are unrated privately issued mortgage-backed securities with structured credit enhancement.

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI https://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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