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Securities

6 Months Ended

Jun. 30, 2024

Debt Securities, Trading, and Equity Securities, FV-NI, Cost [Abstract]

NOTE 2 – SECURITIES

The fair value of equity securities and the related gross unrealized gains and (losses) recognized in noninterest income were as follows:

	June 30, 2024
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Equity securities	$	7,993	$	266	$	(757	)	$	7,502

	December 31, 2023
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Equity securities	$	7,960	$	212	$	(667	)	$	7,505

The following tables present the amortized cost and fair value of securities available for sale and the gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and the amortized cost and fair value of securities held to maturity and the related gross unrealized gains and losses:

	June 30, 2024
(Dollars in thousands) Available for Sale:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury notes and bonds	$	90,112	$	-	$	(10,801	)	$	79,311
State and municipal		260,866		-		(31,611	)		229,255
Mortgage-backed		196,032		26		(23,000	)		173,058
Corporate		250		-		(45	)		205
Asset-backed securities		10,050		-		(209	)		9,841
Total	$	557,310	$	26	$	(65,666	)	$	491,670

(Dollars in thousands)
Held to Maturity:
U.S. Government and federal agency	$	2,975	$	-	$	(340	)	$	2,635
State and municipal		195,460		6		(32,418	)		163,048
Mortgage-backed		173,860		-		(24,715	)		149,145
Corporate		20,028		19		(2,652	)		17,395
Asset-backed securities		376		-		(16	)		360
Total	$	392,699	$	25	$	(60,141	)	$	332,583

	December 31, 2023
(Dollars in thousands) Available for Sale:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury notes and bonds	$	90,345	$	-	$	(10,151	)	$	80,194
State and municipal		269,918		-		(35,236	)		234,682
Mortgage-backed		212,392		14		(23,905	)		188,501
Corporate		250		-		(46	)		204
Asset-backed securities		11,334		-		(317	)		11,017
Total	$	584,239	$	14	$	(69,655	)	$	514,598

(Dollars in thousands)
Held to Maturity:
U.S. Government and federal agency	$	2,972	$	-	$	(293	)	$	2,679
State and municipal		196,098		14		(30,220	)		165,892
Mortgage-backed		188,329		-		(25,796	)		162,533
Corporate		20,013		21		(2,864	)		17,170
Asset-backed securities		547		-		(30	)		517
Total	$	407,959	$	35	$	(59,203	)	$	348,791

Available for sale securities with unrealized losses as of June 30, 2024 and December 31, 2023, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:

	June 30, 2024
	Less than 12 months				More than 12 months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(Dollars in thousands) Available for Sale:	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury notes and bonds	$	-	$	-	$	79,311	$	10,801	$	79,311	$	10,801
State and municipal		-		-		229,255		31,611		229,255		31,611
Mortgage-backed		2,503		14		159,321		22,986		161,824		23,000
Corporate		-		-		205		45		205		45
Asset-backed securities		-		-		9,841		209		9,841		209
Total temporarily impaired	$	2,503	$	14	$	477,933	$	65,652	$	480,436	$	65,666

	December 31, 2023
	Less than 12 months				More than 12 months				Total
(Dollars in thousands) Available for Sale:	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Treasury notes and bonds	$	-	$	-	$	80,194	$	10,151	$	80,194	$	10,151
State and municipal		557		6		234,125		35,230		234,682		35,236
Mortgage-backed		1,255		23		176,400		23,882		177,655		23,905
Corporate		-		-		204		46		204		46
Asset-backed securities		-		-		11,017		317		11,017		317
Total temporarily impaired	$	1,812	$	29	$	501,940	$	69,626	$	503,752	$	69,655

Held to maturity securities with unrealized losses as of June 30, 2024 and December 31, 2023, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:

	June 30, 2024
	Less than 12 months				More than 12 months				Total
(Dollars in thousands) Held to Maturity:	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Government and federal agency	$	-	$	-	$	2,635	$	340	$	2,635	$	340
State and municipal		7,256		1,350		155,628		31,068		162,884		32,418
Mortgage-backed		-		-		149,145		24,715		149,145		24,715
Corporate		-		-		15,731		2,652		15,731		2,652
Asset-backed securities		-		-		360		16		360		16
Total temporarily impaired	$	7,256	$	1,350	$	323,499	$	58,791	$	330,755	$	60,141

	December 31, 2023
	Less than 12 months				More than 12 months				Total
(Dollars in thousands) Held to Maturity:	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Government and federal agency	$	-	$	-	$	2,679	$	293	$	2,679	$	293
State and municipal		23		-		165,526		30,220		165,549		30,220
Mortgage-backed		-		-		162,533		25,796		162,533		25,796
Corporate		-		-		15,509		2,864		15,509		2,864
Asset-backed securities		-		-		517		30		517		30
Total temporarily impaired	$	23	$	-	$	346,764	$	59,203	$	346,787	$	59,203

ChoiceOne evaluates all securities on a quarterly basis to determine if an ACL and corresponding impairment charge should be recorded. Consideration is given to 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. ChoiceOne believes that unrealized losses on securities 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 ACL was recorded in the three and six months ended June 30, 2024 and 2023.

At June 30, 2024 and December 31, 2023, there were 553 and 569 securities with an unrealized loss, respectively. Unrealized losses 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 June 30, 2024, are related to U.S. Treasury notes and bonds, state and municipal bonds and mortgage backed securities. The U.S. Treasury notes are guaranteed by the U.S. government and 100% of the notes 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 June 30, 2024, 85% of state and municipal bonds held are rated AA or better, 11% are A rated and 4% are not rated. Of the mortgage-backed securities held on June 30, 2024, 42% were issued by US government sponsored entities and agencies, and rated AA, 43% are AAA rated private issue and collateralized mortgage obligation, and 15% are unrated privately issued mortgage-backed securities with structured credit enhancement and collateralized mortgage obligation.

Presented below is a schedule of maturities of securities as of June 30, 2024. Available for sale securities are reported at fair value and held to maturity securities are reported at amortized cost. Callable securities in the money are presumed called and matured at the callable date.

	Available for Sale Securities maturing within:
(Dollars in thousands)	Less than 1 Year		1 Year - 5 Years		5 Years - 10 Years		More than 10 Years		Fair Value at June 30, 2024
U.S. Treasury notes and bonds	$	-	$	73,173	$	6,138	$	-	$	79,311
State and municipal		1,006		15,130		77,614		135,505		229,255
Corporate		-		-		205		-		205
Asset-backed securities		-		7,192		2,649		-		9,841
Total debt securities		1,006		95,495		86,606		135,505		318,612

Mortgage-backed securities		12,846		79,329		56,372		24,511		173,058
Total Available for Sale	$	13,852	$	174,824	$	142,978	$	160,016	$	491,670

	Held to Maturity Securities maturing within:
(Dollars in thousands)	Less than 1 Year		1 Year - 5 Years		5 Years - 10 Years		More than 10 Years		Amortized Cost at June 30, 2024
U.S. Government and federal agency	$	-	$	2,975	$	-	$	-	$	2,975
State and municipal		1,690		17,189		98,079		78,502		195,460
Corporate		-		-		20,028		-		20,028
Asset-backed securities		376		-		-		-		376
Total debt securities		2,066		20,164		118,107		78,502		218,839

Mortgage-backed securities		16,659		29,543		127,658		-		173,860
Total Held to Maturity	$	18,725	$	49,707	$	245,765	$	78,502	$	392,699

Following is information regarding unrealized gains and losses on equity securities for the three and six months ended June 30, 2024 and 2023:

	Three Months Ended June 30,						Six Months Ended June 30,
	2024			2023			2024			2023
(Dollars in thousands)
Net gains and (losses) recognized during the period	$	(71	)	$	(385	)	$	(36	)	$	(322	)
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	$	(71	)	$	(385	)	$	(36	)	$	(322	)