Securities

9 Months Ended

Sep. 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:


	September 30, 2024
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Equity securities	$	8,030	$	332	$	(546	)	$	7,816


	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			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:


	September 30, 2024
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			Value
U.S. Treasury notes and bonds	$	89,994	$	-	$	(7,762	)	$	82,232
State and municipal		269,780		-		(34,746	)		235,034
Mortgage-backed		189,408		59		(18,708	)		170,759
Corporate		250		-		(37	)		213
Asset-backed securities		9,511		-		(197	)		9,314
Total	$	558,943	$	59	$	(61,450	)	$	497,552

(Dollars in thousands)
Held to Maturity:
U.S. Government and federal agency	$	2,977	$	-	$	(220	)	$	2,757
State and municipal		196,165		10		(25,013	)		171,162
Mortgage-backed		172,476		-		(18,644	)		153,832
Corporate		20,036		32		(2,212	)		17,856
Asset-backed securities		300		-		(7	)		293
Total	$	391,954	$	42	$	(46,096	)	$	345,900


	December 31, 2023
			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
Available for Sale:	Cost		Gains		Losses			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 September 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:


	September 30, 2024
	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. Treasury notes and bonds	$	-	$	-	$	82,232	$	7,762	$	82,232	$	7,762
State and municipal		-		-		235,034		34,746		235,034		34,746
Mortgage-backed		-		-		158,840		18,708		158,840		18,708
Corporate		-		-		213		37		213		37
Asset-backed securities		-		-		9,314		197		9,314		197
Total temporarily impaired	$	-	$	-	$	485,633	$	61,450	$	485,633	$	61,450


	December 31, 2023
	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. 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 September 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:


	September 30, 2024
	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	$	-	$	-	$	2,757	$	220	$	2,757	$	220
State and municipal		6,818		1,012		162,111		24,001		168,929		25,013
Mortgage-backed		-		-		153,832		18,644		153,832		18,644
Corporate		-		-		16,177		2,212		16,177		2,212
Asset-backed securities		-		-		293		7		293		7
Total temporarily impaired	$	6,818	$	1,012	$	335,170	$	45,084	$	341,988	$	46,096


	December 31, 2023
	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	$	-	$	-	$	2,679	$	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 nine months ended September 30, 2024 and 2023.

At September 30, 2024 and December 31, 2023, there were 541 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 September 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 September 30, 2024, 86% of state and municipal bonds held are rated AA or better, 10% are A rated and 4% are not rated. Of the mortgage-backed securities held on September 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 September 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:
									Fair Value
	Less than		1 Year -		5 Years -		More than		at September 30,
(Dollars in thousands)	1 Year		5 Years		10 Years		10 Years		2024

U.S. Treasury notes and bonds	$	-	$	82,232	$	-	$	-	$	82,232
State and municipal		1,018		22,377		113,176		98,463		235,034
Corporate		-		-		213		-		213
Asset-backed securities		-		6,793		2,521		-		9,314
Total debt securities		1,018		111,402		115,910		98,463		326,793

Mortgage-backed securities		8,693		65,274		83,639		13,153		170,759
Total Available for Sale	$	9,711	$	176,676	$	199,549	$	111,616	$	497,552


	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		2024

U.S. Government and federal agency	$	-	$	2,977	$	-	$	-	$	2,977
State and municipal		2,972		19,729		98,326		75,138		196,165
Corporate		-		-		20,036		-		20,036
Asset-backed securities		300		-		-		-		300
Total debt securities		3,272		22,706		118,362		75,138		219,478

Mortgage-backed securities		13,248		37,077		122,151		-		172,476
Total Held to Maturity	$	16,520	$	59,783	$	240,513	$	75,138	$	391,954

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


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2024		2023			2024		2023
(Dollars in thousands)
Net gains and (losses) recognized during the period	$	277	$	(205	)	$	241	$	(527	)
Less: Net gains and (losses) recognized during the period on securities sold		—		(71	)		—		(71	)

Unrealized gains and (losses) recognized during the reporting period on securities still held at the reporting date	$	277	$	(134	)	$	241	$	(456	)