Securities

9 Months Ended

Sep. 30, 2024

Investments, Debt and Equity Securities [Abstract]

NOTE 3 SECURITIES

Mortgage-backed securities, as shown in the following tables, are all government sponsored enterprises. The amortized cost and fair value of securities, with gross unrealized gains and losses at September 30, 2024 and December 31, 2023, are as follows:


	(In Thousands)
	September 30, 2024
	Amortized		Gross Unrealized		Gross Unrealized			Fair
	Cost		Gains		Losses			Value
Available-for-Sale:
U.S. Treasury	$	109,394	$	170	$	(4,431	)	$	105,133
U.S. Government agencies		144,675		57		(8,372	)		136,360
Mortgage-backed securities		105,479		297		(9,083	)		96,693
State and local governments		69,858		122		(3,285	)		66,695
Total available-for-sale securities	$	429,406	$	646	$	(25,171	)	$	404,881


	(In Thousands)
	December 31, 2023
	Amortized		Gross Unrealized		Gross Unrealized			Fair
	Cost		Gains		Losses			Value
Available-for-Sale:
U.S. Treasury	$	87,182	$	1	$	(6,913	)	$	80,270
U.S. Government agencies		140,960		-		(12,738	)		128,222
Mortgage-backed securities		94,061		-		(11,929	)		82,132
State and local governments		73,000		135		(5,281	)		67,854
Total available-for-sale securities	$	395,203	$	136	$	(36,861	)	$	358,478

Investment securities will at times depreciate to an unrealized loss position. The Company utilizes the following criteria to assess whether the unrealized loss requires an allowance for credit losses on investment securities. No one item by itself will necessarily signal that an allowance for credit losses on investment securities should be established.

The fair value of the security has significantly declined from book value.

A downgrade has occurred that lowered the credit rating to below investment grade (below Baa3 by Moody and BBB – by Standard and Poors.)

Dividends have been reduced or eliminated or scheduled interest payments have not been made.

Management does not possess both the intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

If the unrealized loss is determined to be the result of credit quality factors, the present value of the cash flows expected to be collected is compared to the amortized cost basis. If the present value of the cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded, limited by the amount that the fair value is less than the amortized cost basis. Adjustments to the allowance are recorded in the Company's consolidated statement of income as a component of the provision for credit losses. The table below is presented by category of security and length of time in a continuous loss position. The Company did not record an allowance for credit losses on its investment securities available for sale as the unrealized losses were attributable to changes in interest rates, not credit quality.

Information pertaining to securities with gross unrealized losses at September 30, 2024 and December 31, 2023, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:


	(In Thousands)
	September 30, 2024
	Less Than Twelve Months					Twelve Months & Over					Total
	Gross Unrealized			Fair		Gross Unrealized			Fair		Gross Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
U.S. Treasury	$	(1	)	$	248	$	(4,430	)	$	72,558	$	(4,431	)	$	72,806
U.S. Government agencies		-			-		(8,372	)		132,490		(8,372	)		132,490
Mortgage-backed securities		-			-		(9,083	)		72,452		(9,083	)		72,452
State and local governments		(6	)		1,902		(3,279	)		54,966		(3,285	)		56,868
Total available-for-sale securities	$	(7	)	$	2,150	$	(25,164	)	$	332,466	$	(25,171	)	$	334,616


	(In Thousands)
	December 31, 2023
	Less Than Twelve Months					Twelve Months & Over					Total
	Gross Unrealized			Fair		Gross Unrealized			Fair		Gross Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
U.S. Treasury	$	(4	)	$	494	$	(6,909	)	$	79,528	$	(6,913	)	$	80,022
U.S. Government agencies		-			-		(12,738	)		128,222		(12,738	)		128,222
Mortgage-backed securities		(20	)		4,372		(11,909	)		77,759		(11,929	)		82,131
State and local governments		(2	)		931		(5,279	)		60,402		(5,281	)		61,333
Total available-for-sale securities	$	(26	)	$	5,797	$	(36,835	)	$	345,911	$	(36,861	)	$	351,708

Unrealized losses on securities have not been recognized into income because the issuers’ bonds are of high credit quality, values have only been impacted by changes in interest rates since the securities were purchased, and the Company has the intent and ability to hold the securities for the foreseeable future. The fair value is expected to recover as the bonds approach the maturity date.

Below are the gross realized gains and losses for the three and nine months ended September 30, 2024 and September 30, 2023.


	(In Thousands)				(In Thousands)
	Three Months Ended				Nine Months Ended
	September 30, 2024		September 30, 2023		September 30, 2024		September 30, 2023
Gross realized gains	$	-	$	-	$	-	$	12
Gross realized losses		-		-		-		(903	)
Net realized losses	$	-	$	-	$	-	$	(891	)
Tax benefit related to net realized losses	$	-	$	-	$	-	$	(187	)

The net realized losses on sales and related tax benefit is a reclassification out of accumulated other comprehensive loss. The net realized losses are included in net loss on sale of available-for-sale securities and the related tax benefit is included in income taxes in the condensed consolidated statements of income and comprehensive income.

The amortized cost and fair value of debt securities at September 30, 2024, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	(In Thousands)
	Amortized
	Cost		Fair Value
One year or less	$	46,191	$	45,568
After one year through five years		255,064		241,067
After five years through ten years		21,268		20,144
After ten years		1,404		1,409
Total	$	323,927	$	308,188
Mortgage-backed securities		105,479		96,693
Total	$	429,406	$	404,881

Investments with a carrying value of $214.8 million and $194.1 million at September 30, 2024 and December 31, 2023, respectively, were pledged to secure public deposits and securities sold under repurchase agreements. Investments with a carrying value of $32.2 million were pledged to the Federal Reserve's Discount Window to provide additional borrowing capacity at September 30, 2024. These investments were reallocated from the $61.7 million that were pledged to the Federal Reserve's Bank Term Funding Program (BTFP) at December 31, 2023. The BTFP was discontinued in March of 2024. The remaining investments pledged to BTFP were released.

Other securities primarily include Federal Home Loan Bank of Cincinnati and Indianapolis stock in the amount of $15.0 million as of September 30, 2024 and $14.8 million as of December 31, 2023.