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SECURITIES

9 Months Ended

Sep. 30, 2025

5. SECURITIES

Amortized cost and fair value of available-for-sale debt securities at September 30, 2025 and December 31, 2024 are summarized as follows. No allowance for credit losses was recorded at September 30, 2025 and December 31, 2024.


(In Thousands)		September 30, 2025
					Gross			Gross
					Unrealized			Unrealized
		Amortized			Holding			Holding			Fair
		Cost			Gains			Losses			Value

Obligations of the U.S. Treasury		$	8,052		$	0		$	(623)		$	7,429
Obligations of U.S. Government agencies			9,436			0			(766)			8,670
Bank holding company debt securities			28,963			0			(2,672)			26,291
Obligations of states and political subdivisions:
Tax-exempt			105,922			275			(8,669)			97,528
Taxable			50,373			1			(6,512)			43,862
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			107,771			451			(6,287)			101,935
Residential collateralized mortgage obligations			54,678			52			(2,310)			52,420
Commercial mortgage-backed securities			72,433			13			(6,749)			65,697
Private label commercial mortgage-backed securities			3,471			0			0			3,471
Asset-backed securities,
Collateralized loan obligations			8,000			11			(1)			8,010
Total available-for-sale debt securities		$	449,099		$	803		$	(34,589)		$	415,313


(In Thousands)		December 31, 2024
					Gross			Gross
					Unrealized			Unrealized
		Amortized			Holding			Holding			Fair
		Cost			Gains			Losses			Value

Obligations of the U.S. Treasury		$	8,067		$	0		$	(949)		$	7,118
Obligations of U.S. Government agencies			10,154			0			(1,129)			9,025
Bank holding company debt securities			28,958			0			(3,712)			25,246
Obligations of states and political subdivisions:
Tax-exempt			111,995			238			(10,931)			101,302
Taxable			51,147			0			(8,641)			42,506
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			104,378			6			(9,970)			94,414
Residential collateralized mortgage obligations			53,389			10			(3,505)			49,894
Commercial mortgage-backed securities			73,470			0			(8,969)			64,501
Private label commercial mortgage-backed securities			8,365			9			0			8,374
Total available-for-sale debt securities		$	449,923		$	263		$	(47,806)		$	402,380

The following table presents gross unrealized losses and fair value of available-for-sale debt securities with unrealized loss positions aggregated by length of time that individual securities have been in a continuous unrealized loss position at September 30, 2025 and December 31, 2024 for which an allowance for credit losses has not been recorded:


September 30, 2025		Less Than 12 Months						12 Months or More						Total
(In Thousands)		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
		Value			Losses			Value			Losses			Value			Losses
Obligations of the U.S. Treasury		$	0		$	0		$	7,429		$	(623)		$	7,429		$	(623)
Obligations of U.S. Government agencies			0			0			8,670			(766)			8,670			(766)
Bank holding company debt securities			0			0			26,291			(2,672)			26,291			(2,672)
Obligations of states and political subdivisions:
Tax-exempt			554			(11)			86,573			(8,658)			87,127			(8,669)
Taxable			0			0			43,289			(6,512)			43,289			(6,512)
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			6,631			(32)			59,944			(6,255)			66,575			(6,287)
Residential collateralized mortgage obligations			15,224			(28)			21,952			(2,282)			37,176			(2,310)
Commercial mortgage-backed securities			861			(10)			62,464			(6,739)			63,325			(6,749)
Private label commercial mortgage-backed securities			0			0			0			0			0			0
Asset-backed securities,
Collateralized loan obligations			2,999			(1)			0			0			2,999			(1)
Total		$	26,269		$	(82)		$	316,612		$	(34,507)		$	342,881		$	(34,589)


December 31, 2024		Less Than 12 Months						12 Months or More						Total
(In Thousands)		Fair			Unrealized			Fair			Unrealized			Fair			Unrealized
		Value			Losses			Value			Losses			Value			Losses
Obligations of the U.S. Treasury		$	0		$	0		$	7,118			(949)		$	7,118		$	(949)
Obligations of U.S. Government agencies			0			0			9,025			(1,129)			9,025			(1,129)
Bank holding company debt securities			0			0			25,246			(3,712)			25,246			(3,712)
Obligations of states and political subdivisions:
Tax-exempt			6,581			(58)			91,316			(10,873)			97,897			(10,931)
Taxable			0			0			42,506			(8,641)			42,506			(8,641)
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			22,777			(375)			69,282			(9,595)			92,059			(9,970)
Residential collateralized mortgage obligations			19,586			(156)			27,157			(3,349)			46,743			(3,505)
Commercial mortgage-backed securities			2,314			(38)			62,187			(8,931)			64,501			(8,969)
Total		$	51,258		$	(627)		$	333,837		$	(47,179)		$	385,095		$	(47,806)

As reflected in the table above, gross unrealized holding losses on available-for-sale debt securities totaled $34,589,000 at September 30, 2025 and $47,806,000 at December 31, 2024. At September 30, 2025, the Corporation did not have the intent to sell, nor is it more likely than not it will be required to sell, these securities before it is able to recover the amortized cost basis. The unrealized holding losses were consistent with increases in market interest rates that have occurred subsequent to the purchase of most of the securities.

At September 30, 2025 and December 31, 2024, management performed an assessment for possible credit losses of the Corporation’s debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. At September 30, 2025 and December 31, 2024, all of the Corporation’s holdings of bank holding company debt securities, obligations of states and political subdivisions, private label commercial mortgage-backed securities and collateralized loan obligations were investment grade and there have been no payment defaults.

Based on the results of the assessment, there was no ACL required on available-for-sale debt securities in an unrealized loss position at September 30, 2025 and December 31, 2024.

There were no gross realized gains and losses from the sale of available-for-sale debt securities for the three and nine months ended September 30, 2025 and 2024.

The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of September 30, 2025. Actual maturities may differ from contractual maturities because counterparties may have the right to call or prepay obligations with or without call or prepayment penalties.


(In Thousands)		September 30, 2025
		Amortized			Fair
		Cost			Value
Due in one year or less		$	2,691		$	2,679
Due from one year through five years			36,667			35,024
Due from five years through ten years			78,966			73,179
Due after ten years			84,422			72,898
Sub-total			202,746			183,780
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
Residential pass-through securities			107,771			101,935
Residential collateralized mortgage obligations			54,678			52,420
Commercial mortgage-backed securities			72,433			65,697
Private label commercial mortgage-backed securities			3,471			3,471
Asset-backed securities,
Collateralized loan obligations			8,000			8,010
Total		$	449,099		$	415,313

The Corporation’s mortgage-backed securities, collateralized mortgage obligations and asset-backed securities have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. In the table above, mortgage-backed securities, collateralized mortgage obligations and asset-backed securities are shown in one period.

Investment securities carried at $205,194,000 at September 30, 2025 and $190,949,000 at December 31, 2024 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note 8 for information concerning securities pledged to secure borrowing arrangements.

Equity Securities

C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 11 regional Federal Home Loan Banks. As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh. There is no active market for FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated. C&N Bank’s investment in FHLB-Pittsburgh stock, included in other assets in the consolidated balance sheets, was $14,346,000 at September 30, 2025 and $15,018,000 at December 31, 2024. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at September 30, 2025 and December 31, 2024. In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. The decision was based on review of financial information that FHLB-Pittsburgh has made publicly available.

C&N Bank is a member of the Federal Reserve System. As a member, C&N Bank is required to purchase and maintain stock in the Federal Reserve Bank of Philadelphia. There is no active market for Federal Reserve Bank stock, and it must ordinarily be redeemed by the Federal Reserve Bank of Philadelphia in order to be liquidated. C&N Bank’s investment in Federal Reserve Bank stock, included in other assets in the consolidated balance sheets, was $6,331,000 at September 30, 2025 and $6,299,000 at December 31, 2024.

The Corporation has a marketable equity security included in other assets in the consolidated balance sheets with a carrying value of $887,000 at September 30, 2025 and $863,000 at December 31, 2024, consisting exclusively of one mutual fund. There was an unrealized loss on the mutual fund of $113,000 at September 30, 2025 and $137,000 at December 31, 2024. Changes in the unrealized gains or losses on this security, which are included in other noninterest income in the consolidated statements of income, were a gain of $9,000 in the third quarter of 2025 and a gain of $31,000 in the third quarter of 2024, a gain of $24,000 in the nine-month period ended September 30, 2025 and a gain of $18,000 in the nine-month period ended September 30, 2024.