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Investment Securities | 9 Months Ended
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Sep. 30, 2024
Investments, Debt and Equity Securities [Abstract] |
Investment Securities | Investment Securities The amortized cost and estimated fair value of securities available-for-sale and held-to-maturity along with gross unrealized gains and losses are summarized as follows:
(dollars in thousands) |  |  |  |  |  |  |
September 30, 2024 | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Securities Available-for-Sale: |  |  |  |  |  |  |
U.S. treasury securities | $ | 1,889 |  |  | $ | — |  |  | $ | (6) |  |  | $ | 1,883 |
U.S. agency securities | 4,171 |  |  | — |  |  | (256) |  |  | 3,915 |
Asset backed securities | 19,851 |  |  | 15 |  |  | (193) |  |  | 19,673 |
State, county & municipal securities | 111,265 |  |  | 10 |  |  | (12,629) |  |  | 98,646 |
Corporate debt securities | 53,330 |  |  | — |  |  | (5,629) |  |  | 47,701 |
Mortgage-backed securities | 216,291 |  |  | 405 |  |  | (18,506) |  |  | 198,190 |
Total | $ | 406,797 |  |  | $ | 430 |  |  | $ | (37,219) |  |  | $ | 370,008 |
September 30, 2024 | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Securities Held-to-Maturity: |  |  |  |  |  |  |
U.S. treasury securities | $ | 94,577 |  |  | $ | — |  |  | $ | (1,846) |  |  | $ | 92,731 |
U.S. agency securities | 16,184 |  |  | — |  |  | (1,006) |  |  | 15,178 |
State, county & municipal securities | 137,066 |  |  | 130 |  |  | (11,286) |  |  | 125,910 |
Mortgage-backed securities | 192,879 |  |  | — |  |  | (20,516) |  |  | 172,363 |
Total | $ | 440,706 |  |  | $ | 130 |  |  | $ | (34,654) |  |  | $ | 406,182 |
December 31, 2023 | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Securities Available-for-Sale: |  |  |  |  |  |  |
U.S. treasury securities | $ | 500 |  |  | $ | — |  |  | $ | (2) |  |  | $ | 498 |
U.S. agency securities | 4,500 |  |  | — |  |  | (361) |  |  | 4,139 |
Asset backed securities | 25,035 |  |  | — |  |  | (405) |  |  | 24,630 |
State, county & municipal securities | 124,524 |  |  | 6 |  |  | (15,494) |  |  | 109,036 |
Corporate debt securities | 53,834 |  |  | 16 |  |  | (6,460) |  |  | 47,390 |
Mortgage-backed securities | 246,901 |  |  | 36 |  |  | (25,248) |  |  | 221,689 |
Total | $ | 455,294 |  |  | $ | 58 |  |  | $ | (47,970) |  |  | $ | 407,382 |
December 31, 2023 | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
Securities Held-to-Maturity: |  |  |  |  |  |  |
U.S. treasury securities | $ | 93,306 |  |  | $ | — |  |  | $ | (3,212) |  |  | $ | 90,094 |
U.S. agency securities | 16,282 |  |  | — |  |  | (1,424) |  |  | 14,858 |
State, county & municipal securities | 136,685 |  |  | 356 |  |  | (13,859) |  |  | 123,182 |
Mortgage-backed securities | 202,758 |  |  | — |  |  | (25,316) |  |  | 177,442 |
Total | $ | 449,031 |  |  | $ | 356 |  |  | $ | (43,811) |  |  | $ | 405,576 |
The Company elected to exclude accrued interest receivable from the amortized cost basis of available-for-sale and held-to-maturity securities disclosed throughout this note. As of September 30, 2024 and December 31, 2023, accrued interest receivable for available-for-sale and held-to-maturity securities totaled $2.1 million and $2.4 million, and $1.9 million and $1.9 million, respectively, and is included in the "Other assets" line item on the Company’s consolidated balance sheet. The amortized cost and fair value of investment securities as of September 30, 2024, by contractual maturity, are shown hereafter. Expected maturities may differ from contractual maturities for certain investments because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. This is often the case with mortgage-backed securities, which are disclosed separately in the table below.
| Available-for-Sale |  | Held-to-Maturity
(dollars in thousands) | Amortized Cost |  | Fair Value |  | Amortized Cost |  | Fair Value
Due in one year or less | $ | 3,890 |  |  | $ | 3,863 |  |  | $ | 31,673 |  |  | $ | 31,393 |
Due after one year through five years | 20,256 |  |  | 19,053 |  |  | 77,416 |  |  | 75,467 |
Due after five years through ten years | 96,828 |  |  | 85,350 |  |  | 69,829 |  |  | 63,894 |
Due after ten years | 69,532 |  |  | 63,552 |  |  | 68,909 |  |  | 63,065 |
| $ | 190,506 |  |  | $ | 171,818 |  |  | $ | 247,827 |  |  | $ | 233,819 |
Mortgage-backed securities | 216,291 |  |  | 198,190 |  |  | 192,879 |  |  | 172,363 |
| $ | 406,797 |  |  | $ | 370,008 |  |  | $ | 440,706 |  |  | $ | 406,182 |
Proceeds from the sale of investment securities totaled $7.9 million and $25.6 million for the three and nine month periods ended September 30, 2024, respectively, and resulted in gross realized losses of $454,000 and $1,434,000 for each respective period. The purpose of these sales in 2024 was to restructure underperforming assets and reinvest at higher yields. The sales do not impact our ability to hold the remaining available-for-sale securities, and we are not in a position to be required to sell any remaining securities at this time. The Company had no sales of investment securities for the three and nine month periods ended September 30, 2023. Investment securities having a carrying value of approximately $363.4 million and $429.9 million were pledged to secure public deposits and for other purposes as of September 30, 2024 and December 31, 2023, respectively. Information pertaining to available-for-sale 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 is as follows:
| Less Than 12 Months |  | 12 Months or Greater |  | Total
(dollars in thousands) | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses
September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
U.S. treasury securities | $ | 1,883 |  |  | $ | (6) |  |  | $ | — |  |  | $ | — |  |  | $ | 1,883 |  |  | $ | (6) |
U.S. agency securities | — |  |  | — |  |  | 3,915 |  |  | (256) |  |  | 3,915 |  |  | (256) |
Asset backed securities | 3,805 |  |  | (19) |  |  | 11,427 |  |  | (174) |  |  | 15,232 |  |  | (193) |
State, county & municipal securities | 2,054 |  |  | (278) |  |  | 95,784 |  |  | (12,351) |  |  | 97,838 |  |  | (12,629) |
Corporate debt securities | 4,515 |  |  | (641) |  |  | 43,186 |  |  | (4,988) |  |  | 47,701 |  |  | (5,629) |
Mortgage-backed securities | 4,958 |  |  | (15) |  |  | 177,319 |  |  | (18,491) |  |  | 182,277 |  |  | (18,506) |
| $ | 17,215 |  |  | $ | (959) |  |  | $ | 331,631 |  |  | $ | (36,260) |  |  | $ | 348,846 |  |  | $ | (37,219) |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
U.S. treasury securities | $ | — |  |  | $ | — |  |  | $ | 498 |  |  | $ | (2) |  |  | $ | 498 |  |  | $ | (2) |
U.S. agency securities | — |  |  | — |  |  | 4,139 |  |  | (361) |  |  | 4,139 |  |  | (361) |
Asset backed securities | 6,196 |  |  | (75) |  |  | 17,424 |  |  | (330) |  |  | 23,620 |  |  | (405) |
State, county & municipal securities | 1,033 |  |  | (138) |  |  | 107,443 |  |  | (15,356) |  |  | 108,476 |  |  | (15,494) |
Corporate debt securities | 1,446 |  |  | (105) |  |  | 45,044 |  |  | (6,355) |  |  | 46,490 |  |  | (6,460) |
Mortgage-backed securities | 5,921 |  |  | (49) |  |  | 212,876 |  |  | (25,199) |  |  | 218,797 |  |  | (25,248) |
| $ | 14,596 |  |  | $ | (367) |  |  | $ | 387,424 |  |  | $ | (47,603) |  |  | $ | 402,020 |  |  | $ | (47,970) |
Information pertaining to held-to-maturity 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 is as follows:
| Less Than 12 Months |  | 12 Months or Greater |  | Total
(dollars in thousands) | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses |  | Fair Value |  | Gross Unrealized Losses
September 30, 2024 |  |  |  |  |  |  |  |  |  |  |
U.S. treasury securities | $ | — |  |  | $ | — |  |  | $ | 92,731 |  |  | $ | (1,846) |  |  | $ | 92,731 |  |  | $ | (1,846) |
U.S. agency securities | — |  |  | — |  |  | 15,178 |  |  | (1,006) |  |  | 15,178 |  |  | (1,006) |
State, county & municipal securities | 2,753 |  |  | (29) |  |  | 106,680 |  |  | (11,257) |  |  | 109,433 |  |  | (11,286) |
Mortgage-backed securities | — |  |  | — |  |  | 172,363 |  |  | (20,516) |  |  | 172,363 |  |  | (20,516) |
| $ | 2,753 |  |  | $ | (29) |  |  | $ | 386,952 |  |  | $ | (34,625) |  |  | $ | 389,705 |  |  | $ | (34,654) |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
U.S. treasury securities | $ | — |  |  | $ | — |  |  | $ | 90,094 |  |  | $ | (3,212) |  |  | $ | 90,094 |  |  | $ | (3,212) |
U.S. agency securities | — |  |  | — |  |  | 14,858 |  |  | (1,424) |  |  | 14,858 |  |  | (1,424) |
State, county & municipal securities | 1,461 |  |  | (78) |  |  | 103,500 |  |  | (13,781) |  |  | 104,961 |  |  | (13,859) |
Mortgage-backed securities | — |  |  | — |  |  | 177,442 |  |  | (25,316) |  |  | 177,442 |  |  | (25,316) |
| $ | 1,461 |  |  | $ | (78) |  |  | $ | 385,894 |  |  | $ | (43,733) |  |  | $ | 387,355 |  |  | $ | (43,811) |
Management evaluates available-for-sale securities in an unrealized loss position at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation to determine if credit-related impairment exists. Management first evaluates whether they intend to sell or more likely than not will be required to sell an impaired security before recovering its amortized cost basis. If either criteria is met, the entire amount of unrealized loss is recognized in earnings with a corresponding adjustment to the security's amortized cost basis. If either of the above criteria is not met, management evaluates whether the decline in fair value is attributable to credit or resulted from other factors. The Company does not intend to sell these investment securities in an unrealized loss position as of September 30, 2024, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Based on management's review, the Company's available-for-sale securities have no expected credit losses and no related allowance for credit losses has been established. The Company uses a systematic methodology to determine its ACL for debt securities held-to-maturity considering the effects of past events, current conditions, and reasonable and supportable forecasts on the collectibility of the portfolio. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the held-to-maturity portfolio. The Company monitors the held-to-maturity portfolio on a quarterly basis to determine whether a valuation account would need to be recorded. Based on management's review, the Company's held-to-maturity securities have no expected credit losses and no related allowance for credit losses has been established. At September 30, 2024, there were 243 available-for-sale securities and 146 held-to-maturity securities that had unrealized losses. These securities are guaranteed by either the U.S. Government, other governments or U.S. corporations. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. As management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale, no declines are due to reasons of credit quality. The Company adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326), as amended on January 1, 2023 which included evaluation of expected credit losses on debt securities. As part of the Company's calculated credit losses, the allowance for credit losses on investment securities was determined to be de minimis due to the high credit quality of the portfolio, which includes securities issued or guaranteed by the U.S. treasury and U.S. government agencies and high quality municipalities. Therefore, no allowance for credit losses was recorded as of September 30, 2024. See Note 1 for additional details on the allowance for credit losses as it relates to the securities portfolio.

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