Investments

9 Months Ended

Sep. 30, 2024

Note 4 – Investments

The amortized cost, gross unrealized gains and losses, and fair value of investment securities at September 30, 2024 and December 31, 2023 were as follows (in thousands):

September 30, 2024	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses		Fair Value
Available-for-sale securities:
U.S. agency securities	$	59,579	$	5	$	(3,970	)	$	-	$	55,614
U.S. treasury securities		128,637		-		(5,333	)		-		123,304
Obligations of state and political subdivisions		104,005		25		(6,588	)		-		97,442
Corporate obligations		13,436		290		(1,085	)		-		12,641
Mortgage-backed securities in government sponsored entities		140,099		390		(10,300	)		-		130,189
Total available-for-sale securities	$	445,756	$	710	$	(27,276	)	$	-	$	419,190

December 31, 2023
Available-for-sale securities:
U.S. agency securities	$	66,569	$	1	$	(5,799	)	$	-	$	60,771
U.S. treasury securities		152,485		-		(9,197	)		-		143,288
Obligations of state and political subdivisions		107,945		32		(6,190	)		-		101,787
Corporate obligations		13,394		245		(1,236	)		-		12,403
Mortgage-backed securities in government sponsored entities		112,950		7		(13,605	)		-		99,352
Total available-for-sale securities	$	453,343	$	285	$	(36,027	)	$	-	$	417,601

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time, which individual securities have been in a continuous unrealized loss position, at September 30, 2024 and December 31, 2023 (in thousands). As of September 30, 2024, the Company owned 301 securities whose fair value was less than their cost basis.

September 30, 2024	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. agency securities	$	-	$	-		$	53,597	$	(3,970	)	$	53,597	$	(3,970	)
U.S. treasury securities		-		-			123,304		(5,333	)		123,304		(5,333	)
Obligations of state and political subdivisions		877		(1	)		87,875		(6,587	)		88,752		(6,588	)
Corporate obligations		345		(28	)		9,200		(1,057	)		9,545		(1,085	)
Mortgage-backed securities in government sponsored entities		345		(1	)		88,359		(10,299	)		88,704		(10,300	)
Total securities	$	1,567	$	(30	)	$	362,335	$	(27,246	)	$	363,902	$	(27,276	)

December 31, 2023
U.S. agency securities	$	-	$	-		$	58,753	$	(5,799	)	$	58,753	$	(5,799	)
U.S. treasury securities		-		-			143,288		(9,197	)		143,288		(9,197	)
Obligations of states and political subdivisions		-		-			93,535		(6,190	)		93,535		(6,190	)
Corporate obligations		1,487		(265	)		8,320		(971	)		9,807		(1,236	)
Mortgage-backed securities in government sponsored entities		9,203		(31	)		88,553		(13,574	)		97,756		(13,605	)
Total securities	$	10,690	$	(296	)	$	392,449	$	(35,731	)	$	403,139	$	(36,027	)

Allowance for Credit Losses – Available for Sale Securities

The Company measures expected credit losses on available-for-sale debt securities when the Company does not intend to sell, or when it is not more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this evaluation indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of 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 for the credit loss, equal to the amount that the fair value is less than the amortized cost basis. Economic forecast data is utilized to calculate the present value of expected cash flows. The Company obtains its forecast data through a subscription to a widely recognized and relied upon company who publishes various forecast scenarios. Management evaluates the various scenarios to determine a reasonable and supportable scenario, and utilizes a single scenario in the model. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

The allowance for credit losses on available-for-sale debt securities is included within Investment securities available-for-sale on the consolidated balance sheet. Changes in the allowance for credit losses are recorded within Provision for credit losses on the consolidated statement of income. Losses are charged against the allowance when the Company believes the collectability of an available-for-sale security is in jeopardy or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on available-for-sale debt securities totaled $1,947,000 and $2,202,000 at September 30, 2024 and December 31,2023 and is included within accrued interest receivable on the consolidated balance sheet. This amount is excluded from the estimate of expected credit losses. Available-for-sale debt securities are typically classified as nonaccrual when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about the further collectability of principal or interest. When available-for-sale debt securities are placed on nonaccrual status, unpaid interest credited to income is reversed.

There were no sales of available for sale securities during the three and nine months ended September 30, 2024. There were no sales of available for sale securities during the three months ended September 30, 2023. Proceeds from sales of securities available-for-sale for the nine months ended September 30, 2023 were $86,504,000.

The gross gains and losses were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Gross gains on available for sale securities	$	-	$	-	$	-	$	38
Gross losses on available for sale securities		-		-		-		(89	)
Net losses	$	-	$	-	$	-	$	(51	)

The following table presents the net gains (losses) on the Company’s equity investments recognized in earnings during the three and nine month periods ended September 30, 2024 and 2023, and the portion of unrealized gains for the period that relates to equity investments held at September 30, 2024 and 2023(in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
Equity securities	2024		2023		2024			2023
Net gains (losses) recognized in equity securities during the period	$	159	$	69	$	127		$	(223	)
Less: Net gains (losses) realized on the sale of equity securities during the period		-		9		(4	)		14
Net unrealized gains (losses)	$	159	$	60	$	131		$	(237	)

Investment securities with an approximate carrying value of $367.0 million and $353.3 million at September 30, 2024 and December 31, 2023, respectively, were pledged to secure public funds, certain other deposits and borrowing lines.

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

	Amortized Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	49,528	$	48,725
Due after one year through five years		139,662		132,784
Due after five years through ten years		79,848		73,511
Due after ten years		176,718		164,170
Total	$	445,756	$	419,190