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Investments
9 Months Ended
Sep. 30, 2025
Investments  
Investments

Note 4 – Investments

The following tables show a comparison of amortized cost and fair values of investment securities at September 30, 2025 and December 31, 2024:

(in thousands)

    

Amortized
Cost

    

Gross
Unrealized
Gains

    

Gross
Unrealized
Losses

    

Allowance for Credit Losses

    

Estimated Fair Value

September 30, 2025

Available for Sale:

U.S. government agencies

$

2,000

$

$

624

$

$

1,376

Residential mortgage-backed agencies

24,273

30

3,384

20,919

Commercial mortgage-backed agencies

37,988

7,943

30,045

Collateralized mortgage obligations

30,615

28

2,528

28,115

Obligations of states and political subdivisions

8,556

25

110

8,471

Corporate bonds

1,000

85

915

Collateralized debt obligations

18,759

3,540

15,219

Total available for sale

$

123,191

$

83

$

18,214

$

$

105,060

(in thousands)

    

Amortized
Cost

    

Gross
Unrecognized
Gains

    

Gross
Unrecognized
Losses

    

Estimated Fair Value

    

Allowance for Credit Losses

September 30, 2025

Held to Maturity:

U.S. government agencies

$

68,521

$

$

8,337

$

60,184

$

Residential mortgage-backed agencies

32,834

83

2,626

30,291

Commercial mortgage-backed agencies

20,995

5,238

15,757

Collateralized mortgage obligations

46,171

7,300

38,871

Obligations of states and political subdivisions

4,399

219

591

4,027

102

Total held to maturity

$

172,920

$

302

$

24,092

$

149,130

$

102

(in thousands)

    

Amortized
Cost

    

Gross
Unrealized
Gains

    

Gross
Unrealized
Losses

    

Allowance for Credit Losses

    

Estimated Fair Value

December 31, 2024

Available for Sale:

U.S. government agencies

$

7,000

$

$

885

$

$

6,115

Residential mortgage-backed agencies

24,621

4,425

20,196

Commercial mortgage-backed agencies

37,205

8,571

28,634

Collateralized mortgage obligations

21,069

3,343

17,726

Obligations of states and political subdivisions

6,533

324

6,209

Corporate bonds

1,000

104

896

Collateralized debt obligations

18,686

3,968

14,718

Total available for sale

$

116,114

$

$

21,620

$

$

94,494

(in thousands)

    

Amortized
Cost

    

Gross
Unrecognized
Gains

    

Gross
Unrecognized
Losses

    

Estimated Fair Value

    

Allowance for Credit Losses

December 31, 2024

Held to Maturity:

U.S. government agencies

$

68,301

$

$

11,192

$

57,109

$

Residential mortgage-backed agencies

32,171

1

3,561

28,611

Commercial mortgage-backed agencies

21,134

5,794

15,340

Collateralized mortgage obligations

49,439

9,724

39,715

Obligations of states and political subdivisions

4,511

177

703

3,985

59

Total held to maturity

$

175,556

$

178

$

30,974

$

144,760

$

59

Proceeds from sales and calls of available-for-sale (“AFS”) securities and the realized gains and losses for the nine- and three-month periods ended September 30, 2025 and 2024 are as follows:

Nine Months Ended

Three Months Ended

September 30,

September 30,

(in thousands)

2025

2024

2025

2024

Proceeds

$

8,965

$

$

8,965

$

Realized gains

203

203

Realized losses

106

106

The Corporation utilizes FASB Accounting Standards Codification (“ASC”) Topic 326 to evaluate its AFS and held-to-maturity (“HTM”) debt security portfolio for expected credit losses.  

For any AFS debt security in an unrealized loss position, the Corporation first assesses whether it intends to sell, or it is more likely than not that the Corporation will be required to sell, the security before recovery to its amortized cost basis.  If either criterion regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income.  For AFS debt securities that do not meet the aforementioned criteria, the Corporation evaluates whether any decline in fair value has resulted from credit losses or other factors.  In making this assessment, management 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 assessment 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 (“ACL”) is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis.  Any impairment that has not been recorded through the ACL is recorded in other comprehensive income (“OCI”).

The Corporation adopted ASC Topic 326 using the prospective transition approach for debt securities for which other than temporary impairment (“OTTI”) had been recognized prior to January 1, 2023, such as AFS collateralized debt obligations.  As a result, the amortized cost basis for such debt securities remained the same before and after the effective date of ASC Topic 326.  The effective interest rate on these debt securities was not changed.  Amounts of OTTI that were recorded prior to January 1, 2023 are being accreted into income over the remaining life of the assets.  

The ACL on HTM securities is a contra-asset valuation account, calculated in accordance with ASC Topic 326.  Management measures expected credit losses on HTM debt securities on a collective basis by major security type.  Management has elected to not measure an ACL for accrued interest on securities. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts.  

Management classifies the HTM portfolio into the following major security types: (i) securities issued or guaranteed by U.S. government agencies (including U.S. treasuries, agency bonds, and U.S. guaranteed residential mortgage-backed securities, commercial mortgage-backed securities, and collateralized mortgage obligations); (ii) rated municipal securities; and (iii) unrated municipal securities.  With regard to securities issued by U.S. government agencies and corporations, it is expected that the securities will not settle at prices that are less than the amortized cost bases of the securities, as such securities are backed by the full faith and credit of and/or guaranteed by the U.S. government.  Accordingly, no ACL has been recorded on these securities.  With regard to securities issued by states and political subdivisions, management considers (x) issuer bond ratings, (y) historical loss rates for given bond ratings, and (z) whether issuers continue to make timely principal and interest payments under the contractual terms of the securities. Non-rated securities are evaluated internally based on financial performance and expected future cash flows.

As of September 30, 2025 and December 31, 2024, the Corporation recorded ACL of approximately $102,000 and $59,000, respectively, related to one municipal bond in its HTM security portfolio.

The following tables show the Corporation’s investment securities with gross unrealized and unrecognized losses and fair values at September 30, 2025 and December 31, 2024, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized and unrecognized loss position:

Less than 12 months

12 months or more

(in thousands)

    

Fair
Value

    

Unrealized
Losses

    

Number of
Investments

    

Fair
Value

    

Unrealized
Losses

    

Number of
Investments

September 30, 2025

Available for Sale:

U.S. government agencies

$

$

$

1,376

$

624

1

Residential mortgage-backed agencies

17,610

3,384

3

Commercial mortgage-backed agencies

3,092

126

2

26,953

7,817

8

Collateralized mortgage obligations

8,955

45

1

14,479

2,483

9

Obligations of states and political subdivisions

4,183

110

4

Corporate bonds

915

85

1

Collateralized debt obligations

15,219

3,540

9

Total available for sale

$

12,047

$

171

3

$

80,735

$

18,043

35

Less than 12 months

12 months or more

(in thousands)

    

Fair
Value

    

Unrecognized
Losses

    

Number of
Investments

    

Fair
Value

    

Unrecognized
Losses

    

Number of
Investments

September 30, 2025

Held to Maturity:

U.S. government agencies

$

$

$

60,184

8,337

9

Residential mortgage-backed agencies

2,247

8

2

19,718

2,618

35

Commercial mortgage-backed agencies

15,757

5,238

2

Collateralized mortgage obligations

38,871

7,300

8

Obligations of states and political subdivisions

2,269

591

1

Total held to maturity

$

2,247

$

8

2

$

136,799

$

24,084

55

Less than 12 months

12 months or more

(in thousands)

    

Fair
Value

    

Unrealized
Losses

    

Number of
Investments

    

Fair
Value

    

Unrealized
Losses

    

Number of
Investments

December 31, 2024

Available for Sale:

U.S. government agencies

$

$

$

6,115

$

885

2

Residential mortgage-backed agencies

1,974

18

1

18,222

4,407

3

Commercial mortgage-backed agencies

1,688

59

1

26,946

8,512

8

Collateralized mortgage obligations

2,892

50

1

14,834

3,293

9

Obligations of states and political subdivisions

1,224

18

2

3,742

306

3

Corporate Bonds

896

104

1

Collateralized debt obligations

14,718

3,968

9

Total available for sale

$

7,778

$

145

5

$

85,473

$

21,475

35

Less than 12 months

12 months or more

(in thousands)

    

Fair
Value

    

Unrecognized
Losses

    

Number of
Investments

    

Fair
Value

    

Unrecognized
Losses

    

Number of
Investments

December 31, 2024

Held to Maturity:

U.S. government agencies

$

$

$

57,109

$

11,192

9

Residential mortgage-backed agencies

8,291

132

5

20,243

3,429

35

Commercial mortgage-backed agencies

15,340

5,794

2

Collateralized mortgage obligations

39,715

9,724

8

Obligations of states and political subdivisions

2,179

703

1

Total held to maturity

$

8,291

$

132

5

$

134,586

$

30,842

55

The amortized cost and estimated fair value of securities by contractual maturities at September 30, 2025 are shown in the following table.  Expected maturities for mortgage-backed securities and collateralized mortgage obligations will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

September 30, 2025

(in thousands)

    

Amortized
Cost

    

Fair
Value

Contractual Maturity

Available for Sale:

Due in one year or less

$

2,241

$

2,251

Due after five years through ten years

4,418

4,329

Due after ten years

23,656

19,401

30,315

25,981

Residential mortgage-backed agencies

24,273

20,919

Commercial mortgage-backed agencies

37,988

30,045

Collateralized mortgage obligations

30,615

28,115

Total available for sale

$

123,191

$

105,060

Held to Maturity:

Due after one year through five years

$

17,050

$

16,542

Due after five years through ten years

36,052

32,102

Due after ten years

19,818

15,567

72,920

64,211

Residential mortgage-backed agencies

32,834

30,291

Commercial mortgage-backed agencies

20,995

15,757

Collateralized mortgage obligations

46,171

38,871

Total held to maturity

$

172,920

$

149,130

At September 30, 2025 and December 31, 2024, AFS investment securities with an aggregate fair value of $88.0 million and $71.6 million, respectively, and HTM investment securities with an aggregate book value of $171.0 million and $161.2 million, respectively, were pledged as permitted or required to secure public deposits, for securities sold under agreements to repurchase as required or permitted by law and as collateral for borrowing capacity.