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Debt Securities | 6 Months Ended
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Jun. 30, 2023
Debt Securities [Abstract] |
Debt Securities | (5) Debt Securities Debt securities are classified as available-for-sale when they might be sold before maturity. Securities available-for-sale are valued at fair value, with unrealized holding gains and losses reported in other comprehensive income, net of tax. The following table summarizes the amortized cost, allowance for credit losses, and fair value of debt securities available-for-sale at June 30, 2023 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:
| Amortized |  | Gross |  | Gross |  |  | Allowance |  |
| Cost |  | Unrealized |  | Unrealized |  |  | for Credit |  | Fair
(In thousands) | Basis |  | Gains |  | Losses |  |  | Losses |  | Value
June 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal securities | $ | 11,840 |  | $ | 2 |  | $ | 646 |  | $ | — |  | $ | 11,196
Asset-backed securities |  | 6,945 |  |  | — |  |  | 825 |  |  | — |  |  | 6,120
Government mortgage-backed securities |  | 11,328 |  |  | — |  |  | 988 |  |  | — |  |  | 10,340
Total debt securities available-for-sale | $ | 30,113 |  | $ | 2 |  | $ | 2,459 |  | $ | — |  | $ | 27,656
The following table summarizes the amortized cost and fair value of securities available-for-sale at December 31, 2022 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income:
| Amortized |  | Gross |  | Gross |  |
| Cost |  | Unrealized |  | Unrealized |  | Fair
(In thousands) | Basis |  | Gains |  | Losses |  | Value
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |
State and municipal securities | $ | 11,894 |  | $ | 2 |  | $ | 825 |  | $ | 11,071
Asset-backed securities |  | 7,197 |  |  | — |  |  | 923 |  |  | 6,274
Government mortgage-backed securities |  | 12,366 |  |  | — |  |  | 1,111 |  |  | 11,255
Total debt securities available-for-sale | $ | 31,457 |  | $ | 2 |  | $ | 2,859 |  | $ | 28,600
Interest income includes amortization of purchase premium or discount. Premiums and discounts on securities are generally amortized on the level-yield method without anticipating prepayments, except for mortgage-backed securities where prepayments are anticipated. Premiums on callable debt securities are amortized to their earliest call date. Gains and losses on sales are recorded on the trade date and determined using the specific identification method. There were no realized gains or losses on sales and calls of securities during the six months ended June 30, 2023 or June 30, 2022. Securities with carrying amounts of $8.9 million and $9.8 million were pledged to secure available borrowings with the Federal Home Loan Bank at June 30, 2023 and December 31, 2022, respectively. The scheduled maturities of debt securities at June 30, 2023 are summarized in the table below. Actual maturities of asset and mortgage-backed securities may differ from contractual maturities because the assets and mortgages underlying the securities may be repaid without any penalties. Because asset- and mortgage-backed securities are not due at a single maturity date, they are not included in the maturity categories in the following maturity summary.
| Available-for-Sale
| Amortized |  | Fair
(In thousands) | Cost |  | Value
Due after one year through five years | $ | 863 |  | $ | 844
Due after five years through ten years |  | 1,468 |  |  | 1,464
Due after ten years |  | 9,509 |  |  | 8,888
Government mortgage-backed securities |  | 11,328 |  |  | 10,340
Asset-backed securities |  | 6,945 |  |  | 6,120
| $ | 30,113 |  | $ | 27,656
A debt security is placed on non-accrual status at the time any principal or interest payments become more than 90 days delinquent or if full collection of interest or principal becomes uncertain. Interest accrued but not received for a security placed on non-accrual is reversed against interest income. There were no debt securities on non-accrual status and therefore there was no accrued interest related to debt securities reversed against interest income for the six months ended June 30, 2023 or June 30, 2022. The aggregate fair value and unrealized losses of securities that have been in a continuous unrealized loss position for less than twelve months and for twelve months or longer are as follows at June 30, 2023 and December 31, 2022:
| Less than 12 Months |  | 12 Months or Longer |  | Total
| Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized
(In thousands) | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
June 30, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Temporarily impaired securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal securities | $ | 1,978 |  | $ | 14 |  | $ | 7,785 |  | $ | 632 |  | $ | 9,763 |  | $ | 646
Asset-backed securities |  | — |  |  | — |  |  | 6,120 |  |  | 825 |  |  | 6,120 |  |  | 825
Government mortgage-backed securities |  | — |  |  | — |  |  | 10,340 |  |  | 988 |  |  | 10,340 |  |  | 988
Total temporarily impaired debt securities | $ | 1,978 |  | $ | 14 |  | $ | 24,245 |  | $ | 2,445 |  | $ | 26,223 |  | $ | 2,459
December 31, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Temporarily impaired securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal | $ | 8,174 |  | $ | 183 |  | $ | 2,297 |  | $ | 642 |  | $ | 10,471 |  | $ | 825
Asset-backed securities |  | 2,322 |  |  | 182 |  |  | 3,951 |  |  | 741 |  |  | 6,273 |  |  | 923
Government mortgage-backed securities |  | 7,428 |  |  | 474 |  |  | 3,827 |  |  | 637 |  |  | 11,255 |  |  | 1,111
Total temporarily impaired debt securities | $ | 17,924 |  | $ | 839 |  | $ | 10,075 |  | $ | 2,020 |  | $ | 27,999 |  | $ | 2,859
The Company expects to recover its amortized cost basis on all debt securities. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell these securities in an unrealized loss position as of June 30, 2023, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover. The following summarizes, by investment security type, the basis for the conclusion that the debt securities in an unrealized loss position were not other-than-temporarily impaired at June 30, 2023: State and municipal securities: At June 30, 2023, 15 of the 19 securities in the Company’s portfolio of state and municipal securities were in unrealized loss positions. Aggregate unrealized losses represented 5.5% of the amortized cost of state and municipal securities. The Company continually monitors the state and municipal securities sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the securities in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk. There were no material underlying downgrades during the quarter. All securities are performing. Asset-backed securities: At June 30, 2023, all four of the securities in the Company’s portfolio of asset-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 11.9% of the amortized cost of asset-backed securities. The U.S. Small Business Administration (“SBA”) guarantees the contractual cash flows of all of the Company’s asset-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing. Government mortgage-backed securities: At June 30, 2023, all 33 of the securities in the Company’s portfolio of government mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 8.7% of the amortized cost of government mortgage-backed securities. The Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”), and Government National Mortgage Association (“GNMA”) guarantee the contractual cash flows of all of the Company’s mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the quarter. All securities are performing. Allowance for Credit Losses – Available-For-Sale Securities: For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is 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 a provision for credit losses charged to earnings. For debt securities available-for-sale 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, 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 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 an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as credit loss expense (or reversal). Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on available-for-sale debt securities totaled $176,000 at June 30, 2023 and is excluded from the estimate of credit losses.

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI https://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
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