Investment Securities

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

Note 4 – Investment Securities

The following summarizes the amortized cost and fair value of securities

available-for-sale

at September 30, 2023 and December 31, 2022 with gross unrealized gains and losses therein:


	September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

Available-for-sale	(In thousands)
Mortgage-backed securities—U.S. government sponsored enterprises (GSEs)	$	47,917	$	1	$	(7,875	)	$	40,043
U.S. government agency securities		6,260		—		(1,356	)		4,904
Obligations of state and political subdivisions		44,063		—		(6,436	)		37,627
Small business association (SBA) securities		2,817		2		(1	)		2,818
Subordinated debentures		453		—		—			453
Small business investment company securities		2,799		—		(580	)		2,219

Total	$	104,309	$	3	$	(16,248	)	$	88,064


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

Available-for-sale	(In thousands)
Mortgage-backed securities—U.S. government sponsored enterprises (GSEs)	$	41,515	$	2	$	(6,602	)	$	34,915
U.S. government agency securities		6,260		—		(1,175	)		5,085
Obligations of state and political subdivisions		45,161		8		(3,828	)		41,341
Small business investment company securities		2,061		—		—			2,061

Total	$	94,997	$	10	$	(11,605	)	$	83,402

The unrealized losses, categorized by the length of time of continuous loss position, and the fair value of related securities

available-for-sale

at September 30, 2023 and December 31, 2022 are as follows:


	Less than 12 Months					More than 12 Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses

September 30, 2023	(In thousands)
Mortgage-backed securities—U.S. government sponsored enterprises (GSEs)	$	4,695	$	(180	)	$	30,434	$	(7,695	)	$	35,129	$	(7,875	)
U.S. government agency securities		—		—			4,904		(1,356	)		4,904		(1,356	)
Obligations of state and political subdivisions		7,757		(473	)		28,401		(5,963	)		36,158		(6,436	)
Small business association (SBA) securities		778		(1	)		—		—			778		(1	)
Small business investment company securities		—		—			2,219		(580	)		2,219		(580	)

Total	$	13,230	$	(654	)	$	65,958	$	(15,594	)	$	79,188	$	(16,248	)


	Less than 12 Months					More than 12 Months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses

December 31, 2022	(In thousands)
Mortgage-backed securities—U.S. government sponsored enterprises (GSEs)	$	15,605	$	(1,778	)	$	19,137	$	(4,824	)	$	34,742	$	(6,602	)
U.S. government agency securities		—		—			5,085		(1,175	)		5,085		(1,175	)
Obligations of state and political subdivisions		36,421		(3,457	)		1,352		(371	)		37,773		(3,828	)

	$	52,026	$	(5,235	)	$	25,574	$	(6,370	)	$	77,600	$	(11,605	)

The amortized cost and fair value of securities

available-for-sale

at September 30, 2023 by contractual maturity are shown below. Expected maturities will differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties:


	Amortized Cost		Fair Value

	(In thousands)
Due in one year or less	$	—	$	—
Due after one year through five years		7,951		7,607
Due after five years through ten years		25,038		21,381
Due after ten years		17,787		13,996
Mortgage-backed securities (GSEs)		47,917		40,043
Small business association (SBA) securities		2,817		2,818
SBIC securities		2,799		2,219

	$	104,309	$	88,064

Proceeds from calls and maturities of

available-for-sale

securities amounted to $ 241 thousand for the three-month period ended September 30, 2023, for which there was a $6 thousand loss, and $1.1 million for the nine-month period ended September 30, 2023, for which there was a $6 thousand loss Proceeds from calls and maturities of

available-for-sale

securities amounted to $3.0 million for the nine-month period ended September 30, 2022, for which there was a $2 thousand gain.

On January 1, 2023, the Company adopted ASU

2016-13

and implemented the CECL methodology for allowance for credit losses on its investment securities

available-for-sale.

The new CECL methodology replaces the other-than-temporary impairment model that previously existed. The Company did not have a CECL day 1 impact attributable to its investment securities portfolio and did not have an allowance for credit losses on its investment securities available for sale as of September 30, 2023.

The Company’s securities primarily consist of the following types of instruments; U.S. guaranteed mortgage-backed securities, U.S guaranteed agency bonds, state and political subdivision issued bonds, one small business investment company security guaranteed by the U.S. government and a subordinate debenture acquired from Noah Bank. We believe it is reasonable to expect that the securities with a credit guarantee of the U.S. government, will have a

zero-credit

loss. Therefore, no reserve was recorded for U.S. guaranteed securities or bonds at September 30, 2023. The state and political subdivision securities carry a minimum investment rating of A. Some of the smaller municipalities also have insurance to cover the Company in the event of default. Therefore, the Company expects to have a

zero-credit

loss and no reserve was recorded as of September 30, 2023.

At September 30, 2023, the Company’s

available-for-sale

securities portfolio consisted of approximately 222 securities, of which 157

available-for-sale

securities were in an unrealized loss position for more than twelve months and 47

available-for-sale

securities were in a loss position for less than twelve months. The

available-for-sale

securities in a loss position for more than twelve months consisted of 96 municipal securities aggregating $28.4 million with a loss of $6.0 million, 57 mortgage-backed

securities-GSE

aggregating $30.4 million with a loss of $7.7 million and four agency securities aggregating $4.9 million with a loss of $1.4 million. The Company does not intend to sell these securities, and it is not more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. Unrealized losses primarily relate to interest rate fluctuations and not credit concerns. No credit loss charges were recorded for the three and nine months ended September 30, 2023 and 2022.

There are no securities pledged as of September 30, 2023 and December 31, 2022.