Securities

6 Months Ended

Jun. 30, 2023

Debt Securities, Available-for-Sale [Abstract]

NOTE 4. Securities

On January 1, 2023, the Company adopted ASC 326, which made changes to accounting for available for sale debt securities whereby credit losses should be presented as an allowance, rather than as a write-down when management does not intend to sell and does not believe that it is more likely than not they will be required to sell a security prior to maturity. In addition, ASC 326 requires financial assets measured at amortized cost to measure an expected credit loss under the CECL methodology that requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. All securities information presented as of June 30, 2023 is in accordance with ASC 326. All securities information presented as of December 31, 2022 or a prior date is presented in accordance with previously applicable GAAP.

Amortized costs and fair values of securities available for sale at June 30, 2023 and December 31, 2022 were as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	June 30, 2023
	(in thousands)
Obligations of U.S. government corporations and agencies	$	9,494	$	—	$	(791	)	$	8,703
Mortgage-backed securities		146,696		—		(22,757	)		123,939
Obligations of states and political subdivisions		6,589		—		(358	)		6,231
Subordinated debt		4,750		—		(687	)		4,063
	$	167,529	$	—	$	(24,593	)	$	142,936


	December 31, 2022
	(in thousands)
Obligations of U.S. government corporations and agencies	$	9,993	$	—	$	(858	)	$	9,135
Mortgage-backed securities		153,289		—		(24,136	)		129,153
Obligations of states and political subdivisions		7,027		2		(422	)		6,607
Subordinated debt		4,750		—		(489	)		4,261
	$	175,059	$	2	$	(25,905	)	$	149,156

The amortized cost and estimated fair value of securities at June 30, 2023, by the earlier of contractual maturity or expected maturity, are shown below. The Company has elected to exclude accrued interest receivable, totaling $408 thousand at June 30, 2023, from the amortized cost basis of securities. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.


	Amortized Cost		Fair Value
	(in thousands)
Due in one year or less	$	868	$	860
Due after one year through five years		5,275		4,940
Due after five years through ten years		21,536		19,320
Due after ten years		139,850		117,816
	$	167,529	$	142,936

During the six months ended June 30, 2023 and 2022, the Company sold no available for sale securities.

The fair value and gross unrealized losses for securities available for sale, totaled by the length of time that individual securities have been in a continuous gross unrealized loss position, at June 30, 2023 and December 31, 2022 were as follows:


	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	June 30, 2023
	(in thousands)
Obligations of U.S. government corporations and agencies	$	660	$	34	$	8,043	$	757	$	8,703	$	791
Mortgage-backed securities		1,434		74		122,505		22,683		123,939		22,757
Obligations of states and political subdivisions		1,839		26		4,392		332		6,231		358
Subordinated debt		1,076		174		2,487		513		3,563		687
	$	5,009	$	308	$	137,427	$	24,285	$	142,436	$	24,593


	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	December 31, 2022
	(in thousands)
Obligations of U.S. government corporations and agencies	$	6,140	$	543	$	2,994	$	315	$	9,134	$	858
Mortgage-backed securities		31,771		4,052		97,382		20,084		129,153		24,136
Obligations of states and political subdivisions		6,065		422		—		—		6,065		422
Subordinated debt		2,431		319		1,080		170		3,511		489
	$	46,407	$	5,336	$	101,456	$	20,569	$	147,863	$	25,905

The reference point for determining when securities are in an unrealized loss position is month end. As such, it is possible that a security's market value exceeded its amortized cost on other days during the past twelve-month period.

There were 105 debt securities with a fair value below the amortized cost basis, totaling $142.4 million of aggregate fair value as of June 30, 2023. The Company concluded that a credit loss does not exist in its securities portfolio at June 30, 2023, and no impairment loss has been recognized based on the fact that (1) changes in fair value were caused primarily by fluctuations in interest rates, (2) securities with unrealized losses had generally high credit quality, (3) the Company intends to hold these investments in debt securities to maturity and it is more-likely-than-not that the Company will not be required to sell these investments before a recovery of its investment, and (4) issuers have continued to make timely payments of principal and interest. Additionally, the Company’s mortgage-backed securities are entirely issued by either U.S. government agencies or U.S. government-sponsored enterprises. Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. government, that investors in such mortgage-backed securities will receive timely principal and interest payments.

Securities having a carrying value of $14.1 million at June 30, 2023 were pledged as security for trust accounts.

The composition of restricted investments at June 30, 2023 and December 31, 2022 was as follows:


	June 30, 2023		December 31, 2022
	(in thousands)
Federal Reserve Bank Stock	$	344	$	944
Federal Home Loan Bank Stock		8,093		8,149
Community Bankers’ Bank Stock		140		140
	$	8,577	$	9,233