SECURITIES

3 Months Ended

Mar. 31, 2024

NOTE 3 – SECURITIES

The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at March 31, 2024 and December 31, 2023 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses, and allowance for credit losses:

Securities Available for Sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
March 31, 2024
U.S. Government securities	$	56,880	$	—	$	(2,000	)	$	54,880
U.S. Government sponsored entity securities		6,485		—		(668	)		5,817
Agency mortgage-backed securities, residential		114,082		—		(12,593	)		101,489
Total securities	$	177,447	$	—	$	(15,261	)	$	162,186

December 31, 2023
U.S. Government securities	$	52,174	$	—	$	(1,877	)	$	50,297
U.S. Government sponsored entity securities		6,527		—		(650	)		5,877
Agency mortgage-backed securities, residential		118,218		—		(12,134	)		106,084
Total securities	$	176,919	$	—	$	(14,661	)	$	162,258

Securities Held to Maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Estimated Fair Value		Allowance for Credit Losses
March 31, 2024
Obligations of states and political subdivisions	$	7,969	$	10	$	(732	)	$	7,247	$	(2	)
Agency mortgage-backed securities, residential		1		—		—			1		—
Total securities	$	7,970	$	10	$	(732	)	$	7,248	$	(2	)

December 31, 2023
Obligations of states and political subdivisions	$	7,987	$	17	$	(615	)	$	7,389	$	(2	)
Agency mortgage-backed securities, residential		1		—		—			1		—
Total securities	$	7,988	$	17	$	(615	)	$	7,390	$	(2	)

The amortized cost and estimated fair value of debt securities at March 31, 2024, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain issuers may have the right to call or prepay the debt obligations prior to their contractual maturities. Securities not due at a single maturity are shown separately.

	Available for Sale				Held to Maturity
Debt Securities:	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value

Due in one year or less	$	14,901	$	14,785	$	896	$	875
Due in over one to five years		48,464		45,912		3,471		3,276
Due in over five to ten years		—		—		1,476		1,273
Due after ten years		—		—		2,126		1,823
Agency mortgage-backed securities, residential		114,082		101,489		1		1
Total debt securities	$	177,447	$	162,186	$	7,970	$	7,248

There were no sales of securities during the three months ended March 31, 2024 and 2023.

Debt securities with a carrying value of approximately $140,195 at March 31, 2024 and $126,994 at December 31, 2023, respectively, were pledged to secure public deposits, repurchase agreements, and for other purposes required or permitted by law.

The following table summarizes debt securities available for sale in an unrealized loss position for which an ACL losses has not been recorded at March 31, 2024 and December 31, 2023, aggregated by major security type and length of time in a continuous unrealized loss position:

March 31, 2024	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government securities	$	16,547	$	(174	)	$	38,333	$	(1,826	)	$	54,880	$	(2,000	)
U.S. Government sponsored entity securities		—		—			5,817		(668	)		5,817		(668	)
Agency mortgage-backed
securities, residential		—		—			101,489		(12,593	)		101,489		(12,593	)
Total available for sale	$	16,547	$	(174	)	$	145,639	$	(15,087	)	$	162,186	$	(15,261	)

December 31, 2023	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government securities	$	9,474	$	(52	)	$	40,823	$	(1,825	)	$	50,297	$	(1,877	)
U.S. Government sponsored entity securities		—		—			5,877		(650	)		5,877		(650	)
Agency mortgage-backed securities, residential		—		—			106,084		(12,134	)		106,084		(12,134	)
Total available for sale	$	9,474	$	(52	)	$	152,784	$	(14,609	)	$	162,258	$	(14,661	)

Management evaluates available for sale debt securities in unrealized positions to determine whether impairment is due to credit-related factors. Consideration is given to (1) the extent to which the fair value is less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At March 31, 2024, the Company had 97 available for sale debt securities in an unrealized position without an ACL, of which 14 were from U.S. Government securities, 3 were from U.S. Government sponsored entity securities, and 80 were from Agency mortgage-backed residential securities. Comparatively at December 31, 2023, the Company had 99 available for sale debt securities in an unrealized position without an ACL, of which 15 were from U.S. Government securities, 3 were from U.S. Government sponsored entity securities, and 81 were from Agency mortgage-backed residential securities. Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Accordingly, as of March 31, 2024 and December 31, 2023, management believes that the unrealized losses detailed in the previous table are due to noncredit-related factors, including changes in interest rates and other market conditions. As a result, the Company carried no ACL on available for sale debt securities at March 31, 2024 and December 31, 2023.

The following table presents the activity in the ACL for held to maturity debt securities:

Held to Maturity Debt Securities	Three months ended March 31, 2024		Three months ended March 31, 2023
Allowance for credit losses:
Beginning balance	$	2	$	—
Impact of adopting ASC 326		—		3
Credit loss expense		—		—
Allowance for credit losses ending balance	$	2	$	3

The Company’s held to maturity securities primarily consist of obligations of states and political subdivisions. The ACL on held to maturity securities is estimated at each measurement date on a collective basis by major security type. Risk factors such as issuer bond ratings, historical loss rates, financial condition of issuer, and timely principal and interest payments of issuer were evaluated to determine if a credit reserve was required within the portfolio. At March 31, 2024 and 2023, there were no past due principal and interest payments related to held to maturity securities. During the first quarter of 2024, the cumulative loss rate remained at .02%, resulting in no change to provision expense during the three months ended March 31, 2024. During the first quarter of 2023, the Company identified a cumulative loss rate of .03% upon adoption of ASC326 on January 1. This resulted in a $3 credit loss reserve for held to maturity debt securities, with no provision expense during the three months ended March 31, 2023.