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Securities

9 Months Ended

Sep. 30, 2023

Note 2: Securities

The amortized cost and fair values, together with gross unrealized gains and losses of securities are as follows:


					Gross			Gross			Allowance
					Unrealized			Unrealized			for Credit
		Amortized Cost			Gains			Losses			Losses			Fair Value

		(In thousands)
Available-for-sale Securities:
September 30, 2023:
U.S. government agencies		$	45,000		$	—		$	(1,355)		$	—		$	43,645
State and municipal obligations			171,346			6			(14,353)			—			156,999
Subordinated notes			29,043			—			(5,008)			—			24,035
Total debt securities		$	245,389		$	6		$	(20,716)		$	—		$	224,679


					Gross			Gross
					Unrealized			Unrealized
		Amortized Cost			Gains			Losses			Fair Value

		(In thousands)
Available-for-sale Securities:
December 31, 2022:
U.S. government agencies		$	45,000		$	—		$	(968)		$	44,032
State and municipal obligations			152,447			459			(7,408)			145,498
Subordinated note			31,160			—			(3,066)			28,094
Total debt securities		$	228,607		$	459		$	(11,442)		$	217,624

The amortized cost and fair value of available-for-sale securities at September 30, 2023, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


		Amortized			Fair
		Cost			Value

		(In thousands)
Under 1 year		$	10,000		$	9,841
One to five years			35,611			34,394
Five to ten years			31,358			26,065
Over ten years			168,420			154,379
Totals		$	245,389		$	224,679

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $68.1 million and $68.7 million at September 30, 2023 and December 31, 2022, respectively.

Certain investments in debt securities are reported in the consolidated financial statements at an amount less than their historical cost. The total fair value of these investments at September 30, 2023 was $222.7 million, which represented 99% of the Company’s available-for-sale investment portfolio. The total fair value of these investments at December 31, 2022 was $166.1 million, which represented less than 76% of the Company’s available-for-sale.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary and are a result of an increase in longer term interest rates.

The following tables show the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2023:


		September 30, 2023
		Less than 12 Months						12 Months or More						Total
Description of					Unrealized						Unrealized						Unrealized
Securities		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses

		(In thousands)
U.S. Government agencies		$	—		$	—		$	43,645		$	(1,355)		$	43,645		$	(1,355)
State and municipal obligations			107,520			(4,831)			47,455			(9,522)			154,975			(14,353)
Subordinated notes			3,710			(822)			20,325			(4,186)			24,035			(5,008)
Total temporarily impaired securities		$	111,230		$	(5,653)		$	111,425		$	(15,063)		$	222,655		$	(20,716)


		December 31, 2022
		Less than 12 Months						12 Months or More						Total
Description of					Unrealized						Unrealized						Unrealized
Securities		Fair Value			Losses			Fair Value			Losses			Fair Value			Losses

		(In thousands)
US government agencies		$	44,032		$	(968)		$	—		$	—		$	44,032		$	(968)
State and municipal obligations			100,599			(7,408)			—			—			100,599			(7,408)
Subordinated notes			11,185			(1,565)			10,300			(1,501)			21,485			(3,066)
Total temporarily impaired securities		$	155,816		$	(9,941)		$	10,300		$	(1,501)		$	166,116		$	(11,442)

The unrealized losses on the Company’s 125 investments in available for sale securities were caused primarily by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be indicative of credit losses at September 30, 2023.

There were no sales of investment securities for the three and nine months ended September 30, 2023 and 2022.