Securities

9 Months Ended

Sep. 30, 2023

Note 6 – Securities

The following tables summarize the Bank’s holdings for both securities held-to-maturity and securities available-for-sale as of September 30, 2023 and December 31, 2022 (amounts in thousands):


	September 30, 2023
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
Held-to-maturity
U.S. agency obligations	$	3,626	$	—	$	(598)	$	3,028

Available-for-sale
U.S. Treasuries	$	4,967	$	—	$	(83)	$	4,884
U.S. agency obligations		69,591		—		(10,063)		59,528
Mortgage-backed securities		78,702		—		(13,417)		65,285
Municipals		50,884		—		(13,104)		37,780
Corporates		15,527		—		(1,027)		14,500

	$	219,671	$	—	$	(37,694)	$	181,977



	December 31, 2022
	Amortized		Gross Unrealized				Fair
	Cost		Gains		Losses		Value
Held-to-maturity
U.S. agency obligations	$	3,639	$	—	$	(504)	$	3,135

Available-for-sale
U.S. Treasuries	$	4,912	$	—	$	(171)	$	4,741
U.S. agency obligations		68,833		—		(9,560)		59,273
Mortgage-backed securities		78,955		—		(11,113)		67,842
Municipals		49,951		—		(12,096)		37,855
Corporates		17,037		—		(961)		16,076

	$	219,688	$	—	$	(33,901)	$	185,787

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Note 6 – Securities (continued)

The following tables summarize the fair value of securities available for sale as of September 30, 2023 and securities available for sale and held-to- maturity as of December 31, 2022 and the corresponding amounts of unrealized losses. Management uses the valuation as of month-end in determining when securities are in an unrealized loss position (amounts in thousands):


September 30, 2023	Less than 12 months				More than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Available-for-sale
U.S. Treasuries	$	—	$	—	$	4,884	$	83	$	4,884	$	83
U.S. agency obligations		996		1		58,532		10,062		59,528		10,063
Mortgage-backed securities		5,154		120		60,131		13,297		65,285		13,417
Municipals		1,638		183		36,142		12,921		37,780		13,104
Corporates		—		—		6,500		1,027		6,500		1,027

Total	$	7,788	$	304	$	166,189	$	37,390	$	173,977	$	37,694



December 31, 2022	Less than 12 months				More than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Held-to-maturity
U.S. agency obligations	$	3,135	$	504	$	—	$	—	$	3,135	$	504

Available-for-sale
U.S. Treasuries		4,741		171		—		—		4,741		171
U.S. agency obligations		27,708		2,838		31,565		6,722		59,273		9,560
Mortgage-backed securities		42,024		5,656		25,818		5,457		67,842		11,113
Municipals		10,847		2,245		27,008		9,851		37,855		12,096
Corporates		6,568		469		1,508		492		8,076		961

Total temporarily impaired securities	$	95,023	$	11,883	$	85,899	$	22,522	$	180,922	$	34,405

As of September 30, 2023, the Bank owned 121 securities in an unrealized loss position. Of the securities, 51 were S&P rated AAA, 63 were rated AA, five were rated A, one was rated BBB, and one was non-rated. As of September 30, 2023, 53 of these securities were municipal issues, 60 were backed by the U.S. government, and eight were issues of publicly traded domestic corporations. The Company monitors its municipal and corporate securities by periodically reviewing the issuer’s cash-flow and revenue streams, as well as other economic factors that could affect the issuer’s ability to service and/or repay the debt.

The Company has evaluated available for sale securities in an unrealized loss position for credit related impairment at September 30, 2023 and concluded no impairment existed based on a combination of factors, which included: (1) the securities are of high credit quality (2) unrealized losses are primarily the result of market volatility and increases in market interest rates, (3) the contractual terms of the investments do not permit the issuers to settle the securities at a price less than the par value of each investment, (4) issuers continue to make timely principal and interest payments, and (5) the Company does not intend to sell any of the investments before recovery of its amortized cost basis, nor is it likely that management will be required to sell the securities. As such, there was not an allowance for credit losses on available-for-sale securities at September 30, 2023.

The Company’s held-to-maturity portfolio is covered by the explicit or implied guarantee of the United States government or one of its agencies and rated investment grade or higher. As a result, the Company did not have an allowance for credit losses on held-to-maturity securities as of September 30, 2023 or upon adoption of ASC 326.

All held-to-maturity and available for sale securities were current with no securities past due or on nonaccrual as of September 30, 2023.

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Note 6 – Securities (continued)

There were no sales of available-for-sale securities during the three and nine months ended September 30, 2023 and 2022.

The amortized costs and fair values of securities at September 30, 2023, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	September 30, 2023
	Amortized
	Costs	Fair Value
Held-to-maturity:
Due in one year or less	$ -	$ -
Due after one year through five years	-	-
Due after five years through ten years	2,422	2,079
Due after ten years	1,204	949

Total securities Held-to-maturity	$ 3,626	$ 3,028


	Amortized
	Costs	Fair Value
Available-for-sale:
Due in one year or less	$ 5,963	$ 5,879
Due after one year through five years	43,680	39,461
Due after five years through ten years	66,288	56,046
Due after ten years	103,740	80,591

Total securities Available-for-sale	$ 219,671	$ 181,977