Investment Securities

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

Details of investment securities available-for-sale and held-to-maturity as of September 30, 2023 and December 31, 2022 were as follows:


	Available-for-Sale
	September 30, 2023
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	41,071	$	—	$	(4,071	)	$	37,000
Commercial		10,020		1		(521	)		9,500
Obligations of U.S. government-sponsored agencies		11,851		—		(919	)		10,932
Obligations of states and political subdivisions		1,633		—		(90	)		1,543
Corporate notes		17,772		—		(3,091	)		14,681
U.S. Treasury securities		56,988		—		(4,093	)		52,895
Total	$	139,335	$	1	$	(12,785	)	$	126,551


	Held-to-Maturity
	September 30, 2023
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	704	$	—	$	(30	)	$	674
Obligations of U.S. government-sponsored agencies		502		—		(49	)		453
Obligations of states and political subdivisions		66		—		(10	)		56
Total	$	1,272	$	—	$	(89	)	$	1,183


	Available-for-Sale
	December 31, 2022
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	47,659	$	2	$	(3,704	)	$	43,957
Commercial		12,169		4		(480	)		11,693
Obligations of U.S. government-sponsored agencies		5,116		—		(846	)		4,270
Obligations of states and political subdivisions		2,166		—		(94	)		2,072
Corporate notes		17,817		2		(1,898	)		15,921
U.S. Treasury securities		56,956		—		(4,074	)		52,882
Total	$	141,883	$	8	$	(11,096	)	$	130,795


	Held-to-Maturity
	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,167	$	—	$	(41	)	$	1,126
Obligations of U.S. government-sponsored agencies		610		—		(40	)		570
Obligations of states and political subdivisions		85		—		(12	)		73
Total	$	1,862	$	—	$	(93	)	$	1,769

The scheduled maturities of investment securities available-for-sale and held-to-maturity as of September 30, 2023 are presented in the following table:


	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(Dollars in Thousands)
Maturing within one year	$	12,988	$	12,783	$	—	$	—
Maturing after one to five years		53,676		49,249		324		308
Maturing after five to ten years		60,121		52,780		738		686
Maturing after ten years		12,550		11,739		210		189
Total	$	139,335	$	126,551	$	1,272	$	1,183

For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on the weighted-average contractual maturities of underlying collateral. The mortgage-backed securities generally mature earlier than their weighted-average contractual maturities because of principal prepayments.

The following tables reflect gross unrealized losses and fair value for securities for which an allowance for credit losses has not been recorded, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of September 30, 2023.


	Available-for-Sale
	September 30, 2023
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	105	$	(5	)	$	36,860	$	(4,066	)
Commercial		1,532		(13	)		7,934		(508	)
Obligations of U.S. government-sponsored agencies		—		—			4,176		(919	)
Obligations of states and political subdivisions		—		—			1,543		(90	)
Corporate notes		802		(198	)		13,879		(2,893	)
U.S. Treasury securities		—		—			52,895		(4,093	)
Total	$	2,439	$	(216	)	$	117,287	$	(12,569	)


	Held-to-Maturity
	September 30, 2023
	Less than 12 Months				12 Months or More
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	—	$	—	$	674	$	(30	)
Obligations of U.S. government-sponsored agencies		—		—		453		(49	)
Obligations of states and political subdivisions		—		—		56		(10	)
Total	$	—	$	—	$	1,183	$	(89	)

The following tables reflect 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, as of December 31, 2022. No determination was made concerning the need for an allowance for credit losses as this table reflects information prior to the adoption of ASC 326.


	Available-for-Sale
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Residential	$	19,876	$	(952	)	$	23,903	$	(2,752	)
Commercial		9,720		(357	)		1,247		(123	)
Obligations of U.S. government-sponsored agencies		—		—			4,270		(846	)
Obligations of states and political subdivisions		1,559		(41	)		513		(53	)
Corporate notes		6,845		(898	)		8,075		(1,000	)
U.S. Treasury securities		21,240		(698	)		31,642		(3,376	)
Total	$	59,240	$	(2,946	)	$	69,650	$	(8,150	)


	Held-to-Maturity
	December 31, 2022
	Less than 12 Months					12 Months or More
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in Thousands)
Mortgage-backed securities:
Commercial	$	1,126	$	(41	)	$	—	$	—
Obligations of U.S. government-sponsored agencies		214		(7	)		356		(33	)
Obligations of states and political subdivisions		73		(12	)		—		—
Total	$	1,413	$	(60	)	$	356	$	(33	)

Available-for-Sale Considerations

For any securities classified as available-for-sale that are in an unrealized loss position as of the balance sheet date, the Company assesses whether or not it intends to sell the security, or more-likely-than-not will be required to sell the security, before recovery of its amortized cost basis which would require a write-down to fair value through net income.

As of September 30, 2023, 109 available-for-sale debt securities had been in a loss position for more than 12 months, and six available-for-sale debt securities had been in a loss position for less than 12 months. As of December 31, 2022, 37 available-for-sale debt securities had been in a loss position for more than 12 months, and 75 available-for-sale debt securities had been in a loss position for less than 12 months. The increase in the number of debt securities in a loss position for greater than 12 months was due to the sustained higher interest rate environment during the nine months ended September 30, 2023. As of September 30, 2023, the Company had the current intent and ability to retain its investments for a period of time that management believes to be sufficient to allow for any anticipated recovery of fair value. As of September 30, 2023, the losses for all available-for-sale securities were considered to be a direct result of the effect that the prevailing interest rate environment had on the value of debt securities and were not related to the creditworthiness of the issuers. Accordingly, no allowance for credit losses was considered necessary related to available-for-sale securities as of September 30, 2023.

Held-to-Maturity Considerations

Effective January 1, 2023, the Company adopted the CECL accounting model to evaluate credit losses in the held-to-maturity investment portfolio. Each quarter, management evaluates the portfolio on a collective basis by major security type to determine whether an allowance for credit losses is needed. Qualitative factors are used in the Company’s credit loss assessments, including current and forecasted economic conditions, the characteristics of the debt issuer, and the historic ability of the issuer to make contractual principal and interest payments. Based on these evaluations, no allowance for credit losses was recorded by the Company for the held-to-maturity investment portfolio upon adoption of the CECL accounting model or as of September 30, 2023.

Pledged Securities

Investment securities with a carrying value of $42.3 million and $54.7 million as of September 30, 2023 and December 31, 2022, respectively, were pledged to secure public deposits and for other purposes.