On January 1, 2023, the Company adopted ASC 326, which made changes to accounting for AFS 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 prior to maturity. In addition, ASC 326 requires an ACL to be recorded on HTM debt securities measured at amortized cost. All securities information presented as of December 31, 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. For further discussion on the Company’s accounting policies and policy elections related to the accounting standard update refer to Note 1.

The ACL for HTM securities was initially determined to be immaterial as of the date of adoption of ASC 326. Upon re-estimation in the fourth quarter of 2023, a provision of $(32) thousand was recorded based on the results of our evaluation at December 31, 2023. A provision for credit losses of $94 thousand was recorded for the twelve months ended December 31, 2023.


(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available-for-sale securities:
December 31, 2023
U.S. Treasury and government agencies	$	23,472	$	5	$	3,002	$	20,475
Mortgage-backed securities	91,280		5		7,258		84,027
Other debt securities	6,080		59		120		6,019
Total	$	120,832	$	69	$	10,380	$	110,521

December 31, 2022
U.S. Treasury and government agencies	$	21,798	$	5	$	3,625	$	18,178
Mortgage-backed securities	72,183		2		8,666		63,519
Other debt securities	2,018		—		128		1,890
Total	$	95,999	$	7	$	12,419	$	83,587

No AFS securities were sold from the Company’s legacy securities’ portfolios during 2023 and 2022. The Company sold virtually all of the AFS securities portfolio acquired from TCFC immediately after the legal merger with the proceeds of $434.2 million, and recognized gross losses of $2.2 million from the sale of securities.


(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Held-to-maturity securities:
December 31, 2023
U.S. Treasury and government agencies	$	143,442	$	—	$	10,377	$	133,065
Mortgage-backed securities	357,870		—		43,864		314,006
Obligations of states and political subdivisions	1,470		57		19		1,508
Other debt securities	10,500		—		1,249		9,251
Total	$	513,282	$	57	$	55,509	$	457,830

December 31, 2022
U.S. Treasury and government agencies	$	148,097	$	—	$	13,601	$	134,496
Mortgage-backed securities	398,884		—		50,464		348,420
Obligations of states and political subdivisions	1,474		35		28		1,481
Other debt securities	11,000		—		770		10,230
Total	$	559,455	$	35	$	64,863	$	494,627

Equity securities with an aggregate fair value of $5.7 million at December 31, 2023 and $1.2 million at December 31, 2022 are presented separately on the balance sheet. The fair value adjustment recorded through earnings totaled $54 thousand for 2023 and $(0.2) million for 2022, respectively.

The Company monitors the credit quality of HTM securities through credit ratings provided by Standard & Poor’s Rating Services and Moody’s Investor Services. Credit ratings express opinions about the credit quality of a security, and are updated at each quarter end. Investment grade securities are rated BBB- or higher by S&P and Baa3 or higher by Moody’s and are generally considered by the rating agencies and market participants to be of low credit risk. Conversely, securities rated below investment grade, which are labeled as speculative grade by the rating agencies, are considered to have distinctively higher credit risk than investment grade securities. There were no speculative grade HTM securities at December 31, 2023 or December 31, 2022. HTM securities that are not rated are agency mortgage-backed securities sponsored by U.S. government agencies, as well as direct obligations of the agencies, with the remainder being sub-debt of other banks.


	December 31, 2023
	Investment Grade
(Dollars in thousands)	Aaa		Aa1		A3		Baa1		Baa2		NR		Total
U.S. Treasury and government agencies	$	140,761	$	—	$	—	$	—	$	—	$	2,681	$	143,442
Mortgage-backed securities	357,870		—		—		—		—		—		357,870
Obligations of states and political subdivisions	—		1,470		—		—		—		—		1,470
Other debt securities	—		—		4,000		4,000		500		2,000		10,500
Total held-to-maturity securities	$	498,631	$	1,470	$	4,000	$	4,000	$	500	$	4,681	$	513,282


	Less than 12 Months				More than 12 Months				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2023
Available-for-sale securities:
U.S. Treasury and government agencies	$	74	$	—	$	17,750	$	3,002	$	17,824	$	3,002
Mortgage-backed securities	24,405		150		52,864		7,108		77,269		7,258
Other debt securities	—		—		1,890		120		1,890		120
Total	$	24,479	$	150	$	72,504	$	10,230	$	96,983	$	10,380


	Less than 12 Months				More than 12 Months				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2022
Available-for-sale securities:
U.S. Treasury and government agencies	$	1,165	$	4	$	16,585	$	3,588	$	17,750	$	3,592
Mortgage-backed securities	29,125		2,409		34,167		6,290		63,292		8,699
Other debt securities	$	1,890	$	128	$	—	$	—	$	1,890	$	128
Total	$	32,180	$	2,541	$	50,752	$	9,878	$	82,932	$	12,419

Held-to-maturity securities:
U.S. Treasury and government agencies	$	67,332	$	2,786	$	67,163	$	10,815	$	134,495	$	13,601
Mortgage-backed securities	148,771		9,402		199,649		41,062		348,420		50,464
Obligations of states and political subdivisions	780		28		—		—		780		28
Other debt securities	8,091		409		2,139		361		10,230		770
Total	$	224,974	$	12,625	$	268,951	$	52,238	$	493,925	$	64,863

There were 115 AFS debt securities with a fair value below the amortized cost basis, with unrealized losses totaling $10.4 million as of December 31, 2023. The Company concluded that a credit loss does not exist in its AFS securities portfolio as of December 31, 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 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-back securities are 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.

All of the securities with unrealized losses in the portfolio have modest duration risk, low credit risk, and minimal losses when compared to total amortized cost. The unrealized losses on debt securities that exist are the result of market changes in interest rates since original purchase and are not related to credit concerns. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost bases, which may be at maturity for debt securities, the Company considers the unrealized losses to be temporary. There were a 115 available-for-sale securities and a 185 held to maturity securities in an unrealized loss position at December 31, 2023. There were 192 available-for-sale securities and a 116 held to maturity securities in an unrealized loss position at December 31, 2022.


	Available for sale				Held to maturity
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	2,447	$	2,449	$	7,000	$	6,927
Due after one year through five years	16,491		15,439		119,768		113,227
Due after five years through ten years	29,257		26,436		50,538		45,833
Due after ten years	72,637		66,197		335,976		291,843
Total	$	120,832	$	110,521	$	513,282	$	457,830

The Company has securities which have been pledged as collateral for obligations to federal, state, and local government agencies, and other purpose as required or permitted by law, or sold under agreements to repurchase. At December 31, 2023, the aggregate carrying value of pledged AFS and HTM pledged securities was $54.5 million and $185.9 million, respectively. The comparable amounts for December 31, 2022 were $72.1 million and $19.2 million, respectively.

The following table sets forth the amortized cost and estimated fair values of securities which have been pledged as collateral for obligations to federal, state and local government agencies, and other purposes as required or permitted by law, or sold under agreements to repurchase at December 31, 2023 and 2022.