Debt Securities

9 Months Ended

Sep. 30, 2023

Note 5: Debt Securities

The following table summarizes the amortized cost and fair value of debt securities available-for-sale at September 30, 2023 and December 31, 2022 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss):

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale as of September 30, 2023
U.S. Federal agencies	$	146	$	-	$	(6	)	$	140
Mortgage-backed securities⁽¹⁾⁽²⁾		39,611		-		(5,531	)		34,080
State and political subdivisions		27,707		-		(2,483	)		25,224
U.S. Treasuries		106,032		-		(2,594	)		103,438
Corporate debt securities		5,500		-		(1,244	)		4,256
Total available-for-sale		178,996		-		(11,858	)		167,138
Total debt securities		178,996		-		(11,858	)		167,138

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale as of December 31, 2022
U.S. Federal agencies	$	1,292	$	-	$	(150	)	$	1,142
Mortgage-backed securities⁽¹⁾⁽²⁾		42,953		-		(4,879	)		38,074
State and political subdivisions		30,632		-		(2,276	)		28,356
U.S. Treasuries		104,940		-		(4,280	)		100,660
Corporate debt securities		5,500		-		(567	)		4,933
Total available-for-sale		185,317		-		(12,152	)		173,165
Total debt securities		185,317		-		(12,152	)		173,165

⁽¹⁾ All of our mortgage-backed securities and collateralized mortgage obligations are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored entities.

⁽²⁾Included in mortgage-backed securities is $25.37 million and $27.90 million of residential mortgage-backed securities and $14.25 million and $15.05 million of commercial mortgage-backed securities as of September 30, 2023 and December 31, 2022, respectively

The amortized cost and estimated fair value of investment securities at September 30, 2023 and December 31, 2022, by contractual maturity, are shown below. The expected life of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans with or without call or prepayment penalties.

(in thousands)	Amortized Cost		Fair Value
Available-for-sale as of September 30, 2023
Due in one year or less	$	104,150	$	102,416
Due after one year through five years		16,153		14,875
Due after five years through ten years		18,920		15,638
Due after ten years		162		129
Mortgage-backed securities		39,611		34,080
Total available-for-sale		178,996		167,138

(in thousands)	Amortized Cost		Fair Value
Available-for-sale as of December 31, 2022
Due in one year or less	$	2,133	$	2,115
Due after one year through five years		118,108		113,415
Due after five years through ten years		21,495		19,030
Due after ten years		628		531
Mortgage-backed securities		42,953		38,074
Total available-for-sale		185,317		173,165

There was one holding of securities of issuers in an amount greater than 10% of stockholders equity at September 30, 2023, a U.S. Treasury note with a fair value of $98.35 million.

The following table presents a summary of realized gains and losses from the sale, prepayment and call of debt securities:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
(in thousands)
Proceeds from sales, maturities, prepayments and calls	$	1,831		$	9,024		$	6,029		$	28,852
Gross realized gains on sales, prepayments and calls		-			-			-			10
Gross realized losses on sales, prepayments and calls		(7	)		(10	)		(15	)		(137	)
Total realized (losses), net	$	(7	)	$	(10	)	$	(15	)	$	(127	)

The following table details book value of pledged securities as of September 30, 2023 and December 31, 2022:

(in thousands)		September 30, 2023				December 31, 2022
Book value of pledged securities		$	21,322			$	85,280

The following table details gross unrealized losses and fair values of investment securities aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at September 30, 2023 and December 31, 2022. As of September 30, 2023, the Company had the ability and intent to hold the debt securities classified as available-for-sale for a period of time sufficient for a recovery of cost. The unrealized losses are due to increases in market interest rates over the yields available at the time the underlying debt securities were purchased or acquired. The fair value of those debt securities having unrealized losses is expected to recover as the securities approach their maturity date or repricing date, or if market yields for such investments decline. Management has no intent or requirement to sell before the recovery of the unrealized loss; therefore, no impairment loss was realized in the Company’s consolidated statements of comprehensive income.

	Less than Twelve Months					Twelve Months or Longer					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
(in thousands)
Available-for-sale as of September 30, 2023
U.S. Federal agencies	$	-	$	-		$	140	$	(6	)	$	140	$	(6	)
Mortgage-backed securities		-		-			34,080		(5,531	)		34,080		(5,531	)
State and political subdivisions⁽¹⁾		753		(7	)		24,471		(2,476	)		25,224		(2,483	)
U.S. Treasuries		-		-			103,438		(2,594	)		103,438		(2,594	)
Corporate debt securities		805		(195	)		3,451		(1,049	)		4,256		(1,244	)
Total available-for-sale	$	1,558	$	(202	)	$	165,580	$	(11,656	)	$	167,138	$	(11,858	)

	Less than Twelve Months					Twelve Months or Longer				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
(in thousands)
Available-for-sale as of December 31, 2022
U.S. Federal agencies	$	1,142	$	(150	)	$	-	$	-	$	1,142	$	(150	)
Mortgage-backed securities		38,074		(4,879	)		-		-		38,074		(4,879	)
State and political subdivisions		28,356		(2,276	)		-		-		28,356		(2,276	)
U.S. Treasuries		100,660		(4,280	)		-		-		100,660		(4,280	)
Corporate debt securities		4,933		(567	)		-		-		4,933		(567	)
Total available-for-sale	$	173,165	$	(12,152	)	$	-	$	-	$	173,165	$	(12,152	)

⁽¹⁾ Of our state and political subdivision securities, $22.49 million are rated BBB+ or better and $2.74 million are not rated.