| INVESTMENT SECURITIES |
NOTE 4. INVESTMENT SECURITIES Investment securities have been classified according to management’s intent. The amortized cost of securities and their approximate fair values are as follows: | | | | | | | | | | | | | | | September 30, 2023 | (Dollars in thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | Securities available-for-sale | | | | | | | | | | | | | Mortgage-backed securities | | $ | 67,604 | | $ | - | | $ | (11,181) | | $ | 56,423 | U.S. Government and agency obligations | | | 10,985 | | | - | | | (949) | | | 10,036 | Municipal obligations | | | 6,014 | | | - | | | (665) | | | 5,349 | Total available-for-sale | | $ | 84,603 | | $ | - | | $ | (12,795) | | $ | 71,808 | Securities held-to-maturity | | | | | | | | | | | | | U.S. Government and agency obligations | | $ | 13,004 | | $ | - | | $ | (2,846) | | $ | 10,158 | Municipal obligations | | | 460 | | | - | | | (45) | | | 415 | Total held-to-maturity | | $ | 13,464 | | $ | - | | $ | (2,891) | | $ | 10,573 |
| | | | | | | | | | | | | | | December 31, 2022 | (Dollars in thousands) | | Amortized Cost | | Gross Unrealized Gains | | Gross Unrealized Losses | | Fair Value | Securities available-for-sale | | | | | | | | | | | | | Mortgage-backed securities | | $ | 74,044 | | $ | 15 | | $ | (9,892) | | $ | 64,167 | U.S. Government and agency obligations | | | 10,979 | | | - | | | (1,062) | | | 9,917 | Municipal obligations | | | 6,065 | | | 4 | | | (551) | | | 5,518 | Total available-for-sale | | $ | 91,088 | | $ | 19 | | $ | (11,505) | | $ | 79,602 | Securities held-to-maturity | | | | | | | | | | | | | U.S. Government and agency obligations | | $ | 13,006 | | $ | - | | $ | (2,718) | | $ | 10,288 | Municipal obligations | | | 469 | | | - | | | (33) | | | 436 | Total held-to-maturity | | $ | 13,475 | | $ | - | | $ | (2,751) | | $ | 10,724 |
There were no securities transferred between classifications during the nine months ended September 30, 2023 or 2022. Accrued interest receivable on the Company’s investment securities totaled $243,000 and $257,000 at September 30, 2023 and December 31, 2022, respectively. Investment securities with a carrying amount of approximately $43.6 million and $20.4 million, respectively, were pledged to secure public deposits as required or permitted by law at September 30, 2023 and December 31, 2022. At September 30, 2023, investment securities with a carrying value of $1.0 million were pledged to the Federal Reserve Bank as collateral for borrowings. The following is a summary of maturities of securities available-for-sale and held-to-maturity at September 30, 2023 and December 31, 2022: | | | | | | | | | | | | | | | September 30, 2023 | | | Available-for-Sale | | Held-to-Maturity | (Dollars in thousands) | | Amortized Cost | | Fair Value | | Amortized Cost | | Fair Value | Amounts maturing in: | | | | | | | | | | | | | One year or less | | $ | 1,000 | | $ | 993 | | $ | - | | $ | - | After one through five years | | | 12,984 | | | 12,154 | | | 2,336 | | | 2,014 | After five through ten years | | | 16,883 | | | 14,951 | | | 7,124 | | | 5,561 | After ten years | | | 53,736 | | | 43,710 | | | 4,004 | | | 2,998 | Total | | $ | 84,603 | | $ | 71,808 | | $ | 13,464 | | $ | 10,573 |
| | | | | | | | | | | | | | | December 31, 2022 | | | Available-for-Sale | | Held-to-Maturity | (Dollars in thousands) | | Amortized Cost | | Fair Value | | Amortized Cost | | Fair Value | Amounts maturing in: | | | | | | | | | | | | | One year or less | | $ | 1,000 | | $ | 962 | | $ | - | | $ | - | After one through five years | | | 11,496 | | | 10,634 | | | 2,343 | | | 2,031 | After five through ten years | | | 17,139 | | | 15,699 | | | 7,125 | | | 5,611 | After ten years | | | 61,453 | | | 52,307 | | | 4,007 | | | 3,082 | Total | | $ | 91,088 | | $ | 79,602 | | $ | 13,475 | | $ | 10,724 |
Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments, or call options. The expected maturities may differ from contractual maturities because of the exercise of call options and potential paydowns. Accordingly, actual maturities may differ from contractual maturities. Information pertaining to securities with gross unrealized losses at September 30, 2023 and December 31, 2022 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows: | | | | | | | | | | | | | | | | | | | | | September 30, 2023 | | | Less than 12 Months | | 12 Months or Greater | | Total | (Dollars in thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | Securities available-for-sale | | | | | | | | | | | | | | | | | | | Mortgage-backed securities | | $ | 1,534 | | $ | (47) | | $ | 54,889 | | $ | (11,134) | | $ | 56,423 | | $ | (11,181) | U.S. Government and agency obligations | | | - | | | - | | | 10,036 | | | (949) | | | 10,036 | | | (949) | Municipal obligations | | | 1,597 | | | (45) | | | 3,752 | | | (620) | | | 5,349 | | | (665) | Total available-for-sale | | $ | 3,131 | | $ | (92) | | $ | 68,677 | | $ | (12,703) | | $ | 71,808 | | $ | (12,795) | Securities held-to-maturity | | | | | | | | | | | | | | | | | | | U.S. Government and agency obligations | | $ | - | | $ | - | | $ | 10,158 | | $ | (2,846) | | $ | 10,158 | | $ | (2,846) | Municipal obligations | | | - | | | - | | | 415 | | | (45) | | | 415 | | | (45) | Total held-to-maturity | | $ | - | | $ | - | | $ | 10,573 | | $ | (2,891) | | $ | 10,573 | | $ | (2,891) | Total | | $ | 3,131 | | $ | (92) | | $ | 79,250 | | $ | (15,594) | | $ | 82,381 | | $ | (15,686) |
| | | | | | | | | | | | | | | | | | | | | December 31, 2022 | | | Less than 12 Months | | 12 Months or Greater | | Total | (Dollars in thousands) | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | | Fair Value | | Gross Unrealized Losses | Securities available-for-sale | | | | | | | | | | | | | | | | | | | Mortgage-backed securities | | $ | 9,759 | | $ | (546) | | $ | 53,402 | | $ | (9,346) | | $ | 63,161 | | $ | (9,892) | U.S. Government and agency obligations | | | - | | | - | | | 9,917 | | | (1,062) | | | 9,917 | | | (1,062) | Municipal obligations | | | 602 | | | (16) | | | 3,885 | | | (535) | | | 4,487 | | | (551) | Total available-for-sale | | $ | 10,361 | | $ | (562) | | $ | 67,204 | | $ | (10,943) | | $ | 77,565 | | $ | (11,505) | Securities held-to-maturity | | | | | | | | | | | | | | | | | | | U.S. Government and agency obligations | | $ | - | | $ | - | | $ | 10,288 | | $ | (2,718) | | $ | 10,288 | | $ | (2,718) | Municipal obligations | | | 120 | | | (6) | | | 316 | | | (27) | | | 436 | | | (33) | Total held-to-maturity | | $ | 120 | | $ | (6) | | $ | 10,604 | | $ | (2,745) | | $ | 10,724 | | $ | (2,751) | Total | | $ | 10,481 | | $ | (568) | | $ | 77,808 | | $ | (13,688) | | $ | 88,289 | | $ | (14,256) |
At September 30, 2023 and December 31, 2022, the Company held 98 and 96 securities, respectively, with an unrealized loss. The securities with unrealized losses consisted of government-sponsored mortgage-backed securities and debt obligations guaranteed by federal, state and local government entities. These unrealized losses relate principally to noncredit related factors, including changes in current interest rates for similar types of securities. Based on management’s evaluation of the securities portfolio, the Company has not established an allowance for credit losses for its available-for-sale or held-to-maturity securities at September 30, 2023. Under ASC 326, management evaluates available-for-sale securities in unrealized loss positions to determine if the decline in the fair value of each security below its amortized cost basis is due to credit-related factors or noncredit-related factors. Consideration is given to the extent to which that fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the issuer for a period sufficient to allow for any anticipated recovery in fair value. At September 30, 2023, management does not have the intent to sell any of the Company’s securities in an unrealized loss position and believes that it is more likely than not that the Company will not have to sell any such securities before recovery of cost. Prior to the adoption of ASC 326, management evaluated securities for other-than-temporary impairment and, as of December 31, 2022, no declines in fair value were deemed to be other-than temporary. See Note 2 for more information on the adoption of ASC 326.
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