Securities Available for Sale

12 Months Ended

Dec. 31, 2022

Investments, Debt and Equity Securities [Abstract]

NOTE 3 – SECURITIES AVAILABLE FOR SALE

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at December 31, 2022 and 2021 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss):


				Gross		Gross
		Amortized		Unrealized		Unrealized
	2022	Cost		Gains		Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities		$	149,712	$	0	$	(21,616	)	$	128,096
State and political subdivisions			651,705		266		(121,891	)		530,080
Corporate bonds			4,181		0		(302	)		3,879
Mortgage-backed securities - residential			672,784		12		(117,654	)		555,142
Collateralized mortgage obligations			52,291		0		(4,937	)		47,354
Small Business Administration			3,839		0		(365	)		3,474
Totals		$	1,534,512	$	278	$	(266,765	)	$	1,268,025


				Gross		Gross
		Amortized		Unrealized		Unrealized
	2021	Cost		Gains		Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities		$	93,137	$	32	$	(2,338	)	$	90,831
State and political subdivisions			636,724		23,296		(1,205	)		658,815
Corporate bonds			4,009		50		(29	)		4,030
Mortgage-backed securities - residential			663,405		1,875		(10,094	)		655,186
Collateralized mortgage obligations			13,303		153		(71	)		13,385
Small Business Administration			5,381		49		0			5,430
Totals		$	1,415,959	$	25,455	$	(13,737	)	$	1,427,677

The proceeds from sales of available-for-sale securities and the associated gains and losses were as follows:


		2022			2021			2020
Proceeds	$	37,190		$	35,175		$	60,341
Gross gains		6			863			394
Gross losses		(421	)		(25	)		(824	)

The tax provision (benefit) related to these net realized gains (losses) was $(87) thousand, $176 thousand, and $(90) thousand respectively.

The amortized cost and fair value of the debt securities portfolio are shown by expected maturity. Expected maturities may differ from contractual maturities if issuers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


Available for sale	December 31, 2022
	Amortized
Maturity	Cost		Fair Value
Within one year	$	325	$	321
One to five years		27,624		25,346
Five to ten years		156,929		135,626
Beyond ten years		620,720		500,762
Mortgage-backed Securities, Collateralized Mortgage Obligations and Small Business Administration		728,914		605,970
Totals	$	1,534,512	$	1,268,025

Securities with a carrying amount of $479 million at December 31, 2022 and $491 million at December 31, 2021 were pledged to secure public deposits and repurchase agreements. Farmers Trust had securities, with a carrying amount of $100 thousand, at year-end 2022 and $102 thousand at year-end 2021, pledged to qualify as a fiduciary in the State of Ohio.

In each year, there were no holdings of any issuer that exceeded 10% of stockholders’ equity, except for the U.S. Government, its agencies and its sponsored entities, which are fully insured.

The following table summarizes the investment securities with unrealized losses at December 31, 2022 and 2021 aggregated by major security type and length of time in a continuous unrealized loss position.


2022
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and U.S. government
sponsored entities	$	52,311	$	(5,835	)	$	75,685	$	(15,781	)	$	127,996	$	(21,616	)
State and political subdivisions		306,709		(56,650	)		191,584		(65,241	)		498,293		(121,891	)
Corporate bonds		2,893		(122	)		986		(180	)		3,879		(302	)
Mortgage-backed securities - residential		101,476		(13,545	)		453,233		(104,109	)		554,709		(117,654	)
Collateralized mortgage obligations		42,140		(4,137	)		5,214		(800	)		47,354		(4,937	)
Small Business Administration		1,295		(122	)		2,179		(243	)		3,474		(365	)
Total temporarily impaired	$	506,824	$	(80,411	)	$	728,881	$	(186,354	)	$	1,235,705	$	(266,765	)


2021
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and U.S. government
sponsored entities	$	81,236	$	(1,960	)	$	8,271	$	(378	)	$	89,507	$	(2,338	)
State and political subdivisions		103,651		(1,020	)		10,020		(185	)		113,671		(1,205	)
Corporate bonds		418		(2	)		715		(27	)		1,133		(29	)
Mortgage-backed securities - residential		525,792		(7,872	)		55,569		(2,222	)		581,361		(10,094	)
Collateralized mortgage obligations		7,270		(71	)		0		0			7,270		(71	)
Total temporarily impaired	$	718,367	$	(10,925	)	$	74,575	$	(2,812	)	$	792,942	$	(13,737	)

The Company has adopted ASU 2016-13 that makes improvements to the accounting for credit losses on securities available for sale. The concept of other than-temporarily impaired securities has been replaced with the allowance for credit losses. Securities available for sale are evaluated on an individual level and pooling of securities is no longer an option. During this evaluation process, management considers the extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer, and the intent and ability of the Company to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

If the Company determines that a credit loss exists, the credit portion of the allowance will be measured using a discounted cash flow analysis using the effective interest rate as of the security’s purchase date. As of December 31, 2022, the Company’s security portfolio consisted of 847 securities, 803 of which were in an unrealized loss position. The majority of unrealized losses on the Company’s securities are related to its holdings of mortgage-backed securities and state and political subdivisions. The Company does not consider its available for sale ("AFS") securities with unrealized losses to be attributable to credit-related factors, as the unrealized losses have occurred as a result of changes in noncredit related factors such as changes in interest rates, market spreads and market conditions subsequent to purchase, not credit deterioration. In addtion, management has both the ability and intent to hold the securities for a period of time sufficient to allow for the recovery in fair value. As of December 31, 2022 the Company has not recorded an allowance for credit losses on AFS securities.

Equity Securities

The Company also holds equity securities which include $15.0 million in Small Business Investment Company (“SBIC”) partnership investments as well as $196 thousand in local and regional bank holdings and other miscellaneous equity funds at December 31, 2022. At December 31, 2021 the Company held $14.7 million in SBIC investments and $228 thousand in local and regional bank holdings and other miscellaneous equity funds. Gains were recognized in income in 2022 and 2021 in compliance with ASU 2016-01, which requires all equity securities to be measured at their fair value with changes in fair value being recognized through the statements of income.