SECURITIES

12 Months Ended

Dec. 31, 2022

SECURITIES

SECURITIES

NOTE 2 — SECURITIES

The amortized cost, related estimated fair value, and unrealized gains and losses for debt securities classified as “available-for-sale” were as follows at December 31, 2022 and 2021:

	Debt Securities Available-for-Sale
(Dollars in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2022:	Cost		Gains		Losses		Value
U.S. Treasury securities	$	7,853	$	—	$	(1,052)	$	6,801
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgage-backed		146,707		—		(15,032)		131,675
Other		10,992		233		(45)		11,180
Other mortgage backed securities		36,767		—		(3,079)		33,688
Obligations of state and political subdivisions		125,176		266		(14,753)		110,689
Asset-backed securities		37,526		—		(1,108)		36,418
Corporate debt securities		45,838		183		(3,028)		42,993
Total	$	410,859	$	682	$	(38,097)	$	373,444

	Debt Securities Available-for-Sale
(Dollars in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2021:	Cost		Gains		Losses		Value
U.S. Treasury securities	$	7,825	$	—	$	(96)	$	7,729
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgage-backed		116,039		560		(1,688)		114,911
Other		7,636		5		(65)		7,576
Other mortgage backed securities		39,881		99		(430)		39,550
Obligations of state and political subdivisions		175,021		11,709		(554)		186,176
Asset-backed securities		36,555		143		(156)		36,542
Corporate debt securities		45,354		448		(370)		45,432
Total	$	428,311	$	12,964	$	(3,359)	$	437,916

Debt securities available-for-sale with an aggregate fair value of $315,836,000 at December 31, 2022 and $401,861,000 at December 31, 2021, were pledged to secure public funds, trust funds, securities sold under agreements to repurchase and the Federal Discount Window aggregating $241,385,000 at December 31, 2022 and $318,074,000 at December 31, 2021.

The amortized cost and fair value of securities, by contractual maturity, are shown below at December 31, 2022. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollars in thousands)	Available-for-Sale
	Amortized
	Cost		Fair Value
1 year or less	$	6,971	$	6,994
Over 1 year through 5 years		29,664		28,469
Over 5 years through 10 years		74,848		68,609
Over 10 years		115,902		104,009
Mortgage-backed securities		183,474		165,363
Total	$	410,859	$	373,444

At December 31, 2022, the Corporation had holdings of securities from one issuer in excess of ten percent of consolidated stockholders’ equity, other than the U.S. Government and U.S. Government Agencies and Corporations. Holdings in Sallie Mae Bank securities had a fair value of $17,362,000 as of December 31, 2022. There were no aggregate holdings of securities with a single issuer (excluding the U.S. Government and U.S. Government Agencies and Corporations) which exceeded ten percent of consolidated stockholders’ equity at December 31, 2021. The quality rating of the obligations of state and political subdivisions are generally investment grade, as rated by Moody’s, Standard and Poor’s or Fitch. The typical exceptions are local issues which are not rated, but are secured by the full faith and credit obligations of the communities that issued these securities.

Proceeds from sales of investments in debt securities available-for-sale during 2022 and 2021 were $58,675,000 and $0, respectively. Gross gains realized on these sales were $221,000 and $0, respectively. Gross losses on these sales were $974,000 and $0, respectively. There were no impairment losses realized on debt securities available-for-sale during 2022 or 2021.

At December 31, 2022 and 2021, the Corporation had $1,699,000 and $1,962,000, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during 2022 and 2021:

(Dollars in thousands)
	December 31, 2022		December 31, 2021
Net (losses) and gains from market value fluctuations recognized during the period on equity securities	$	(93)	$	323
Less: Net gains recognized during the period on equity securities sold during the period		27		4
Net (losses) and gains recognized during the reporting period on equity securities still held at the reporting date	$	(120)	$	319

The Corporation and its investment advisors monitor the entire portfolio at least quarterly with particular attention given to securities in a continuous loss position of at least ten percent for over twelve months. Based on the factors described above, management did not consider any securities to be other-than-temporarily impaired at December 31, 2022 and 2021.

The summary below shows the gross unrealized losses and fair value of the Corporation’s debt securities, aggregated by investment category, of which individual securities have been in a continuous unrealized loss position for less than 12 months or 12 months or more as of December 31, 2022 and 2021:

December 31, 2022

(Dollars in thousands)	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale:	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury securities	$	—	$	—	$	6,801	$	(1,052)	$	6,801	$	(1,052)
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgage-backed		61,067		(2,184)		65,174		(12,848)		126,241		(15,032)
Other		1,589		(2)		3,168		(43)		4,757		(45)
Other mortgage-backed debt securities		16,167		(962)		17,521		(2,117)		33,688		(3,079)
Obligations of state and political subdivisions		56,565		(5,881)		35,704		(8,872)		92,269		(14,753)
Asset-backed securities		24,136		(405)		12,282		(703)		36,418		(1,108)
Corporate debt securities		15,827		(1,073)		18,345		(1,955)		34,172		(3,028)
Total	$	175,351	$	(10,507)	$	158,995	$	(27,590)	$	334,346	$	(38,097)

December 31, 2021

(Dollars in thousands)	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale:	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury securities	$	7,729	$	(96)	$	—	$	—	$	7,729	$	(96)
Obligations of U.S. Government Agencies and Sponsored Agencies:
Mortgage-backed		66,195		(1,271)		11,697		(417)		77,892		(1,688)
Other		—		—		6,687		(65)		6,687		(65)
Other mortgage-backed debt securities		11,036		(225)		7,362		(205)		18,398		(430)
Obligations of state and political subdivisions		25,867		(362)		3,931		(192)		29,798		(554)
Asset-backed securities		11,232		(49)		6,315		(107)		17,547		(156)
Corporate debt securities		19,485		(315)		3,445		(55)		22,930		(370)
Total	$	141,544	$	(2,318)	$	39,437	$	(1,041)	$	180,981	$	(3,359)

The Corporation invests in various forms of agency debt including residential and commercial mortgage-backed securities and callable debt. The mortgage-backed agency securities are issued by Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”), Government National Mortgage Association (“GNMA”) or SBA. The other mortgage-backed securities consist of private (non-agency) residential and commercial mortgage-backed securities. The municipal securities consist of general obligations and revenue bonds. Asset-backed securities consist of private (non-agency) student loan pools backed by the Federal Family Education Loan Program (“FFELP”) which carry a 97% federal government guarantee. Corporate debt securities consist of senior debt and subordinated debt holdings.

The fair market value of the above securities is influenced by market interest rates, prepayment speeds on mortgage securities, bid-offer spreads in the marketplace and credit premiums for various types of agency debt. These factors change continuously and therefore the market value of these securities may be higher or lower than the Corporation’s carrying value at any measurement date. Management does not believe any of their 95 debt securities with a less than one year unrealized loss position, or any of their 88 debt securities with a one year or greater unrealized loss position, as of December 31, 2022, represent an other-than-temporary impairment, as these unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities. The Corporation expects to collect principal and interest payments as defined under the original terms as all contracted payments on securities in the portfolio are current as of December 31, 2022.