XML 19 R10.htm IDEA: XBRL DOCUMENT v3.23.2
Securities
6 Months Ended
Jun. 30, 2023
Debt Securities, Trading, and Equity Securities, FV-NI, Cost [Abstract]  
Securities

NOTE 2 – SECURITIES

The fair value of equity securities and the related gross unrealized gains and (losses) recognized in noninterest income were as follows:

 

 

June 30, 2023

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

(Dollars in thousands)

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Equity securities

$

9,037

 

 

$

201

 

 

$

(939

)

 

$

8,299

 

 

 

December 31, 2022

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

(Dollars in thousands)

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

 

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

Equity securities

$

8,982

 

 

$

305

 

 

$

(721

)

 

$

8,566

 

 

 

The following tables present the amortized cost and fair value of securities available for sale and the gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and the amortized cost and fair value of securities held to maturity and the related gross unrealized gains and losses:

 

 

June 30, 2023

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

(Dollars in thousands)

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

Available for Sale:

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

U.S. Treasury notes and bonds

$

90,579

 

 

$

-

 

 

$

(12,184

)

 

$

78,395

 

State and municipal

 

271,940

 

 

 

-

 

 

 

(39,143

)

 

 

232,797

 

Mortgage-backed

 

225,413

 

 

 

-

 

 

 

(27,764

)

 

 

197,649

 

Corporate

 

759

 

 

 

-

 

 

 

(54

)

 

 

705

 

Asset-backed securities

 

12,144

 

 

 

-

 

 

 

(488

)

 

 

11,656

 

Total

$

600,835

 

 

$

-

 

 

$

(79,633

)

 

$

521,202

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and federal agency

$

2,969

 

 

$

-

 

 

$

(384

)

 

$

2,585

 

State and municipal

 

197,746

 

 

 

9

 

 

 

(34,551

)

 

 

163,204

 

Mortgage-backed

 

199,093

 

 

 

-

 

 

 

(30,552

)

 

 

168,541

 

Corporate

 

19,998

 

 

 

17

 

 

 

(3,204

)

 

 

16,811

 

Asset-backed securities

 

743

 

 

 

-

 

 

 

(59

)

 

 

684

 

Total

$

420,549

 

 

$

26

 

 

$

(68,750

)

 

$

351,825

 

 

 

December 31, 2022

 

 

 

 

 

Gross

 

 

Gross

 

 

 

 

(Dollars in thousands)

Amortized

 

 

Unrealized

 

 

Unrealized

 

 

Fair

 

Available for Sale:

Cost

 

 

Gains

 

 

Losses

 

 

Value

 

U.S. Treasury notes and bonds

$

90,810

 

 

$

-

 

 

$

(12,606

)

 

$

78,204

 

State and municipal

 

277,489

 

 

 

-

 

 

 

(47,551

)

 

 

229,938

 

Mortgage-backed

 

236,703

 

 

 

-

 

 

 

(28,140

)

 

 

208,563

 

Corporate

 

757

 

 

 

-

 

 

 

(46

)

 

 

711

 

Asset-backed securities

 

13,031

 

 

 

-

 

 

 

(698

)

 

 

12,333

 

Total

$

618,790

 

 

$

-

 

 

$

(89,041

)

 

$

529,749

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and federal agency

$

2,966

 

 

$

-

 

 

$

(421

)

 

$

2,545

 

State and municipal

 

201,890

 

 

 

1

 

 

 

(39,355

)

 

 

162,536

 

Mortgage-backed

 

200,473

 

 

 

-

 

 

 

(29,868

)

 

 

170,605

 

Corporate

 

19,603

 

 

 

-

 

 

 

(2,285

)

 

 

17,318

 

Asset-backed securities

 

974

 

 

 

-

 

 

 

(77

)

 

 

897

 

Total

$

425,906

 

 

$

1

 

 

$

(72,006

)

 

$

353,901

 

 

Available for sale securities with unrealized losses as of June 30, 2023 and December 31, 2022, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:

 

 

June 30, 2023

 

 

Less than 12 months

 

 

More than 12 months

 

 

Total

 

(Dollars in thousands)

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

Available for Sale:

Value

 

 

Losses

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

U.S. Treasury notes and bonds

$

-

 

$

-

 

$

78,395

 

$

12,184

 

$

78,395

 

$

12,184

 

State and municipal

 

1,311

 

 

31

 

 

231,235

 

 

39,112

 

 

232,546

 

 

39,143

 

Mortgage-backed

 

21,083

 

 

1,502

 

 

176,566

 

 

26,262

 

 

197,649

 

 

27,764

 

Corporate

 

-

 

 

-

 

 

705

 

 

54

 

 

705

 

 

54

 

Asset-backed securities

 

-

 

 

-

 

 

11,656

 

 

488

 

 

11,656

 

 

488

 

     Total temporarily impaired

$

22,394

 

 

$

1,533

 

 

$

498,557

 

 

$

78,100

 

 

$

520,951

 

 

$

79,633

 

 

 

December 31, 2022

 

 

Less than 12 months

 

 

More than 12 months

 

 

Total

 

(Dollars in thousands)

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

Available for Sale:

Value

 

 

Losses

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

U.S. Treasury notes and bonds

$

-

 

$

-

 

$

78,204

 

$

12,606

 

$

78,204

 

$

12,606

 

State and municipal

 

89,158

 

 

12,612

 

 

140,390

 

 

34,939

 

 

229,548

 

 

47,551

 

Mortgage-backed

 

63,249

 

 

3,093

 

 

144,318

 

 

25,047

 

 

207,567

 

 

28,140

 

Corporate

 

711

 

 

46

 

 

-

 

 

-

 

 

711

 

 

46

 

Asset-backed securities

 

-

 

 

-

 

 

12,333

 

 

698

 

 

12,333

 

 

698

 

     Total temporarily impaired

$

153,118

 

$

15,751

 

$

375,245

 

$

73,290

 

$

528,363

 

$

89,041

 

 

 

Held to maturity securities with unrealized losses as of June 30, 2023 and December 31, 2022, aggregated by investment category and length of time the individual securities have been in an unrealized loss position, were as follows:

 

June 30, 2023

 

 

Less than 12 months

 

 

More than 12 months

 

 

Total

 

(Dollars in thousands)

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

Held to Maturity:

Value

 

 

Losses

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

U.S. Government and federal agency

$

-

 

$

-

 

$

2,585

 

$

384

 

$

2,585

 

$

384

 

State and municipal

 

768

 

 

4

 

 

162,252

 

 

34,547

 

 

163,020

 

 

34,551

 

Mortgage-backed

 

404

 

 

34

 

 

168,137

 

 

30,518

 

 

168,541

 

 

30,552

 

Corporate

 

-

 

 

-

 

 

15,159

 

 

3,204

 

 

15,159

 

 

3,204

 

Asset-backed securities

 

-

 

 

-

 

 

684

 

 

59

 

 

684

 

 

59

 

     Total temporarily impaired

$

1,172

 

$

38

 

$

348,817

 

$

68,712

 

$

349,989

 

$

68,750

 

 

 

December 31, 2022

 

 

Less than 12 months

 

 

More than 12 months

 

 

Total

 

(Dollars in thousands)

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

Held to Maturity:

Value

 

 

Losses

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

U.S. Government and federal agency

$

-

 

 

$

-

 

 

$

2,545

 

 

$

421

 

 

$

2,545

 

$

421

 

State and municipal

 

13,457

 

 

 

1,899

 

 

 

149,016

 

 

 

37,456

 

 

 

162,473

 

 

39,355

 

Mortgage-backed

 

25,582

 

 

 

822

 

 

 

145,024

 

 

 

29,046

 

 

 

170,606

 

 

29,868

 

Corporate

 

5,296

 

 

 

603

 

 

 

10,771

 

 

 

1,682

 

 

 

16,067

 

 

2,285

 

Asset-backed securities

 

-

 

 

 

-

 

 

 

897

 

 

 

77

 

 

 

897

 

 

77

 

     Total temporarily impaired

$

44,335

 

$

3,324

 

$

308,253

 

$

68,682

 

$

352,588

 

$

72,006

 

 

 

 

ChoiceOne evaluates all securities on a quarterly basis to determine if an ACL and corresponding impairment charge should be recorded. Consideration is given to 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 ChoiceOne to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value of amortized cost basis. ChoiceOne believes that unrealized losses on securities were temporary in nature and were caused primarily by changes in interest rates, increased credit spreads, and reduced market liquidity and were not caused by the credit status of the issuer. No ACL was recorded in the three and six months ended June 30, 2023, and no other-than-temporary impairment charges were recorded in the same periods in 2022.

 

At June 30, 2023 and December 31, 2022, there were 601 and 611 securities with an unrealized loss, respectively. Unrealized losses on corporate and municipal bonds have not been recognized into income because the issuers’ bonds are of high credit quality, and management does not intend to sell prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. The issuers continue to make timely principal and interest payments on the bonds. The fair value is expected to recover as the bonds approach maturity.

The majority of unrealized losses at June 30, 2023, are related to U.S. Treasury notes and bonds, state and municipal bonds and mortgage backed securities. The U.S. Treasury notes are guaranteed by the U.S. government and 100% of the notes are rated AA or better. State and municipal bonds are backed by the taxing authority of the bond issuer or the revenues from the bond. On June 30, 2023, 86% of state and municipal bonds held are rated AA or better, 11% are A rated and 3% are not rated. Of the mortgage-backed securities held on June 30, 2023, 38% were issued by US government sponsored entities and agencies, and rated AA, 37% are AAA rated private issue and collateralized mortgage obligation, and 25% are unrated privately issued mortgage-backed securities with structured credit enhancement and collateralized mortgage obligation.

 

Presented below is a schedule of maturities of securities as of June 30, 2023. Available for sale securities are reported at fair value and held to maturity securities are reported at amortized cost. Callable securities in the money are presumed called and matured at the callable date.

 

 

Available for Sale Securities maturing within:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value

 

 

Less than

 

 

1 Year -

 

 

5 Years -

 

 

More than

 

 

at June 30,

 

(Dollars in thousands)

1 Year

 

 

5 Years

 

 

10 Years

 

 

10 Years

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and federal agency

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

 

$

-

 

U.S. Treasury notes and bonds

 

-

 

 

 

40,530

 

 

 

37,865

 

 

 

-

 

 

 

78,395

 

State and municipal

 

2,717

 

 

 

7,031

 

 

 

86,525

 

 

 

136,524

 

 

 

232,797

 

Corporate

 

504

 

 

 

-

 

 

 

201

 

 

 

 

 

 

705

 

Asset-backed securities

 

 

 

 

8,473

 

 

 

3,183

 

 

 

 

 

 

11,656

 

Total debt securities

 

3,221

 

 

 

56,034

 

 

 

127,774

 

 

 

136,524

 

 

 

323,553

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

9,856

 

 

 

71,075

 

 

 

95,439

 

 

 

21,279

 

 

 

197,649

 

Total Available for Sale

$

13,077

 

 

$

127,109

 

 

$

223,213

 

 

$

157,803

 

 

$

521,202

 

 

 

Held to Maturity Securities maturing within:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized Cost

 

 

Less than

 

 

1 Year -

 

 

5 Years -

 

 

More than

 

 

at June 30,

 

(Dollars in thousands)

1 Year

 

 

5 Years

 

 

10 Years

 

 

10 Years

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. Government and federal agency

$

 

 

$

 

 

$

2,969

 

 

$

 

 

$

2,969

 

State and municipal

 

1,633

 

 

 

9,469

 

 

 

93,041

 

 

 

93,603

 

 

 

197,746

 

Corporate

 

 

 

 

-

 

 

 

19,998

 

 

 

-

 

 

 

19,998

 

Asset-backed securities

 

 

 

 

743

 

 

 

 

 

 

 

 

 

743

 

Total debt securities

 

1,633

 

 

 

10,212

 

 

 

116,008

 

 

 

93,603

 

 

 

221,456

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

18,743

 

 

 

34,838

 

 

 

145,512

 

 

 

 

 

 

199,093

 

Total Held to Maturity

$

20,376

 

 

$

45,050

 

 

$

261,520

 

 

$

93,603

 

 

$

420,549

 

 

Following is information regarding unrealized gains and losses on equity securities for the three and six months ended June 30, 2023 and 2022:

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net gains and (losses) recognized during the period

 

$

(385

)

 

$

(327

)

 

$

(322

)

 

$

(683

)

Less: Net gains and (losses) recognized during the period on securities sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gains and (losses) recognized during the reporting period on securities still held at the reporting date

 

$

(385

)

$

(327

)

$

(322

)

$

(683

)