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 |
) |
|