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Note 3 - Debt Securities

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 3. Debt Securities

The following tables present the amortized cost and fair value of available-for-sale debt securities, including gross unrealized gains and losses, as of the dates indicated:

		*March 31, 2024*
		*Amortized*				*Unrealized*				*Unrealized*				*Fair*
		*Cost*				*Gains*				*Losses*				*Value*
(Amounts in thousands)
U.S. Agency securities		$	5,750			$	-			$	-			$	5,750
U.S. Treasury securities			36,384				2				(62	)			36,324
Municipal securities			18,325				4				(217	)			18,112
Corporate notes			28,574				-				(1,658	)			26,916
Agency mortgage-backed securities			92,496				-				(13,351	)			79,145
Total		$	181,529			$	6			$	(15,288	)		$	166,247

		*December 31, 2023*
		*Amortized*				*Unrealized*				*Unrealized*				*Fair*
		*Cost*				*Gains*				*Losses*				*Value*
(Amounts in thousands)
U.S. Agency securities		$	5,750			$	-			$	(1	)		$	5,749
U.S. Treasury securities			146,653				16				(843	)			145,826
Municipal securities			19,528				11				(162	)			19,377
Corporate notes			28,566				-				(1,485	)			27,081
Agency mortgage-backed securities			94,548				2				(11,622	)			82,928
Total		$	295,045			$	29			$	(14,113	)		$	280,961

There was no allowance for credit losses for debt securities as of March 31, 2024; therefore, it is not presented in the table below. The Company excludes the accrued interest receivable from the amortized cost basis in measuring expected credit losses on the debt securities and does not record an allowance for credit losses on accrued interest receivable. Accrued interest receivable for debt securities was $1.12 million and $1.25 million as of March 31, 2024, and December 31, 2023, respectively.

The following table presents the amortized cost and aggregate fair value of available-for-sale debt securities by contractual maturity, as of the date indicated. Actual maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

		*March 31, 2024*
		*Amortized*
(Amounts in thousands)		*Cost*				*Fair Value*
Available-for-sale debt securities
Due within one year		$	47,332			$	47,266
Due after one year but within five years			41,701				39,836
Due after five years but within ten years			-				-
			89,033				87,102
Agency mortgage-backed securities			92,496				79,145
Total debt securities available-for-sale		$	181,529			$	166,247

The following tables present the fair values and unrealized losses for available-for-sale debt securities in a continuous unrealized loss position for less than 12 months and for 12 months or longer as of the dates indicated:

		*March 31, 2024*
		*Less than 12 Months*								*12 Months or Longer*								*Total*
		*Fair*				*Unrealized*				*Fair*				*Unrealized*				*Fair*				*Unrealized*
		*Value*				*Losses*				*Value*				*Losses*				*Value*				*Losses*
(Amounts in thousands)
U.S. Agency securities		$	5,750			$	-			$	-			$	-			$	5,750			$	-
U.S. Treasury securities			5,283				(12	)			25,684				(50	)			30,967				(62	)
Municipal securities			3,944				(21	)			7,713				(196	)			11,657				(217	)
Corporate notes			-				-				26,916				(1,658	)			26,916				(1,658	)
Agency mortgage-backed securities			4,546				(52	)			74,598				(13,299	)			79,144				(13,351	)
Total		$	19,523			$	(85	)		$	134,911			$	(15,203	)		$	154,434			$	(15,288	)

		*December 31, 2023*
		*Less than 12 Months*								*12 Months or Longer*								*Total*
		*Fair*				*Unrealized*				*Fair*				*Unrealized*				*Fair*				*Unrealized*
		*Value*				*Losses*				*Value*				*Losses*				*Value*				*Losses*
(Amounts in thousands)
U.S. Agency securities		$	5,749			$	(1	)		$	—			$	—			$	5,749			$	(1	)
U.S. Treasury securities			11,417				(14	)			129,108				(829	)			140,525				(843	)
Municipal securities			4,742				(20	)			5,484				(142	)			10,226				(162	)
Corporate notes			—				—				27,081				(1,485	)			27,081				(1,485	)
Agency mortgage-backed securities			3,421				(10	)			78,319				(11,612	)			81,740				(11,622	)
Total		$	25,329			$	(45	)		$	239,992			$	(14,068	)		$	265,321			$	(14,113	)

There were 115 individual debt securities in an unrealized loss position as of March 31, 2024, and the combined depreciation in value represented 9.20% of the debt securities portfolio. There were 112 individual debt securities in an unrealized loss position as of December 31, 2023, and their combined depreciation in value represented 5.02% of the debt securities portfolio.

Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Credit losses are calculated individually, rather than collectively, using a discounted cash flow method, whereby management compares the present value of expected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for credit losses and the creation of an allowance for credit losses. Consideration is given to (1) the financial condition and near-term prospects of the issuer including looking at default and delinquency rates, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) our intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that we will be required to sell the debt security prior to recovering its fair value, (5) the anticipated outlook for changes in the general level of interest rates, (6) credit ratings, (7) third party guarantees, and (8) collateral values. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the investments. All of the U.S. Treasury and Agency-Backed Securities have the full faith and credit backing of the United State Government or one of its agencies. Municipal securities and all other securities that do not have a zero expected credit loss are evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value. All debt securities available-for-sale in an unrealized loss position as of March 31, 2024, continue to perform as scheduled and we do not believe that there is a credit loss or that a provision for credit losses is necessary. Also, as part of our evaluation of our intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, we consider our investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not currently intend to sell the securities within the portfolio and it is not more-likely-than-not that we will be required to sell the debt securities.

Management continues to monitor all of our securities with a high degree of scrutiny. There can be no assurance that we will not conclude in future periods that conditions existing at that time indicate some or all of its securities may be sold or would require a charge to earnings as a provision for credit losses in such periods.

There were no available-for-sale securities sold in the first three months 2024. In the first three months of 2023, approximately $17.01 million in securities available-for-sale were sold. The following table presents gross realized gains and losses from the sale of available-for-sale debt securities for the periods indicated:

		*Three Months Ended*
		*March 31,*
		*2024*				*2023*
(Amounts in thousands)
Gross realized gains		$	-			$	7
Gross realized losses			-				-
Net gain (loss) on sale of securities		$	-			$	7

The carrying amount of securities pledged for various purposes totaled $44.55 million as of March 31, 2024, and $145.09million as of December 31, 2023.