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Note 3 - Securities

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

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

NOTE 3 – SECURITIES

Equity Securities

The Company held equity securities with fair values of $3,274,000 and $3,132,000 as of September 30, 2024 and December 31, 2023, respectively. There were no sales of equity securities during the three and nine-month periods ended September 30, 2024 and 2023. Consistent with ASC 321, Equity Securities, these securities are carried at fair value with the changes in fair value recognized in the condensed consolidated statements of income. Accordingly, the Company recognized a gain of $141,000 during the three-month period ended September 30, 2024, and a loss of $60,000, during the nine-month period ended September 30, 2024, as compared to losses of $144,000 and $141,000 during the same periods of 2023.

Debt Securities

Debt securities have been classified in the financial statements as available for sale. The amortized cost and estimated fair values of debt securities as of September 30, 2024 are as follows:

(dollars in thousands)		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
Available-for-sale securities:
U.S. agencies		$	96,862			$	226			$	(3,106	)		$	93,982
Collateralized mortgage obligations			26,388				65				(355	)			26,098
Municipalities			322,063				1,671				(17,522	)			306,212
SBA pools			940				1				(1	)			940
Corporate debt			43,500				10				(2,477	)			41,033
Asset backed securities			49,637				59				(629	)			49,067
		$	539,390			$	2,032			$	(24,090	)		$	517,332

The following table details the gross unrealized losses and fair values of debt securities aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2024.

(dollars in thousands)						Less than 12 months								12 months or more								Total
Description of Securities		Number of Securities				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss
U.S. agencies			37			$	4,966			$	(119	)		$	57,899			$	(2,987	)		$	62,865			$	(3,106	)
Collateralized mortgage obligations			6				8,286				(7	)			3,568				(348	)			11,854				(355	)
Municipalities			93				28,246				(139	)			183,696				(17,383	)			211,942				(17,522	)
SBA pools			3				128				0				160				(1	)			288				(1	)
Corporate debt			11				0				0				39,023				(2,477	)			39,023				(2,477	)
Asset backed securities			14				8,143				(21	)			17,625				(608	)			25,768				(629	)
Total temporarily impaired securities			164			$	49,769			$	(286	)		$	301,971			$	(23,804	)		$	351,740			$	(24,090	)

For available-for-sale debt securities in an unrealized loss position, management evaluates whether the decline in fair value is a reflection of credit deterioration or other factors. In performing this evaluation, management considers the extent which fair value has fallen below amortized cost, changes in ratings by rating agencies, and other information indicating a deterioration in repayment capacity of either the underlying issuer or the borrowers providing repayment capacity in a securitization. If management’s evaluation indicates that a credit loss exists then a present value of the expected cash flows is calculated and compared to the amortized cost basis of the security in question and, to the degree that the amortized cost basis exceeds the present value, an allowance for credit loss (“ACL”) is established, with the caveat that the maximum amount of the reserve on any individual security is the difference between the fair value and amortized cost balance of the security in question. Any unrealized loss that has not been recorded through an ACL is recognized in other comprehensive income. As of September 30, 2024, accrued interest receivable on available-for-sale securities was $4,164,000 and is not included in the tables within this footnote.

The unrealized losses are due primarily to rising market yields and not due to credit deterioration. As such, no ACL on available-for-sale securities has been established as of September 30, 2024. The Company does not intend to sell the securities and it is not likely that the Company will be required to sell the securities before the earlier of the forecasted recovery or the maturity of the underlying investment security.

The amortized cost and estimated fair value of debt securities as of September 30, 2024, segregated by contractual maturity or call date, are shown below. 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)		Amortized				Fair
		Cost				Value
Available-for-sale securities:
Due in one year or less		$	89,461			$	86,651
Due after one year through five years			155,826				153,114
Due after five years through ten years			185,793				172,544
Due after ten years			108,310				105,023
		$	539,390			$	517,332

The amortized cost and estimated fair values of debt securities as of December 31, 2023 are as follows:

(dollars in thousands)		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
Available-for-sale securities:
U.S. agencies		$	84,678			$	11			$	(4,430	)		$	80,259
Collateralized mortgage obligations			9,108				0				(444	)			8,664
Municipalities			345,981				2,792				(19,865	)			328,908
SBA pools			1,394				3				(2	)			1,395
Corporate debt			47,500				9				(3,992	)			43,517
Asset backed securities			56,613				133				(1,411	)			55,335
		$	545,274			$	2,948			$	(30,144	)		$	518,078

The following tables detail the gross unrealized losses and fair values aggregated of debt securities by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2023.

(dollars in thousands)						Less than 12 months								12 months or more								Total
Description of Securities		Number of Securities				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss
U.S. agencies			51			$	190			$	(3	)		$	79,556			$	(4,427	)		$	79,746			$	(4,430	)
Collateralized mortgage obligations			6				4,791				(1	)			3,873				(443	)			8,664				(444	)
Municipalities			106				44,859				(453	)			178,812				(19,412	)			223,671				(19,865	)
SBA pools			4				116				0				472				(2	)			588				(2	)
Corporate debt			13				0				0				41,508				(3,992	)			41,508				(3,992	)
Asset backed securities			19				2,123				(8	)			32,535				(1,403	)			34,658				(1,411	)
Total temporarily impaired securities			199			$	52,079			$	(465	)		$	336,756			$	(29,679	)		$	388,835			$	(30,144	)

There were no sales of available-for-sale securities during the three-months ended September 30, 2024 and 2023. The Company sold eighteen available-for-sale securities during the nine-months ended September 30, 2024 with a book value of $28,258,000, resulting in gross gains of $106,000, as compared to 24 available-for-sale securities sold with a book value of $42,791,000, resulting in gross losses of $72,000 and gross gains of $215,000, for a net gain of $143,000 during the nine-months ended September 30, 2023. In addition, the Company recognized a net gain of $8,000 and $9,000 on called securities during the three and nine-month periods ended June, 2024, respectively, as compared to gains of $13,000 during the comparable 2023 periods.

Debt securities carried at $305,109,000 and $288,199,000 as of September 30, 2024 and December 31, 2023, respectively, were pledged to secure deposits of public funds.