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Note 2 - Securities

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

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

Note 2. Securities

The Company invests in U.S. agency and mortgage-backed securities, obligations of state and political subdivisions, and corporate debt securities. Amortized costs and fair values of securities at September 30, 2020 and December 31, 2019 were as follows (in thousands):

		September 30, 2020
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized (Losses)				Fair Value
Securities available for sale:
U.S. agency and mortgage-backed securities		$	84,217			$	3,260			$	(14	)		$	87,463
Obligations of states and political subdivisions			28,706				963				—				29,669
Total securities available for sale		$	112,923			$	4,223			$	(14	)		$	117,132
Securities held to maturity:
U.S. agency and mortgage-backed securities		$	10,450			$	302			$	—			$	10,752
Obligations of states and political subdivisions			3,151				150				—				3,301
Corporate debt securities			1,500				85				—				1,585
Total securities held to maturity		$	15,101			$	537			$	—			$	15,638
Total securities		$	128,024			$	4,760			$	(14	)		$	132,770

		December 31, 2019
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized (Losses)				Fair Value
Securities available for sale:
U.S. agency and mortgage-backed securities		$	94,461			$	778			$	(334	)		$	94,905
Obligations of states and political subdivisions			25,607				476				(5	)			26,078
Total securities available for sale		$	120,068			$	1,254			$	(339	)		$	120,983
Securities held to maturity:
U.S. agency and mortgage-backed securities		$	12,528			$	6			$	(80	)		$	12,454
Obligations of states and political subdivisions			3,599				81				—				3,680
Corporate debt securities			1,500				12				—				1,512
Total securities held to maturity		$	17,627			$	99			$	(80	)		$	17,646
Total securities		$	137,695			$	1,353			$	(419	)		$	138,629

At September 30, 2020 and December 31, 2019, investments in an unrealized loss position that were temporarily impaired were as follows (in thousands):

		September 30, 2020
		Less than 12 months								12 months or more								Total
		Fair Value				Unrealized (Loss)				Fair Value				Unrealized (Loss)				Fair Value				Unrealized (Loss)
Securities available for sale:
U.S. agency and mortgage-backed securities		$	3,093			$	(14	)		$	—			$	—			$	3,093			$	(14	)
Total securities available for sale		$	3,093			$	(14	)		$	—			$	—			$	3,093			$	(14	)

		December 31, 2019
		Less than 12 months								12 months or more								Total
		Fair Value				Unrealized (Loss)				Fair Value				Unrealized (Loss)				Fair Value				Unrealized (Loss)
Securities available for sale:
U.S. agency and mortgage-backed securities		$	29,853			$	(207	)		$	13,083			$	(127	)		$	42,936			$	(334	)
Obligations of states and political subdivisions			1,373				(5	)			—				—				1,373				(5	)
Total securities available for sale		$	31,226			$	(212	)		$	13,083			$	(127	)		$	44,309			$	(339	)
Securities held to maturity:
U.S. agency and mortgage-backed securities		$	3,516			$	(10	)		$	5,936			$	(70	)		$	9,452			$	(80	)
Total securities held to maturity		$	3,516			$	(10	)		$	5,936			$	(70	)		$	9,452			$	(80	)
Total securities		$	34,742			$	(222	)		$	19,019			$	(197	)		$	53,761			$	(419	)

The tables above provide information about securities that have been in an unrealized loss position for less than twelve consecutive months and securities that have been in an unrealized loss position for twelve consecutive months or more. Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Impairment is considered to be other-than-temporary if the Company (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its cost, or (3) does not expect to recover the security’s entire amortized cost basis. Presently, the Company does not intend to sell any of these securities, does not expect to be required to sell these securities, and expects to recover the entire amortized cost of all the securities.

At September 30, 2020, there was one out of ninety-three U.S. agency and mortgage-backed securities in an unrealized loss position. One hundred percent of the Company’s investment portfolio is considered investment grade. The weighted-average re-pricing term of the portfolio was 3.1 years at September 30, 2020. At December 31, 2019, there were forty-two out of ninety-four U.S. agency and mortgage-backed securities and three out of seventy-nine obligations of states and political subdivisions in an unrealized loss position. One hundred percent of the Company’s investment portfolio was considered investment grade at December 31, 2019. The weighted-average re-pricing term of the portfolio was 3.7 years at December 31, 2019. The unrealized losses at September 30, 2020 in the U.S. agency and mortgage-backed securities portfolio were related to changes in market interest rates and not credit concerns of the issuers.

The amortized cost and fair value of securities at September 30, 2020 by contractual maturity are shown below (in thousands). Expected maturities of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.

		Available for Sale								Held to Maturity
		Amortized Cost				Fair Value				Amortized Cost				Fair Value
Due within one year		$	1,409			$	1,416			$	392			$	397
Due after one year through five years			13,424				13,984				4,547				4,710
Due after five years through ten years			31,236				32,563				3,973				4,148
Due after ten years			66,854				69,169				6,189				6,383
		$	112,923			$	117,132			$	15,101			$	15,638

On January 1, 2019 the Company adopted ASU No. 2017-12 and reclassified eligible securities with a fair value of $23.0 million from the held to maturity portfolio to the available for sale portfolio. The unrealized loss associated with the reclassified securities totaled $431 thousand on the date of reclassification. The securities were reclassified to provide the Company with opportunities to maximize asset utilization.

Federal Home Loan Bank, Federal Reserve Bank, and Community Bankers’ Bank stock are generally viewed as long-term investments and as restricted securities, which are carried at cost, because there is a minimal market for the stock. Therefore, when evaluating restricted securities for impairment, their value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Company does not consider these investments to be other-than-temporarily impaired at September 30, 2020, and no impairment has been recognized.

The composition of restricted securities at September 30, 2020 and December 31, 2019 was as follows (in thousands):

		September 30, 2020				December 31, 2019
Federal Home Loan Bank stock		$	818			$	776
Federal Reserve Bank stock			980				980
Community Bankers’ Bank stock			50				50
		$	1,848			$	1,806

The Company also holds limited partnership investments in Small Business Investment Companies (SBICs), which are included in other assets in the Consolidated Balance Sheets. The limited partnership investments are measured as equity investments without readily determinable fair values at their cost, less any impairment. The amounts included in other assets for the limited partnership investments were $497 thousand and $514 thousand at September 30, 2020 and December 31, 2019, respectively.