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Note 2 - Securities

12 Months Ended

Dec. 31, 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 states and political subdivisions, and corporate debt securities. Amortized costs and fair values of securities at December 31, 2020 and 2019 were as follows (in thousands):

		*2020*
		*Amortized Cost*				*Gross Unrealized Gains*				*Gross Unrealized (Losses)*				*Fair Value*
Securities available for sale:
U.S. agency and mortgage-backed securities		$	98,848			$	2,830			$	(80	)		$	101,598
Obligations of states and political subdivisions			37,507				1,122				(2	)			38,627
Total securities available for sale		$	136,355			$	3,952			$	(82	)		$	140,225
Securities held to maturity:
U.S. agency and mortgage-backed securities		$	9,588			$	264			$	—			$	9,852
Obligations of states and political subdivisions			3,146				140				—				3,286
Corporate debt securities			1,500				105				—				1,605
Total securities held to maturity		$	14,234			$	509			$	—			$	14,743
Total securities		$	150,589			$	4,461			$	(82	)		$	154,968

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

		*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		$	17,367			$	(80	)		$	—			$	—			$	17,367			$	(80	)
Obligations of states and political subdivisions			1,020				(2	)			—				—				1,020				(2	)
Total securities available for sale		$	18,387			$	(82	)		$	—			$	—			$	18,387			$	(82	)

		*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 December 31, 2020, there were seven out of one hundred and one U.S. agency and mortgage-backed securities and one out of eighty-four obligations of states and political subdivisions 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 3.5 years at December 31, 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 December 31, 2020 in the U.S. agency and mortgage-backed securities portfolio and the obligations of states and political subdivisions 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 December 31, 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		$	201			$	202			$	392			$	394
Due after one year through five years			13,608				14,152				6,043				6,293
Due after five years through ten years			38,483				39,790				2,287				2,377
Due after ten years			84,063				86,081				5,512				5,679
		$	136,355			$	140,225			$	14,234			$	14,743

Proceeds from maturities, calls, principal payments, and sales of securities available for sale during 2020 and 2019 were $34.1 million and $22.0 million, respectively. Gross gains of $40 thousand and $1 thousand were realized on calls and sales during 2020 and 2019, respectively. The Company did not realize any gross losses on calls or sales during 2020 or 2019.

Proceeds from maturities, calls, and principal payments of securities held to maturity during 2020 and 2019 were $3.3 million and $2.2 million, respectively. There were no sales of securities from the held to maturity portfolio for the years ended December 31, 2020 or 2019. The Company did not realize any gross gains or gross losses on held to maturity securities during 2020 or 2019.

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.

Securities having a fair value of $66.5 million and $40.5 million at December 31, 2020 and 2019 were pledged to secure public deposits and for other purposes required by law.

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 December 31, 2020, and no impairment has been recognized.

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

		*2020*				*2019*
Federal Home Loan Bank stock		$	818			$	776
Federal Reserve Bank stock			980				980
Community Bankers’ Bank stock			77				50
		$	1,875			$	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 $529 thousand and $514 thousand at December 31, 2020 and 2019, respectively.