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Note 2 - Securities

12 Months Ended

Dec. 31, 2021

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. Treasury securities, 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, 2021 and 2020 were as follows (in thousands):

		*2021*
		*Amortized Cost*				*Gross Unrealized Gains*				*Gross Unrealized (Losses)*				*Fair Value*
Securities available for sale:
U.S. Treasury securities		$	39,871			$	37			$	(250	)		$	39,658
U.S. agency and mortgage-backed securities			177,131				1,085				(1,837	)			176,379
Obligations of states and political subdivisions			71,037				910				(509	)			71,438
Corporate debt securities			2,019				1				—				2,020
Total securities available for sale		$	290,058			$	2,033			$	(2,596	)		$	289,495
Securities held to maturity:
U.S. agency and mortgage-backed securities		$	26,392			$	124			$	(53	)		$	26,463
Obligations of states and political subdivisions			7,049				118				(13	)			7,154
Total securities held to maturity		$	33,441			$	242			$	(66	)		$	33,617
Total securities		$	323,499			$	2,275			$	(2,662	)		$	323,112

		*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

At December 31, 2021 and 2020, investments in an unrealized loss position that were temporarily impaired were as follows (in thousands):

		*2021*
		*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. Treasury securities		$	29,656			$	(250	)		$	—			$	—			$	29,656			$	(250	)
U.S. agency and mortgage-backed securities			109,950				(1,335	)			14,749				(502	)			124,699				(1,837	)
Obligations of states and political subdivisions			34,611				(500	)			1,009				(9	)			35,620				(509	)
Total securities available for sale		$	174,217			$	(2,085	)		$	15,758			$	(511	)		$	189,975			$	(2,596	)
Securities held to maturity:
U.S. agency and mortgage-backed securities		$	5,411			$	(53	)		$	—			$	—			$	5,411			$	(53	)
Obligations of states and political subdivisions			999				(13	)			—				—				999				(13	)
Total securities held to maturity		$	6,410			$	(66	)		$	—			$	—			$	6,410			$	(66	)
Total securities		$	180,627			$	(2,151	)		$	15,758			$	(511	)		$	196,385			$	(2,662	)

		*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	)

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, 2021, there were six out of eight U.S. Treasury securities, 58 out of 135 U.S. agency and mortgage-backed securities and 37 out of 118 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 5.2 years at December 31, 2021. At December 31, 2020, there were seven out of 101 U.S. agency and mortgage-backed securities and one out of 84 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, 2020. The weighted- average re-pricing term of the portfolio was 3.5 years at December 31, 2020. The unrealized losses at December 31, 2021 in the U.S. Treasury securities portfolio, 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, 2021 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		$	765			$	766			$	2,410			$	2,412
Due after one year through five years			37,128				37,119				2,332				2,415
Due after five years through ten years			65,837				66,087				6,288				6,362
Due after ten years			186,328				185,523				22,411				22,428
		$	290,058			$	289,495			$	33,441			$	33,617

Proceeds from maturities, calls, principal payments, and sales of securities available for sale during 2021 and 2020 were $54.6 million and $34.1 million, respectively. Gross gains of $37 thousand and $40 thousand were realized on calls and sales during 2021 and 2020, respectively. The Company did not realize any gross losses on calls or sales during 2021 or 2020.

Proceeds from maturities, calls, and principal payments of securities held to maturity during 2021 and 2020 were $4.7 million and $3.3 million, respectively. There were no sales of securities from the held to maturity portfolio for the years ended December 31, 2021 or 2020. The Company did not realize any gross gains or gross losses on held to maturity securities during 2021 or 2020.

Securities having a fair value of $83.8 million and $66.5 million at December 31, 2021 and 2020 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, 2021, and no impairment has been recognized.

The composition of restricted securities at December 31, 2021 and 2020 was as follows (in thousands):

		*2021*				*2020*
Federal Home Loan Bank stock		$	701			$	818
Federal Reserve Bank stock			980				980
Community Bankers’ Bank stock			132				77
		$	1,813			$	1,875

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 $504 thousand and $529 thousand at December 31, 2021 and 2020, respectively.