XML 25 R11.htm IDEA: XBRL DOCUMENT

Note 2 - Securities

12 Months Ended

Dec. 31, 2022

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, 2022 and 2021 were as follows (in thousands):

		*2022*
		*Amortized Cost*				*Gross Unrealized Gains*				*Gross Unrealized (Losses)*				*Fair Value*
Securities available for sale:
U.S. Treasury securities		$	12,469			$	—			$	(1,239	)		$	11,229
U.S. agency and mortgage-backed securities			109,971				95				(13,149	)			96,918
Obligations of states and political subdivisions			64,386				4				(9,630	)			54,760
Total securities available for sale		$	186,826			$	99			$	(24,018	)		$	162,907
Securities held to maturity:
U.S. Treasury securities		$	38,211			$	—			$	(568	)		$	37,643
U.S. agency and mortgage-backed securities			99,374				—				(9,189	)			90,185
Obligations of states and political subdivisions			12,573				—				(1,252	)			11,321
Corporate debt securities			3,000				—				(352	)			2,648
Total securities held to maturity		$	153,158			$	—			$	(11,361	)		$	141,797
Total securities		$	339,984			$	99			$	(35,379	)		$	304,704

		*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

At December 31, 2022 and 2021, investments in an unrealized loss position that were temporarily impaired were as follows (in thousands):

		*2022*
		*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		$	9,041			$	(932	)		$	2,188			$	(307	)		$	11,229			$	(1,239	)
U.S. agency and mortgage-backed securities			27,282				(1,945	)			62,342				(11,204	)			89,624				(13,149	)
Obligations of states and political subdivisions			24,689				(2,581	)			26,362				(7,049	)			51,051				(9,630	)
Total securities available for sale		$	61,012			$	(5,458	)		$	90,892			$	(18,560	)		$	151,904			$	(24,018	)
Securities held to maturity:
U.S. Treasury securities		$	19,302			$	(258	)		$	18,342			$	(310	)		$	37,644			$	(568	)
U.S. agency and mortgage-backed securities			58,019				(6,848	)			32,167				(2,341	)			90,186				(9,189	)
Obligations of states and political subdivisions			8,648				(1,008	)			2,672				(244	)			11,320				(1,252	)
Corporate debt securities			2,648				(352	)			—				—				2,648				(352	)
Total securities held to maturity		$	88,617			$	(8,466	)		$	53,181			$	(2,895	)		$	141,798			$	(11,361	)
Total securities		$	149,629			$	(13,924	)		$	144,073			$	(21,455	)		$	293,702			$	(35,379	)

		*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	)

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, 2022, there were 11 out of 11 U.S. Treasury securities, 126 out of 143 U.S. agency and mortgage-backed securities, 107 out of 116 obligations of states and political subdivisions, and one of one corporate debt 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 6.5 years at December 31, 2022. 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 was considered investment grade at December 31, 2021. The weighted- average re-pricing term of the portfolio was 5.2 years at December 31, 2021. The unrealized losses at December 31, 2022 in the U.S. Treasury securities portfolio, U.S. agency and mortgage-backed securities portfolio, obligations of states and political subdivisions portfolio, and corporate debt 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 December 31, 2022 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		$	—			$	—			$	905			$	902
Due after one year through five years			19,801				18,483				44,441				43,455
Due after five years through ten years			39,909				36,498				27,016				24,481
Due after ten years			127,116				107,926				80,796				72,959
		$	186,826			$	162,907			$	153,158			$	141,797

Proceeds from maturities, calls, principal payments, and sales of securities available for sale during 2022 and 2021were $39.1 million and $54.6 million, respectively. Gross losses of $2.0 million were realized on calls and sales during 2022 Gross gains of $37 thousand were realized on calls and sales during 2021,

Proceeds from maturities, calls, and principal payments of securities held to maturity during 2022 and 2021 were $9.3 million and $4.7 million, respectively. There were no sales of securities from the held to maturity portfolio for the years ended December 31, 2022 or 2021. The Company did not realize any gross gains or gross losses on held to maturity securities during 2022 or 2021.

Securities having a fair value of $134.5 million and $83.8 million at December 31, 2022 and 2021 were pledged to secure public deposits and for other purposes required by law.

During the third quarter of 2022, management continued to contemplate the accounting treatment of the Company’s securities portfolio. Given the rapidly rising interest rates, the resulting effects on capital and to better reflect management’s intention to hold certain securities until maturity, management approved the transfer of a portion of the portfolio from the available for sale accounting treatment to the held to maturity accounting treatment. Available for sale securities with a book value of $82.2 million and an associated unrealized loss of $7.8 million were transferred to the held to maturity classification at the fair value of $74.4 million.

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, 2022, and no impairment has been recognized.

The composition of restricted securities at December 31, 2022 and 2021 was as follows (in thousands):

		*2022*				*2021*
Federal Home Loan Bank stock		$	796			$	701
Federal Reserve Bank stock			980				980
Community Bankers’ Bank stock			132				132
		$	1,908			$	1,813

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 $599 thousand and $504 thousand at December 31, 2022 and 2021, respectively.