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Note 3 - 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 3: Securities

The amortized cost and fair value of securities available for sale, with gross unrealized gains and losses, as of the dates indicated, follows:

December 31, 2020

Available for sale:

Amortized

Cost

Gross

Unrealized

Gains

Gross

Unrealized

Losses

Fair Value

U.S. Government agencies and corporations

$

86,859

$

4,477

$

173

$

91,163

States and political subdivisions

196,435

7,778

252

203,961

Mortgage-backed securities

244,780

4,473

78

249,175

Corporate debt securities

2,001

442

-

2,443

Total securities available for sale

$

530,075

$

17,170

$

503

$

546,742

		December 31, 2019
Available for sale:		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
U.S. Government agencies and corporations		$	119,903			$	1,995			$	775			$	121,123
States and political subdivisions			88,092				791				644				88,239
Mortgage-backed securities			223,173				45				1,435				221,783
Corporate debt securities			3,998				120				-				4,118
Total securities available for sale		$	435,166			$	2,951			$	2,854			$	435,263

The amortized cost and fair value of single maturity securities available for sale at December 31, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities included in these totals are categorized by final maturity at December 31, 2020.

		December 31, 2020
Available for sale:		Amortized Cost				Fair Value
Due in one year or less		$	4,002			$	4,048
Due after one year through five years			5,605				5,787
Due after five years through ten years			141,804				146,716
Due after ten years			378,664				390,191
Total securities available for sale		$	530,075			$	546,742

Information pertaining to securities with gross unrealized losses at December 31, 2020 and 2019 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

		December 31, 2020
		Less Than 12 Months								12 Months or More
		Fair Value				Unrealized Loss				Fair Value				Unrealized Loss
U.S. Government agencies and corporations		$	28,798			$	173			$	-			$	-
State and political subdivisions			32,353				249				635				3
Mortgage-backed securities			8,816				76				4,060				2
Total temporarily impaired securities		$	69,967			$	498			$	4,695			$	5

		December 31, 2019
		Less Than 12 Months								12 Months or More
		Fair Value				Unrealized Loss				Fair Value				Unrealized Loss
U.S. Government agencies and corporations		$	53,244			$	738			$	38,962			$	37
State and political subdivisions			35,934				596				591				48
Mortgage-backed securities			181,279				1,435				-				-
Total temporarily impaired securities		$	270,457			$	2,769			$	39,553			$	85

The Company had 62 securities with a fair value of $74,662 that were temporarily impaired at December 31, 2020. The total unrealized loss on these securities was $503. Of the temporarily impaired total, two securities with a fair value of $4,695 and an unrealized loss of $5 have been in a continuous loss position for 12 months or more. The Company has determined that these securities are temporarily impaired at December 31, 2020 for the reasons set out below.

States and political subdivisions. This category exhibits unrealized losses of $3 on one security with a fair value of $635. The Company reviewed financial statements and cash flows for the security and determined that the unrealized loss is primarily the result of interest rate and market fluctuations and not associated with impaired financial status. The contractual terms of the investment do not permit the issuer to settle the security at a price less than the cost basis of the investment. Because the Company does not intend to sell the investment and it is not likely that the Company will be required to sell the investment before recovery of its amortized cost basis, which may be at maturity, the Company does not consider the investment to be other-than-temporarily impaired.

Mortgage-backed securities. This category exhibits unrealized losses of $2 on one security with a fair value of $4,060. The unrealized losses were caused by interest rate and market fluctuations. The Company is monitoring bond market trends to develop strategies to address unrealized loss. Because the Company does not intend to sell the investment and it is not likely that the Company will be required to sell the investment before recovery of its amortized costs basis, which may be at maturity, the Company does not consider this investment to be other-than-temporarily impaired.

Restricted Stock

The Company holds restricted stock of $1,279 as of December 31, 2020 and $1,220 as of December 31, 2019. Restricted stock is reported separately from available for sale securities and held to maturity securities. As a member of the Federal Reserve and the FHLB, NBB is required to maintain certain minimum investments in the common stock of those entities. Required levels of investment are based upon NBB’s capital and a percentage of qualifying assets. The Company purchases stock from or sells stock back to the correspondents based on their calculations. The stock is held by member institutions only and is not actively traded.

Redemption of FHLB stock is subject to certain limitations and conditions. At its discretion, the FHLB may declare dividends on the stock. In addition to dividends, NBB also benefits from its membership with FHLB through eligibility to borrow from the FHLB, using as collateral NBB’s capital stock investment in the FHLB and qualifying NBB real estate mortgage loans totaling $558,703 at December 31, 2020. Management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at December 31, 2020, management did not determine any impairment.

Management regularly monitors the credit quality of the investment portfolio. Changes in ratings are noted and follow-up research on the issuer is undertaken when warranted. Management intends to carefully monitor any changes in bond quality.

Pledged Securities

At December 31, 2020 and 2019, securities with a carrying value of $251,048 and $220,999, respectively, were pledged to secure municipal deposits and for other purposes as required or permitted by law.

Realized Securities Gains and Losses

During 2020, the Company realized net securities gains of $108, including net gains of $43 on the sale of securities and $65 on calls of securities. During 2019, the Company realized net securities gains of $566, including net gains of $438 on the sale of securities and $128 on calls of securities. The sales of securities were pursuant to a restructuring plan to manage interest rate risk. During 2018, the $17 realized securities gain stemmed from the call of one security with a gain of $1 and the sale of another security for a gain of $16. All other net realized gains resulted from calls of securities. Information pertaining to realized gains and losses on sold and called securities follows:

For the year ended December 31, 2020

Proceeds

Book Value

Gross Gain

Gross Loss

Net Gain

Available for sale

$

126,840

$

126,732

$

110

$

2

$

108

		For the year ended December 31, 2019
		Proceeds				Book Value				Gross Gain				Gross Loss				Net Gain
Available for sale		$	348,032			$	347,466			$	1,157			$	591			$	566

		For the year ended December 31, 2018
		Proceeds				Book Value				Gross Gain				Gross Loss				Net Gain
Available for sale		$	17,287			$	17,270			$	17			$	-			$	17
Held to maturity			6,430				6,430				-				-				-

Prior to the second quarter of 2018, the Company designated securities in its portfolio as either available for sale or held to maturity. During the second quarter of 2018, the Company re-designated all of its held to maturity securities to available for sale. The securities were re-designated to provide opportunities to maximize asset utilization. At the time of transfer, the securities had a fair value of $119,790 and an amortized cost of $118,662, resulting in an unrealized gain of $1,128 which was added to accumulated other comprehensive income at the date of re-designation.