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Note 6 - Debt Securities

9 Months Ended

Sep. 30, 2023

Notes to Financial Statements

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

6.	Debt Securities

The amortized cost of securities available-for-sale and their approximate fair values as of September 30, 2023 and December 31, 2022 are summarized below (in thousands):

2023:						Gross				Gross
		Amortized				Unrealized				Unrealized				Estimated
		Cost				Gains				Losses				Fair Value

U.S. government treasuries		$	221,032			$	-			$	(18,510	)		$	202,522
U.S. government agencies			107,597				2				(9,550	)			98,049
U.S. government mortgage-backed securities			119,999				3				(18,450	)			101,552
State and political subdivisions			298,962				6				(33,669	)			265,299
Corporate bonds			77,177				-				(7,655	)			69,522
		$	824,767			$	11			$	(87,834	)		$	736,944

2022:						Gross				Gross
		Amortized				Unrealized				Unrealized				Estimated
		Cost				Gains				Losses				Fair Value

U.S. government treasuries		$	227,065			$	-			$	(19,468	)		$	207,597
U.S. government agencies			110,370				4				(9,441	)			100,933
U.S. government mortgage-backed securities			133,205				4				(16,468	)			116,741
State and political subdivisions			317,179				27				(31,203	)			286,003
Corporate bonds			82,177				7				(7,020	)			75,164
		$	869,996			$	42			$	(83,600	)		$	786,438

The amortized cost and fair value of debt securities available-for-sale as of September 30, 2023, are shown below by expected maturity. Expected maturity will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties (in thousands).

		Amortized				Estimated
		Cost				Fair Value

Due in one year or less		$	78,232			$	76,604
Due after one year through five years			403,015				368,300
Due after five years through ten years			214,556				183,416
Due after ten years			8,965				7,072
		$	704,768			$	635,392
U.S. government mortgage-backed securities			119,999				101,552
Total		$	824,767			$	736,944

The Company's investment portfolio had an expected duration of 3.64 years as of September 30, 2023.

Securities with a carrying value of $367.6 million and $256.7 million at September 30, 2023 and December 31, 2022, respectively, were pledged on public deposits, securities sold under agreements to repurchase, other borrowings and for other purposes as required or permitted by law.

The proceeds and gains on securities available-for-sale for the three and nine months ended September 30, 2023 and 2022 are summarized below (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		2023				2022				2023				2022
Proceeds from sales of securities available-for-sale		$	716			$	10,013			$	2,069			$	10,548
Gross realized gains on securities available-for-sale			62				25				73				60
Gross realized losses on securities available-for-sale			(34	)			(23	)			(38	)			(23	)

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of September 30, 2023 and December 31, 2022 are summarized as follows (in thousands):

		Less than 12 Months								12 Months or More								Total
2023:		Estimated Fair Value				Unrealized Losses				Estimated Fair Value				Unrealized Losses				Estimated Fair Value				Unrealized Losses

Securities available-for-sale:
U.S. government treasuries		$	-			$	-			$	202,522			$	(18,510	)		$	202,522			$	(18,510	)
U.S. government agencies			1,934				(64	)			95,544				(9,486	)			97,478				(9,550	)
U.S. government mortgage-backed securities			816				(34	)			100,453				(18,416	)			101,269				(18,450	)
State and political subdivisions			17,036				(662	)			246,247				(33,007	)			263,283				(33,669	)
Corporate bonds			4,033				(177	)			65,489				(7,478	)			69,522				(7,655	)
		$	23,819			$	(937	)		$	710,255			$	(86,897	)		$	734,074			$	(87,834	)

		Less than 12 Months								12 Months or More								Total
2022:		Estimated Fair Value				Unrealized Losses				Estimated Fair Value				Unrealized Losses				Estimated Fair Value				Unrealized Losses

Securities available-for-sale:
U.S. government treasuries		$	57,882			$	(3,960	)		$	147,215			$	(15,508	)		$	205,097			$	(19,468	)
U.S. government agencies			61,821				(4,293	)			38,492				(5,148	)			100,313				(9,441	)
U.S. government mortgage-backed securities			45,440				(4,393	)			70,854				(12,075	)			116,294				(16,468	)
State and political subdivisions			181,640				(14,556	)			97,907				(16,647	)			279,547				(31,203	)
Corporate bonds			59,293				(4,281	)			13,382				(2,739	)			72,675				(7,020	)
		$	406,076			$	(31,483	)		$	367,850			$	(52,117	)		$	773,926			$	(83,600	)

Gross unrealized losses on debt securities totaled $87.8 million as of September 30, 2023. These unrealized losses are generally due to changes in interest rates or general market conditions. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, state or political subdivision, or corporations. Management then determines whether downgrades by bond rating agencies have occurred, and reviews industry analysts’ reports. The Company’s procedures for evaluating investments in states, municipalities and political subdivisions include but are not limited to reviewing the offering statement and the most current available financial information, comparing yields to yields of bonds of similar credit quality, confirming capacity to repay, assessing operating and financial performance, evaluating the stability of tax revenues, considering debt profiles and local demographics, and for revenue bonds, assessing the source and strength of revenue structures for municipal authorities. These procedures, as applicable, are utilized for all municipal purchases and are utilized in whole or in part for monitoring the portfolio of municipal holdings. The Company does not utilize third party credit rating agencies as a primary component of determining if the municipal issuer has an adequate capacity to meet the financial commitments under the security for the projected life of the investment, and, therefore, does not compare internal assessments to those of the credit rating agencies. Credit rating downgrades are utilized as an additional indicator of credit weakness and as a reference point for historical default rates. Management concluded that the gross unrealized losses on debt securities were temporary. Due to potential changes in conditions, it is at least reasonably possible that changes in fair values and management’s assessments will occur in the near term and that such changes could materially affect the amounts reported in the Company’s financial statements.