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Note 6 - Debt Securities

9 Months Ended

Sep. 30, 2024

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, 2024 and December 31, 2023 are summarized below (in thousands):

2024:						Gross				Gross
		Amortized				Unrealized				Unrealized				Estimated
		Cost				Gains				Losses				Fair Value

U.S. government treasuries		$	186,405			$	218			$	(7,840	)		$	178,783
U.S. government agencies			97,673				142				(4,064	)			93,751
U.S. government mortgage-backed securities			104,041				7				(10,142	)			93,906
State and political subdivisions			270,717				135				(14,470	)			256,382
Corporate bonds			69,035				57				(3,319	)			65,773
		$	727,871			$	559			$	(39,835	)		$	688,595

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

U.S. government treasuries		$	213,646			$	29			$	(13,587	)		$	200,088
U.S. government agencies			99,455				2				(6,842	)			92,615
U.S. government mortgage-backed securities			115,988				-				(14,124	)			101,864
State and political subdivisions			292,475				93				(22,677	)			269,891
Corporate bonds			77,139				11				(5,219	)			71,931
		$	798,703			$	135			$	(62,449	)		$	736,389

The amortized cost and fair value of debt securities available-for-sale as of September 30, 2024, 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		$	106,029			$	104,557
Due after one year through five years			380,712				364,244
Due after five years through ten years			128,989				118,358
Due after ten years			8,100				7,530
		$	623,830			$	594,689
U.S. government mortgage-backed securities			104,041				93,906
Total		$	727,871			$	688,595

The Company's investment portfolio had an expected duration of 3.16 years as of September 30, 2024.

Securities with a carrying value of $296.4 million and $374.4 million at September 30, 2024 and December 31, 2023, 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, 2024 and 2023 are summarized below (in thousands):

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
		*2024*				*2023*				*2024*				*2023*
Proceeds from sales of securities available-for-sale		$	-			$	716			$	2,049			$	2,069
Gross realized gains on securities available-for-sale			-				62				-				73
Gross realized losses on securities available-for-sale			-				(34	)			(165	)			(38	)

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, 2024 and December 31, 2023 are summarized as follows (in thousands):

		Less than 12 Months												12 Months or More												Total
		Estimated				Unrealized				No. of				Estimated				Unrealized				No. of				Estimated				Unrealized
2024:		Fair Value				Losses				Securities				Fair Value				Losses				Securities				Fair Value				Losses

Securities available-for-sale:
U.S. government treasuries		$	-			$	-				-			$	170,184			$	(7,840	)			102			$	170,184			$	(7,840	)
U.S. government agencies			-				-				-				85,317				(4,064	)			73				85,317				(4,064	)
U.S. government mortgage-backed securities			-				-				-				93,339				(10,142	)			154				93,339				(10,142	)
State and political subdivisions			2,810				(14	)			8				236,197				(14,456	)			447				239,007				(14,470	)
Corporate bonds			-				-				-				61,554				(3,319	)			78				61,554				(3,319	)
		$	2,810			$	(14	)			8			$	646,591			$	(39,821	)			854			$	649,401			$	(39,835	)

		Less than 12 Months												12 Months or More												Total
		Estimated				Unrealized				No. of				Estimated				Unrealized				No. of				Estimated				Unrealized
2023:		Fair Value				Losses				Securities				Fair Value				Losses				Securities				Fair Value				Losses

Securities available-for-sale:
U.S. government treasuries		$	-			$	-				-			$	196,432			$	(13,587	)			121			$	196,432			$	(13,587	)
U.S. government agencies			1,986				(11	)			2				90,137				(6,831	)			78				92,123				(6,842	)
U.S. government mortgage-backed securities			467				(12	)			4				101,265				(14,112	)			155				101,732				(14,124	)
State and political subdivisions			9,054				(73	)			18				251,286				(22,604	)			474				260,340				(22,677	)
Corporate bonds			3,117				(108	)			4				67,816				(5,111	)			84				70,933				(5,219	)
		$	14,624			$	(204	)			28			$	706,936			$	(62,245	)			912			$	721,560			$	(62,449	)

Gross unrealized losses on debt securities totaled $39.8 million as of September 30, 2024. 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. As of September 30, 2024 and December 31, 2023, the Company determined that no individual securities in an unrealized loss position represented credit losses that would require an allowance for credit losses. The Company concluded that the unrealized losses were primarily attributable to increases in market interest rates since these securities were purchased and other market conditions. Accrued interest receivable on AFS debt securities totaled $3.6 million and $3.5 million as of September 30, 2024 and December 31, 2023, respectively, and is excluded from the estimate of credit losses.