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Note 3 - Investment Securities

3 Months Ended

Mar. 31, 2025

Investment in Debt and Equity Instruments and Cash and Cash Equivalent [Text Block]

3.	Investment Securities

Investment securities have been classified in the consolidated balance sheets according to management’s intent. Investment securities at March 31, 2025 and December 31, 2024 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value

March 31, 2025
Securities available for sale:
Agency mortgage-backed securities	$	78,033	$	106	$	6,938	$	71,201
Agency CMO		64,236		502		222		64,516
Agency notes and bonds		111,629		18		3,632		108,015
Treasury notes and bonds		16,828		-		135		16,693
Municipal obligations		146,525		396		15,628		131,293

Total securities available for sale	$	417,251	$	1,022	$	26,555	$	391,718

Securities held to maturity:
Other debt securities:
Corporate notes	$	7,000	$	-	$	2,409	$	4,591

Total securities held to maturity	$	7,000	$	-	$	2,409	$	4,591

December 31, 2024
Securities available for sale:
Agency mortgage-backed securities	$	76,295	$	-	$	8,354	$	67,941
Agency CMO		47,821		197		500		47,518
Agency notes and bonds		122,834		6		4,760		118,080
Treasury notes and bonds		21,803		-		254		21,549
Municipal obligations		150,182		171		16,198		134,155

Total securities available for sale	$	418,935	$	374	$	30,066	$	389,243

Securities held to maturity:
Other debt securities:
Corporate notes	$	7,000	$	-	$	2,409	$	4,591

Total securities held to maturity	$	7,000	$	-	$	2,409	$	4,591

Agency notes and bonds, agency mortgage-backed securities and agency collateralized mortgage obligations (“CMO”) include securities issued by the Government National Mortgage Association (“GNMA”), a U.S. government agency, and the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”), the Federal Farm Credit Bank (“FFCB”) and the Federal Home Loan Bank (“FHLB”), which are government-sponsored enterprises. Corporate notes classified as held to maturity include subordinated debt obligations issued by other bank holding companies (“BHC”).

The amortized cost and fair value of debt securities as of March 31, 2025, by contractual maturity, are shown below. Expected maturities of mortgage-backed securities and CMO may differ from contractual maturities because the mortgages underlying the obligations may be prepaid without penalty.

	Securities Available for Sale				Securities Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
(In thousands)

Due in one year or less	$	69,148	$	67,850	$	-	$	-
Due after one year through five years		77,427		73,803		-		-
Due after five years through ten years		61,762		55,648		2,000		1,324
Due after ten years		66,645		58,700		5,000		3,267
		274,982		256,001		7,000		4,591
Mortgage-backed securities and CMO		142,269		135,717		-		-

	$	417,251	$	391,718	$	7,000	$	4,591

Information pertaining to investment securities with gross unrealized losses at March 31, 2025, aggregated by investment category and the length of time that individual investment securities have been in a continuous loss position, follows.

	Number of				Gross
	Investment		Fair		Unrealized
	Positions		Value		Losses
(Dollars in thousands)
March 31, 2025:
Securities available for sale:
Continuous loss position less than twelve months:
Agency mortgage-backed securities		1	$	928	$	1
Agency CMO		3		6,654		60
Agency notes and bonds		2		1,992		9
Muncipal obligations		23		11,738		247
Total less than twelve months		29		21,312		317

Continuous loss position more than twelve months:
Agency mortgage-backed securities		93		58,330		6,937
Agency CMO		20		5,127		162
Agency notes and bonds		42		104,127		3,623
Treasury notes and bonds		7		16,693		135
Muncipal obligations		187		97,944		15,381
Total more than twelve months		349		282,221		26,238

Total securities available for sale		378	$	303,533	$	26,555

Securities held to maturity:
Continuous loss position more than twelve months:
Corporate notes		4	$	4,591	$	2,409
Total more than twelve months		4		4,591		2,409

Total securities held to maturity		4	$	4,591	$	2,409

Information pertaining to investment securities with gross unrealized losses at December 31, 2024, aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows.

	Number of				Gross
	Investment		Fair		Unrealized
	Positions		Value		Losses
(Dollars in thousands)
December 31, 2024:
Securities available for sale:
Continuous loss position less than twelve months:
Agency mortgage-backed securities		7	$	8,008	$	93
Agency CMO		11		19,211		215
Agency notes and bonds		7		4,830		57
Muncipal obligations		39		18,880		334
Total less than twelve months		64		50,929		699

Continuous loss position more than twelve months:
Agency mortgage-backed securities		93		59,933		8,261
Agency CMO		22		7,271		285
Agency notes and bonds		45		112,046		4,703
Treasury notes and bonds		8		21,549		254
Muncipal obligations		196		103,201		15,864
Total more than twelve months		364		304,000		29,367

Total securities available for sale		428	$	354,929	$	30,066

Securities held to maturity:
Continuous loss position less than twelve months:
Corporate notes		4	$	4,591	$	2,409
Total less than twelve months		4		4,591		2,409


Total securities held to maturity		4	$	4,591	$	2,409

The Company has not identified any specific available for sale securities in a loss position that it intends to sell in the near term and does not believe that it will be required to sell any such securities. The Company reviews its securities on a quarterly basis to assess declines in fair value for credit losses. Consideration is given to such factors as the credit rating of the borrower, market conditions such as current interest rates, any adverse conditions specific to the security, and delinquency status on contractual payments. At March 31, 2025, management concluded that in all instances, securities with fair values less than carrying value were due to fluctuations in interest rates and other factors; thus, no credit loss provision was required.

In addition, management assesses held to maturity securities for credit losses on a quarterly basis. The assessment includes review of performance metrics, identification of delinquency and evaluation of market factors. In July 2024, a BHC whose subordinated debt the Company holds and is classified as held to maturity, having an amortized cost balance of $2.0 million, announced the suspension of its quarterly dividend. Beginning with this announcement, management began performing additional research regarding the financial stability and strength of the BHC and underlying bank quarterly. Based on all analysis, management concludes the decline in fair value of all securities classified as held to maturity was due to changes in interest rates and other market factors.

At March 31, 2025, the municipal obligations and U.S. government agency debt securities, including Treasury notes and bonds, agency notes and bonds, mortgage-backed securities and CMOs classified as available for sale and in a loss position had depreciated approximately 8.0% from the amortized cost basis. All of the U.S. government agency securities and municipal obligations are issued by U.S. government agencies, government-sponsored enterprises and municipal governments, or are secured by first mortgage loans and municipal project revenues. At March 31, 2025, the corporate notes classified as held to maturity in a loss position had depreciated approximately 34.4% from the amortized cost basis. These unrealized losses related principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As the Company has the ability to hold the debt securities until maturity, or the foreseeable future if classified as available for sale, no credit loss is deemed to exist.

As of March 31, 2025 and December 31, 2024, the Company estimated expected credit losses to be immaterial based on the composition of the held to maturity securities portfolio.

While management does not anticipate any credit losses at March 31, 2025, additional deterioration in market and economic conditions may have an adverse impact on credit quality in the future.

During the three months ended March 31, 2025, the Company recognized gross gains of $31,000 and gross losses of $86,000 on sales of available for sale securities. During the three months ended March 31, 2024, the Company recognized gross gains of $133,000 and gross losses of $101,000 on sales of available for sale securities.

At March 31, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, with an aggregate book value greater that 10% of stockholders’ equity.

Accrued interest receivable on available for sale debt securities totaled $2.1 million at both March 31, 2025 and December 31, 2024, respectively, and was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the estimate of credit losses.

Accrued interest receivable on held to maturity debt securities totaled $18,000 at both March 31, 2025 and December 31, 2024, and was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the estimate of credit losses.

Equity Securities

In September 2018, the Company acquired 90,000 shares of common stock in another BHC, representing approximately 5% of the outstanding common stock of the entity, for a total investment of $1.9 million. During the three months ended March 31, 2025, the Company recognized an unrealized gain of $18,000. During the three months ended March 31, 2024, the Company recognized an unrealized loss of $68,000. At March 31, 2025 and December 31, 2024, the equity investment had a fair value of $905,000 and $887,000, respectively, and is included in other assets on the consolidated balance sheets.

In October 2021, the Company entered into an agreement to invest in a bank technology fund through a limited partnership. At both March 31, 2025 and December 31, 2024, the Company’s investment in the limited partnership was $965,000 and is reflected in other assets on the consolidated balance sheets. The unfunded commitment related to the limited partnership investment at March 31, 2025 and December 31, 2024 was $380,000 and is reflected in other liabilities on the consolidated balance sheets. The Company expects to fulfill the commitment as capital calls are made through 2026. The investment is accounted for as an equity security without a readily determinable fair value, and has been recorded at cost, less any impairment, and adjustments resulting from observable price changes. There were no impairments or adjustments on equity securities without readily determinable fair values during the three months ended March 31, 2025 or 2024.