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Note 3 - Securities

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

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

NOTE 3 – Securities

The estimated fair value of available-for-sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

		(Dollars in thousands)
						Gross				Gross				Estimated
		Cost				Unrealized				Unrealized				Fair
		Basis				Gains				Losses				Value
December 31, 2023
U.S. government sponsored entities		$	8,884			$	-			$	(1,001	)		$	7,883
U.S. treasury securities			-				-				-				-
Collateralized mortgage obligations and residential mortgage-backed securities			149,410				-				(25,946	)			123,464
Municipal securities			278,813				60				(40,203	)			238,670
Collateralized debt obligations			2,170				-				(813	)			1,357
Total securities available-for-sale		$	439,277			$	60			$	(67,963	)		$	371,374

		(Dollars in thousands)
						Gross				Gross				Estimated
		Cost				Unrealized				Unrealized				Fair
		Basis				Gains				Losses				Value
December 31, 2022
U.S. government sponsored entities		$	8,883			$	-			$	(1,258	)		$	7,625
U.S. treasury securities			389				-				-				389
Collateralized mortgage obligations and residential mortgage-backed securities			163,000				-				(28,884	)			134,116
Municipal securities			281,032				7				(53,321	)			227,718
Collateralized debt obligations			2,173				-				(1,125	)			1,048
Total securities available-for-sale		$	455,477			$	7			$	(84,588	)		$	370,896

The cost basis, estimated fair value of available-for-sale securities, and carrying amount, if different, at December 31, 2023, by contractual maturity were as follows. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately.

		(Dollars in thousands)
		Available-for-sale
						Estimated
		Cost				Fair
December 31, 2023		Basis				Value
Due in one year or less		$	250			$	249
Due from one to five years			10,433				9,325
Due from five to ten years			21,801				20,486
Due over ten years			257,383				217,850
Collateralized mortgage obligations and residential mortgage-backed securities			149,410				123,464
Total		$	439,277			$	371,374

Sales of available-for-sale securities were as follows:

		(Dollars in thousands)
		December 31,				December 31,
		2023				2022

Proceeds		$	476			$	53,953
Gross gains			-				733
Gross losses			(48	)			(71	)

The tax benefits related to these net realized losses were approximately $11 thousand for 2023. The tax provisions related to these net realized gains were approximately $157 thousand for 2022.

Accumulated other comprehensive income/(loss) balances, net of tax, related to available-for-sale securities, were as follows:

		(Dollars in thousands)
		Unrealized gain/(loss)
Ending balance, December 31, 2022		$	(64,300	)
Current period change			12,687
Ending balance, December 31, 2023		$	(51,613	)

		(Dollars in thousands)
		Unrealized gain/(loss)
Ending balance, December 31, 2021		$	4,276
Current period change			(68,576	)
Ending balance, December 31, 2022		$	(64,300	)

Securities with carrying values of approximately $324.1 million and $223.7 million were pledged as of December 31, 2023 and 2022, respectively, as collateral for repurchase agreements, public funds, and for other purposes as permitted or required by law.

Securities with unrealized losses at December 31, 2023, and 2022, not recognized in income are as follows:

		(Dollars in thousands)
		Less than 12 months								12 months or longer								Total
		Estimated								Estimated								Estimated								Percentage of
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized				Total Portfolio
		Value				Losses				Value				Losses				Value				Losses				in Loss Position
December 31, 2023
U.S. government sponsored entities		$	-			$	-			$	7,883			$	(1,001	)		$	7,883			$	(1,001	)			100.0	%
Collateralized mortgage obligations and residential mortgage-backed securities			-				-				123,464				(25,946	)			123,464				(25,946	)			100.0	%
Municipal securities			-				-				229,595				(40,203	)			229,595				(40,203	)			96.2	%
Collateralized debt obligations			-				-				1,357				(813	)			1,357				(813	)			100.0	%
Total temporarily impaired		$	-			$	-			$	362,299			$	(67,963	)		$	362,299			$	(67,963	)			97.6	%
Number of securities							-								434								434

		(Dollars in thousands)
		Less than 12 months								12 months or longer								Total
		Estimated								Estimated								Estimated								Percentage of
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized				Total Portfolio
		Value				Losses				Value				Losses				Value				Losses				in Loss Position
December 31, 2022
U.S. government sponsored entities		$	-			$	-			$	7,625			$	(1,258	)		$	7,625			$	(1,258	)			100.0	%
Collateralized mortgage obligations and residential mortgage-backed securities			32,700				(4,955	)			101,416				(23,929	)			134,116				(28,884	)			100.0	%
Municipal securities			171,581				(35,935	)			52,961				(17,386	)			224,542				(53,321	)			98.6	%
Collateralized debt obligations			-				-				1,048				(1,125	)			1,048				(1,125	)			100.0	%
Total temporarily impaired		$	204,281			$	(40,890	)		$	163,050			$	(43,698	)		$	367,331			$	(84,588	)			99.0	%
Number of securities							311								135								446

Unrealized losses on securities have not been recognized into income because the securities are of high credit quality or have undisrupted cash flows. Management has the intent and ability to hold those securities for the foreseeable future, and the decline in fair value is largely due to changes in interest rates and volatility in securities markets. The fair values are expected to recover as the securities approach maturity.

AFS securities are not within the scope of the CECL methodology; however, the accounting for credit losses on these securities is affected by ASC 326-30. ASC 326 allows for prospective adoption of previously recorded other-than-temporary impairment (OTTI) on AFS securities. At adoption, the Bank had $173 thousand of previously recorded credit impairment on trust preferred AFS securities. The Bank believes this continues to represent the expected credit losses of the amortized cost basis, therefore, no additional ACL has been established for AFS debt securities at January 1, 2023. The need for an ACL is monitored quarterly and is measured by evaluating the present value of cash flows as compared to the amortized cost basis of the security. After adoption, if there is a decrease in future expected cash flows due to a deterioration in credit, an ACL will be recorded. If there is an improvement in credit, any previously recorded ACL will be reduced. Improvement in credit beyond any ACL that has been established will be recorded in the income statement in the period in which the cash recovery is received. At December 31, 2023 collateralized debt obligations with a cost basis of $2.2 million and fair value of $1.4 million had previously recorded impairment of $173 thousand, which will not be recoverable until maturity of the security.