Note 2 - Securities

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

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

Note 2 – Securities

The amortized cost and fair value of investments in securities available for sale at September 30, 2021 were as follows (dollars in thousands):

	September 30, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Securities available for sale:
U.S. Treasury	$	110,154	$	92	$	205	$	110,041
Federal agencies and GSEs		89,680		1,298		482		90,496
Mortgage-backed and CMOs		358,910		3,933		2,436		360,407
State and municipal		62,813		1,336		282		63,867
Corporate		18,950		248		60		19,138
Total securities available for sale	$	640,507	$	6,907	$	3,465	$	643,949

The amortized cost and fair value of investments in securities available for sale at December 31, 2020 were as follows (dollars in thousands):

	December 31, 2020
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Securities available for sale:
U.S. Treasury	$	34,997	$	1	$	—	$	34,998
Federal agencies and GSEs		104,092		1,976		45		106,023
Mortgage-backed and CMOs		246,770		6,117		105		252,782
State and municipal		57,122		1,979		2		59,099
Corporate		13,011		188		10		13,189
Total securities available for sale	$	455,992	$	10,261	$	162	$	466,091

Restricted Stock

Due to restrictions placed upon the Bank's common stock investment in the Federal Reserve Bank of Richmond ("FRB") and Federal Home Loan Bank of Atlanta ("FHLB"), these securities have been classified as restricted equity securities and carried at cost. The restricted securities are not subject to the investment security classification requirements and are included as a separate line item on the Company's consolidated balance sheets. The FRB requires the Bank to maintain stock with a par value equal to 3.00% of its outstanding capital and an additional 3.00% is on call. The FHLB requires the Bank to maintain stock in an amount equal to 3.75% of outstanding borrowings and a specific percentage of the Bank's total assets. The cost of restricted stock at September 30, 2021 and  December 31, 2020 was as follows (dollars in thousands):

	September 30, 2021		December 31, 2020
FRB stock	$	6,490	$	6,458
FHLB stock		1,556		2,257
Total restricted stock	$	8,046	$	8,715

Temporarily Impaired Securities

The following table shows estimated fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2021. The reference point for determining when securities are in an unrealized loss position is month end. Therefore, it is possible that a security's market value exceeded its amortized cost on other days during the past twelve-month period.

Available for sale securities that have been in a continuous unrealized loss position, at September 30, 2021, were as follows (dollars in thousands):

	Total				Less than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Treasury	$	75,384	$	205	$	75,384	$	205	$	—	$	—
Federal agencies and GSEs		54,053		482		48,140		302		5,913		180
Mortgage-backed and CMOs		208,634		2,436		202,455		2,302		6,179		134
State and municipal		17,869		282		15,440		166		2,429		116
Corporate		7,690		60		7,690		60		—		—
Total	$	363,630	$	3,465	$	349,109	$	3,035	$	14,521	$	430

The table below shows estimated fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position, at December 31, 2020 (dollars in thousands):

	Total				Less than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Federal agencies and GSEs	$	21,237	$	45	$	19,974	$	26	$	1,263	$	19
Mortgage-backed and CMOs		46,640		105		46,640		105		—		—
State and municipal		3,456		2		3,456		2		—		—
Corporate		5,990		10		5,990		10		—		—
Total	$	77,323	$	162	$	76,060	$	143	$	1,263	$	19

U.S. Treasury securities: The unrealized losses on the Company's investment in eight U.S. Treasury securities were caused by normal market fluctuations. None of these securities were in an unrealized loss position for 12 months or more. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2021.

Federal agencies and GSEs: The unrealized losses on the Company's investment in 23 government sponsored entities ("GSE") securities were caused by normal market fluctuations. Eleven of these securities were in an unrealized loss position for 12 months or more. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2021.

Mortgage-backed securities: The unrealized losses on the Company's investment in 16 GSE mortgage-backed securities were caused by normal market fluctuations. One of these securities was in an unrealized loss position for 12 months or more. The contractual cash flows of those investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company's investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2021.

Collateralized Mortgage Obligations: The unrealized losses associated with 23 GSE collateralized mortgage obligations ("CMOs") were due to normal market fluctuations. One of these securities was in an unrealized loss position for 12 months or more. The contractual cash flows of these investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company's investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2021.

State and municipal securities: The unrealized losses on 26 state and municipal securities were caused by normal market fluctuations. One of these securities was in an unrealized loss position for 12 months or more. These securities are of high credit quality (rated AA- or higher), and principal and interest payments have been made timely. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2021.

Corporate securities: The unrealized losses on three corporate securities were caused by normal market fluctuations and not credit deterioration. These securities are not rated, but the Company conducted thorough internal credit reviews prior to purchase earlier this year, which determined the investment risk to be acceptable due to the issuers' experienced management teams, strong asset quality, and ample levels of capital and liquidity. The Company conducts ongoing quarterly reviews of these companies as well. The contractual terms of these investment do not permit the issuer to settle the security at a price less than the amortized cost basis of the investment. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at  September 30, 2021.

Restricted stock: When evaluating restricted stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Company does not consider restricted stock to be other-than-temporarily impaired at September 30, 2021, and no impairment has been recognized.

Other-Than-Temporarily-Impaired Securities

As of September 30, 2021 and December 31, 2020, there were no securities classified as other-than-temporarily impaired.

Realized Gains and Losses

The following table presents the gross realized gains and losses on, and the proceeds from the sale of, securities available for sale during the three and nine months ended September 30, 2021 and 2020 (dollars in thousands):

	Three Months Ended September 30, 2021		Nine Months Ended September 30, 2021
Realized gains:
Gross realized gains	$	—	$	—
Gross realized losses		—		—
Net realized gains	$	—	$	—
Proceeds from sales of securities	$	—	$	—

	Three Months Ended September 30, 2020		Nine Months Ended September 30, 2020
Realized gains:
Gross realized gains	$	—	$	814
Gross realized losses		—		—
Net realized gains	$	—	$	814
Proceeds from sales of securities	$	—	$	5,811