Note 3 - Securities

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

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

Note 3 - Securities

The amortized cost and estimated fair value of investments in securities at December 31, 2021 and 2020 were as follows (dollars in thousands):

	December 31, 2021
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Securities available for sale:
U.S. Treasury	$	150,751	$	—	$	1,174	$	149,577
Federal agencies and GSEs		104,518		993		931		104,580
Mortgage-backed and CMOs		357,981		2,854		4,525		356,310
State and municipal		65,939		1,021		488		66,472
Corporate		15,450		218		140		15,528
Total securities available for sale	$	694,639	$	5,086	$	7,258	$	692,467

The Company had no equity securities at December 31, 2021 or  December 31, 2020 but recognized in income $333,000 during 2019. 

(Dollars in thousands)	December 31, 2020
	Amortized		Unrealized		Unrealized
	Cost		Gains		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

The amortized cost and estimated fair value of investments in debt securities at December 31, 2021, by contractual maturity, are shown in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because mortgage-backed securities have both known principal repayment terms as well as unknown principal repayments due to potential borrower pre-payments, it is difficult to accurately predict the final maturity of these investments. Mortgage-backed securities are shown separately (dollars in thousands):

	Available for Sale
	Amortized
	Cost		Fair Value
Due in one year or less	$	52,314	$	52,315
Due after one year through five years		185,555		185,333
Due after five years through ten years		84,768		84,381
Due after ten years		14,021		14,128
Mortgage-backed and CMOs		357,981		356,310
	$	694,639	$	692,467

Gross realized gains and losses on, and the proceeds from the sale of, securities available for sale were as follows (dollars in thousands):

	For the Year Ended December 31,
	2021		2020		2019
Gross realized gains	$	35	$	814	$	328
Gross realized losses		—		—		(54	)
Proceeds from sales of securities		561		5,811		29,878

Securities with a carrying value of approximately $150,400,000 and $189,791,000 at December 31, 2021 and 2020, respectively, were pledged to secure public deposits, repurchase agreements, and for other purposes as required by law. FHLB letters of credit were used as additional collateral in the amounts of $275,000,000 at December 31, 2021 and $245,000,000 at December 31, 2020.

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 December 31, 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 are as follows (dollars in thousands):

	Total				Less than 12 Months				12 Months or More
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury	$	149,577	$	1,174	$	149,577	$	1,174	$	—	$	—
Federal agencies and GSEs		73,640		931		63,042		512		10,598		419
Mortgage-backed and CMOs		253,444		4,525		213,292		3,014		40,152		1,511
State and municipal		26,646		488		23,341		354		3,305		134
Corporate		7,611		140		7,611		140		—		—
Total	$	510,918	$	7,258	$	456,863	$	5,194	$	54,055	$	2,064

U.S. Treasury: The unrealized losses on the Company's investment in 17 U.S. Treasury securities were caused by normal market fluctuations. None of these securities was 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 bases 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 bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2021.

Federal agencies and GSEs: The unrealized losses on the Company's investment in 26 government sponsored entities ("GSEs") were caused by normal market fluctuations. Twelve 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 bases 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 bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2021.

Mortgage-backed securities: The unrealized losses on the Company's investment in 18 GSE mortgage-backed securities were caused by normal market fluctuations. Four of these securities were 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 bases 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 bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2021.

Collateralized Mortgage Obligations: The unrealized losses associated with 33 GSE collateralized mortgage obligations ("CMOs") were due to normal market fluctuations. Four of these securities were 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 bases 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 its amortized cost bases, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at December 31, 2021.

State and municipal securities: The unrealized losses on 39 state and municipal securities were caused by normal market fluctuations. Two of these securities were in an unrealized loss position for 12 months or more. These securities are of high credit quality (rated A- or higher), and principal and interest payments have been made timely. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost bases 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 bases, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2021.

Corporate securities: The unrealized losses on three corporate securities were caused by normal market fluctuations and not credit deterioration. None of these securities was in an unrealized loss position for 12 months or more. These securities are not rated, but the Company conducted thorough internal credit reviews prior to purchase and conducts ongoing quarterly reviews of these companies as well, and the Company's analysis did not indicate the existence of credit loss. The contractual terms of these 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 December 31, 2021.

Due to restrictions placed upon the Bank's common stock investment in the Federal Reserve Bank of Richmond and FHLB, these securities have been classified as restricted equity securities and carried at cost. These 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 sheet. Restricted equity securities consist of Federal Reserve Bank of Richmond stock in the amount of $6,500,000 and $6,458,000 as of  December 31, 2021 and 2020, respectively, and FHLB stock in the amount of $1,556,000 and $2,257,000 as of December 31, 2021 and 2020, respectively.

The table below shows gross unrealized losses and fair value, 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		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury	$	21,237	$	45	$	19,974	$	26	$	1,263	$	19
Federal agencies and GSEs		46,640		105		46,640		105		—		—
Mortgage-backed and CMOs		3,456		2		3,456		2		—		—
State and municipal		5,990		10		5,990		10		—		—
Total	$	77,323	$	162	$	76,060	$	143	$	1,263	$	19

Other-Than-Temporary-Impaired Securities

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