Note 4 - Securities

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

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

Note 4: Securities

The amortized costs, gross unrealized gains, gross unrealized losses and fair values for securities available for sale by major security type are as follows.

	September 30, 2020
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for Sale:
U.S. Government agencies and corporations	$	57,906	$	4,712	$	25	$	62,593
State and political subdivisions		157,528		5,936		350		163,114
Mortgage-backed securities		254,025		4,363		64		258,324
Corporate debt securities		3,001		319		---		3,320
Total securities available for sale	$	472,460	$	15,330	$	439	$	487,351

	December 31, 2019
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for Sale:
U.S. Government agencies and corporations	$	119,903	$	1,995	$	775	$	121,123
State and political subdivisions		88,092		791		644		88,239
Mortgage-backed securities		223,173		45		1,435		221,783
Corporate debt securities		3,998		120		---		4,118
Total securities available for sale	$	435,166	$	2,951	$	2,854	$	435,263

The amortized cost and fair value of single maturity securities available for sale at September 30, 2020, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities included in these totals are categorized by final maturity.

	September 30, 2020
	Amortized Cost		Fair Value
Available for Sale:
Due in one year or less	$	8,732	$	8,806
Due after one year through five years		4,837		5,010
Due after five years through ten years		130,312		135,038
Due after ten years		328,579		338,497
Total securities available for sale	$	472,460	$	487,351

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

	September 30, 2020
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Temporarily Impaired Securities:
U.S. Government agencies and corporations	$	4,972	$	25	$	---	$	---
State and political subdivisions		26,545		338		626		12
Mortgage-backed securities		17,760		60		5,011		4
Total	$	49,277	$	423	$	5,637	$	16

	December 31, 2019
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Temporarily Impaired Securities:
U.S. Government agencies and corporations	$	53,244	$	738	$	38,962	$	37
State and political subdivisions		35,934		596		591		48
Mortgage-backed securities		181,279		1,435		---		---
Total	$	270,457	$	2,769	$	39,553	$	85

The Company had 37 securities with a fair value of $54,914 that were temporarily impaired at September 30, 2020.  The total unrealized loss on these securities was $439. Of the temporarily impaired total, 2 securities with a fair value of $5,637 and an unrealized loss of $16 have been in a continuous loss position for twelve months or more. The Company has determined that these securities are temporarily impaired at September 30, 2020 for the reasons set out below.

State and political subdivisions. The unrealized loss of $12 on state and political subdivisions securities stemmed from one security with a fair value of $626. The unrealized loss was caused by interest rate and market fluctuations. The Company is monitoring bond market trends to develop strategies to address unrealized losses. Because the Company does not intend to sell the investment and it is not likely that the Company will be required to sell the investment before recovery of the amortized cost basis, which may be at maturity, the Company does not consider the investment to be other-than-temporarily impaired.     

Mortgage-backed securities. The unrealized loss of $4 on mortgage-backed securities stemmed from one security with a fair value of $5,011. The unrealized loss was caused by interest rate and market fluctuations. The Company is monitoring bond market trends to develop strategies to address unrealized losses. Because the Company does not intend to sell the investment and it is not likely that the Company will be required to sell the investment before recovery of the amortized cost basis, which may be at maturity, the Company does not consider the investment to be other-than-temporarily impaired.    

Restricted Stock.

The Company held restricted stock of $1,279 as of September 30, 2020 and $1,220 at December 31, 2019. Restricted stock is reported separately from available for sale securities. As a member bank of the Federal Reserve system and the Federal Home Loan Bank of Atlanta (“FHLB”), NBB is required to maintain certain minimum investments in the common stock of those entities. Required levels of investment are based upon NBB’s capital, current borrowings, and a percentage of qualifying assets. The Company purchases stock from or sells stock back to the correspondents based on their calculations. The stock is held by member institutions only and is not actively traded.

Redemption of FHLB stock is subject to certain limitations and conditions. At its discretion, the FHLB may declare dividends on the stock. In addition to dividends, NBB also benefits from its membership with FHLB through eligibility to borrow from the FHLB, using as collateral NBB’s capital stock investment in the FHLB and qualifying NBB real estate mortgage loans totaling $562,220 at September 30, 2020. Management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at September 30, 2020, management did not determine any impairment.

Management regularly monitors the credit quality of the investment portfolio. Changes in ratings are noted and follow-up research on the issuer is undertaken when warranted. Management intends to carefully monitor any changes in bond quality.