Note 4 - Securities

6 Months Ended

Jun. 30, 2021

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.

	June 30, 2021
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for Sale:
U.S. Government agencies and corporations	$	182,123	$	3,614	$	2,101	$	183,636
States and political subdivisions		197,399		6,143		1,728		201,814
Mortgage-backed securities		225,994		4,128		123		229,999
Corporate debt securities		2,001		306		-		2,307
Total securities available for sale	$	607,517	$	14,191	$	3,952	$	617,756

	December 31, 2020
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for Sale:
U.S. Government agencies and corporations	$	86,859	$	4,477	$	173	$	91,163
States and political subdivisions		196,435		7,778		252		203,961
Mortgage-backed securities		244,780		4,473		78		249,175
Corporate debt securities		2,001		442		-		2,443
Total securities available for sale	$	530,075	$	17,170	$	503	$	546,742

The amortized cost and fair value of single maturity securities available for sale at June 30, 2021, 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.

	June 30, 2021
	Amortized Cost		Fair Value
Available for Sale:
Due in one year or less	$	1,377	$	1,396
Due after one year through five years		5,431		5,550
Due after five years through ten years		229,995		232,759
Due after ten years		370,714		378,051
Total securities available for sale	$	607,517	$	617,756

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.

	June 30, 2021
	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	$	90,558	$	2,101	$	-	$	-
States and political subdivisions		57,581		1,538		7,709		190
Mortgage-backed securities		6,046		2		5,187		121
Total	$	154,185	$	3,641	$	12,896	$	311

	December 31, 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	$	28,798	$	173	$	-	$	-
States and political subdivisions		32,353		249		635		3
Mortgage-backed securities		8,816		76		4,060		2
Total	$	69,967	$	498	$	4,695	$	5

The Company has 145 securities with a fair value of $167,081 that are temporarily impaired at June 30, 2021.  The total unrealized loss on these securities is $3,952. Of the temporarily impaired securities, eight securities with a fair value of $12,896 and an unrealized loss of $311 have been in a continuous loss position for twelve months or more. The Company determined that these eight securities are temporarily impaired at June 30, 2021 for the reasons set out below.

States and political subdivisions. The unrealized loss of $190 on state and political subdivision securities stemmed from five securities with a fair value of $7,709. The Company reviewed financial statements and cash flows for each of the securities in a continuous loss position for more than 12 months. The Company’s analysis determined that the unrealized losses are primarily the result of interest rate and market fluctuations and not associated with impaired financial status. The contractual terms of the investment do not permit the issuer to settle the securities at a price less than the cost basis of each investment. The Company is monitoring bond market trends to develop strategies to address unrealized losses. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of amortized cost basis, which may be at maturity, the Company does not consider the investments to be other-than-temporarily impaired.         

Mortgage-backed securities. The unrealized loss of $121 on mortgage-backed securities stemmed from three securities with a fair value of $5,187. The unrealized loss was caused by interest rate and market fluctuations. The contractual terms of the investment do not permit the issuer to settle the securities at a price less than the cost basis of each investment. 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 its 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 $845 as of June 30, 2021 and $1,279 at December 31, 2020. 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 correspondents provide calculations that require NBB to purchase or sell stock back to the correspondents. 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 $574,203 at June 30, 2021. Management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at June 30, 2021, 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.