Note 4 - 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 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, 2021
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for Sale:
U.S. Government agencies and corporations	$	220,372	$	3,062	$	3,243	$	220,191
States and political subdivisions		196,518		4,970		2,181		199,307
Mortgage-backed securities		215,661		3,284		193		218,752
Corporate debt securities		3,004		259		27		3,236
Total securities available for sale	$	635,555	$	11,575	$	5,644	$	641,486

	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 September 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.

	September 30, 2021
	Amortized Cost		Fair Value
Available for Sale:
Due in one year or less	$	1,864	$	1,902
Due after one year through five years		8,722		8,785
Due after five years through ten years		264,217		265,751
Due after ten years		360,752		365,048
Total securities available for sale	$	635,555	$	641,486

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, 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	$	156,418	$	3,190	$	944	$	53
States and political subdivisions		71,912		1,868		9,026		313
Mortgage-backed securities		10,229		46		5,146		147
Corporate debt securities		976		27		-		-
Total	$	239,535	$	5,131	$	15,116	$	513

	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 229 securities with a fair value of $254,651 that are temporarily impaired at September 30, 2021.  The total unrealized loss on these securities is $5,644. Of the temporarily impaired securities, 10 securities with a fair value of $15,116 and an unrealized loss of $513 have been in a continuous loss position for twelve months or more. The Company determined that these 10 securities are temporarily impaired at September 30, 2021 for the reasons set out below.

U.S. Government agencies and corporations. The unrealized loss of $53 on US Government agency securities stemmed from one security with a fair value of $944. The unrealized loss was caused by interest rate and market fluctuations. The contractual terms of the investment do not permit the issuers to settle the securities at a price less than the cost basis of the investments. 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.

States and political subdivisions. The unrealized loss of $313 on state and political subdivision securities stemmed from six securities with a fair value of $9,026. 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 investments 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 $147 on mortgage-backed securities stemmed from three securities with a fair value of $5,146. The unrealized loss was caused by interest rate and market fluctuations. The contractual terms of the investments do not permit the issuers to settle the securities at a price less than the cost basis of each investment. 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 its amortized cost basis, which may be at maturity, the Company does not consider the investments to be other-than-temporarily impaired.

Restricted Stock.

The Company held restricted stock of $845 as of September 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 $596,772 at September 30, 2021. Management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at September 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.