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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 fair value of debt securities available for sale, with gross unrealized gains and losses, as of the dates indicated, follows:

 

   

December 31, 2021

 

Available for sale:

 

Amortized

Cost

   

Gross

Unrealized

Gains

   

Gross

Unrealized

Losses

    Fair Value  

U.S. Government agencies and corporations

  $ 279,934     $ 2,795     $ 4,710     $ 278,019  

States and political subdivisions

    195,365       5,314       2,007       198,672  

Mortgage-backed securities

    204,164       2,323       313       206,174  

Corporate debt securities

    3,004       248       37       3,215  

Total securities available for sale

  $ 682,467     $ 10,680     $ 7,067     $ 686,080  

 

   

December 31, 2020

 

Available for sale:

 

Amortized

Cost

   

Gross

Unrealized

Gains

   

Gross

Unrealized

Losses

   

Fair Value

 

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 December 31, 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 at December 31, 2021.

 

   

December 31, 2021

 

Available for sale:

 

Amortized Cost

   

Fair Value

 

Due in one year or less

  $ 2,519     $ 2,540  

Due after one year through five years

    24,034       24,051  

Due after five years through ten years

    313,966       313,288  

Due after ten years

    341,948       346,201  

Total securities available for sale

  $ 682,467     $ 686,080  

 

Information pertaining to securities with gross unrealized losses at December 31, 2021 and 2020 aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

 

   

December 31, 2021

 
   

Less Than 12 Months

   

12 Months or More

 
   

Fair
Value

   

Unrealized
Loss

   

Fair
Value

   

Unrealized
Loss

 

U.S. Government agencies and corporations

  $ 201,650     $ 3,530     $ 26,792     $ 1,180  

State and political subdivisions

    50,659       1,214       20,542       793  

Mortgage-backed securities

    13,139       141       4,665       172  

Corporate debt securities

    966       37       -       -  

Total temporarily impaired securities

  $ 266,414     $ 4,922     $ 51,999     $ 2,145  

 

   

December 31, 2020

 
   

Less Than 12 Months

   

12 Months or More

 
   

Fair
Value

   

Unrealized
Loss

   

Fair
Value

   

Unrealized
Loss

 

U.S. Government agencies and corporations

  $ 28,798     $ 173     $ -     $ -  

State and political subdivisions

    32,353       249       635       3  

Mortgage-backed securities

    8,816       76       4,060       2  

Total temporarily impaired securities

  $ 69,967     $ 498     $ 4,695     $ 5  

 

The Company had 291 securities with a fair value of $318,413 that were temporarily impaired at December 31, 2021.  The total unrealized loss on these securities was $7,067. Of the temporarily impaired total, 48 securities with a fair value of $51,999 and an unrealized loss of $2,145 have been in a continuous loss position for 12 months or more. The Company has determined that these securities are temporarily impaired at December 31, 2021 for the reasons set out below.

U.S. Government agencies. Unrealized losses of $1,180 on 28 securities with a fair value of $26,792 were caused by interest rate and market fluctuations. The contractual terms of the investments do not permit the issuer to settle the securities at a price less than the cost basis of the investments. 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 their amortized cost basis, which may be at maturity, the Company does not consider the securities to be other-than-temporarily impaired.

 

States and political subdivisions. The Company reviewed financial statements and cash flows for the 17 securities with a fair value of $20,542 and unrealized losses of $793 and determined that the unrealized loss is 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 security at a price less than the cost basis of the 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.

Mortgage-backed securities. Unrealized losses of $172 on 3 securities with a fair value of $4,665 were caused by interest rate and market fluctuations. 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 costs basis, which may be at maturity, the Company does not consider this investment to be other-than-temporarily impaired.

 

Restricted Stock

The Company held restricted stock of $845 at December 31, 2021 and $1,279 at December 31, 2020. Restricted stock is reported separately from available for sale securities. As a member of the Federal Reserve and the 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 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 $603,827 at December 31, 2021. Management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at December 31, 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.

 

Pledged Securities

At December 31, 2021 and 2020, securities with a carrying value of $287,023 and $251,048, respectively, were pledged to secure municipal deposits and for other purposes as required or permitted by law.

 

Realized Securities Gains and Losses

During 2021, the Company realized net securities gains of $6, all of which stemmed from calls of securities. During 2020, the Company realized net securities gains of $108, including net gains of $43 on the sale of securities and $65 on calls of securities. The sales of securities were pursuant to a restructuring plan to manage interest rate risk. Information pertaining to realized gains and losses on sold and called securities follows:

 

   

For the year ended December 31, 2021

 
   

Proceeds

   

Book Value

   

Gross Gain

   

Gross Loss

   

Net Gain

 

Available for sale

  $ 20,377     $ 20,371     $ 6     $ -     $ 6  

 

   

For the year ended December 31, 2020

 
   

Proceeds

   

Book Value

   

Gross Gain

   

Gross Loss

   

Net Gain

 

Available for sale

  $ 126,840     $ 126,732     $ 110     $ 2     $ 108