Note 4 - Securities

9 Months Ended

Sep. 30, 2022

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, 2022
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for Sale:
U.S. Treasuries	$	991	$	-	$	59	$	932
U.S. Government agencies and corporations		391,473		45		56,988		334,530
States and political subdivisions		190,361		28		41,229		149,160
Mortgage-backed securities		176,045		23		8,824		167,244
Corporate debt securities		6,501		-		957		5,544
Total securities available for sale	$	765,371	$	96	$	108,057	$	657,410

	December 31, 2021
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for Sale:
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

The amortized cost and fair value of single maturity securities available for sale at September 30, 2022, 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, 2022
	Amortized Cost		Fair Value
Available for Sale:
Due in one year or less	$	1,799	$	1,798
Due after one year through five years		133,556		124,384
Due after five years through ten years		324,861		276,378
Due after ten years		305,155		254,850
Total securities available for sale	$	765,371	$	657,410

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, 2022
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Treasuries	$	932	$	59	$	-	$	-
U.S. Government agencies and corporations		207,506		25,296		124,968		31,692
States and political subdivisions		100,072		23,747		43,622		17,482
Mortgage-backed securities		152,201		7,624		12,802		1,200
Corporate debt securities		4,749		749		795		208
Total temporarily impaired securities	$	465,460	$	57,475	$	182,187	$	50,582

	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
States 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

The Company has 614 securities with a fair value of $647,648 that are temporarily impaired at September 30, 2022.  The total unrealized loss on these securities is $108,057. Of the temporarily impaired securities, 207 securities with a fair value of $182,187 and an unrealized loss of $50,582 have been in a continuous loss position for 12 months or more. The Company determined that these securities are temporarily impaired at September 30, 2022 for the reasons set out below.

U.S. Government agencies and corporations: Unrealized losses of $31,692 on 150 securities with a fair value of $124,968 were 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 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 unrealized loss of $17,482 on state and political subdivision securities stemmed from 50 securities with a fair value of $43,622. 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 issuers 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 $1,200 on mortgage-backed securities stemmed from six securities with a fair value of $12,802. The unrealized loss was 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 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.

Corporate debt securities: One corporate debt security with a fair value of $795 presented an unrealized loss of $208. The Company reviewed the corporation's financial position 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 the amortized cost basis, which may be at maturity, the Company does not consider the investment to be other-than-temporarily impaired.

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.

Restricted Stock.

The Company held restricted stock of $941 as of September 30, 2022 and $845 at December 31, 2021. 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 the Company 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 $641,798 at September 30, 2022. Management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at September 30, 2022, management did not determine any impairment.