Note 3 - Securities

12 Months Ended

Dec. 31, 2022

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, 2022
Available for sale:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. government agencies and corporations	$	391,538	$	39	$	55,002	$	336,575
States and political subdivisions		190,192		26		38,018		152,200
Mortgage-backed securities		170,694		22		9,239		161,477
Corporate debt securities		6,501		-		837		5,664
U.S. treasury		992		-		56		936
Total securities available for sale	$	759,917	$	87	$	103,152	$	656,852

	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

The amortized cost and fair value of single maturity securities available for sale, by contractual maturity, are shown below. Mortgage-backed securities are categorized by final maturity. 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.

	December 31, 2022
Available for sale:	Amortized Cost		Fair Value
Due in one year or less	$	2,779	$	2,738
Due after one year through five years		139,168		129,798
Due after five years through ten years		328,812		279,880
Due after ten years		289,158		244,436
Total securities available for sale	$	759,917	$	656,852

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:

	December 31, 2022
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government agencies and corporations	$	144,574	$	12,699	$	190,950	$	42,303
State and political subdivisions		94,657		18,373		52,134		19,645
Mortgage-backed securities		144,198		7,326		15,165		1,913
Corporate debt securities		4,843		655		821		182
U.S. treasury		936		56		-		-
Total temporarily impaired securities	$	389,208	$	39,109	$	259,070	$	64,043

	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

The Company had 614 securities with a fair value of $648,278 that were temporarily impaired as of  December 31, 2022.  The total unrealized loss on these securities was $103,152. Of the temporarily impaired total, 289 securities with a fair value of $259,070 and an unrealized loss of $64,043 have been in a continuous loss position for 12 months or more. The Company has determined that these securities are temporarily impaired as of  December 31, 2022 for the reasons set out below.

U.S. Government agencies. Unrealized losses of $42,303 on 222 securities with a fair value of $190,950 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 flow information for the 58 securities with a fair value of $52,134 and unrealized losses of $19,645 and determined that the unrealized loss is 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 $1,913 on 8 securities with a fair value of $15,165 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.

Corporate debt securities. One corporate debt security with a fair value of $821 presented an unrealized loss of $182. 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  December 31, 2022 and $845 as of  December 31, 2021. 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 $645,539 as of  December 31, 2022. Management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and as of  December 31, 2022, 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

As of  December 31, 2022 and 2021, securities with a carrying value of $345,689 and $287,023, respectively, were pledged to secure municipal deposits and for other purposes as required or permitted by law.

Realized Securities Gains and Losses

The Company did not have any realized gains or losses in 2022. During 2021, the Company realized net securities gains of $6, all of which stemmed from calls of securities. Information pertaining to realized gains and losses on 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