Note 3 - Securities

9 Months Ended

Sep. 30, 2023

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 estimated fair value of securities available for sale along with gross unrealized gains and losses as of the dates indicated are summarized as follows:

	September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Losses		Fair Value
Available for Sale:
U.S. Treasuries	$	995	$	-	$	47	$	-	$	948
U.S. Government agencies and corporations		353,845		-		57,856		-		295,989
States and political subdivisions		179,672		-		42,603		-		137,069
Mortgage-backed securities		161,067		-		8,955		-		152,112
Corporate debt securities		6,504		-		1,070		-		5,434
Total securities available for sale	$	702,083	$	-	$	110,531	$	-	$	591,552

	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for Sale:
U.S. Treasuries	$	992	$	-	$	56	$	936
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
Total securities available for sale	$	759,917	$	87	$	103,152	$	656,852

No allowance for credit loss on securities available for sale was recorded as of September 30, 2023.

Accrued interest receivable on securities, included in accrued interest receivable on the Consolidated Balance Sheets, totaled $3,420 at September 30, 2023 and $3,485 at December 31, 2022.

The deferred tax asset for the net unrealized loss on securities available for sale was $23,211 as of September 30, 2023 and $21,644 as of December 31, 2022. The deferred tax asset is included in other assets on the Consolidated Balance Sheets.

The amortized cost and fair value of single maturity securities available for sale at September 30, 2023, 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, 2023
	Amortized Cost		Fair Value
Available for Sale:
Due in one year or less	$	1,755	$	1,730
Due after one year through five years		154,209		140,650
Due after five years through ten years		293,046		239,668
Due after ten years		253,073		209,504
Total securities available for sale	$	702,083	$	591,552

Information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that the individual securities have been in a continuous loss position, as of the dates indicated, follows.

	September 30, 2023
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Treasuries	$	-	$	-	$	948	$	47
U.S. Government agencies and corporations		-		-		295,989		57,856
States and political subdivisions		845		41		135,979		42,562
Mortgage-backed securities		1,664		39		150,448		8,916
Corporate debt securities		-		-		5,434		1,070
Total temporarily impaired securities	$	2,509	$	80	$	588,798	$	110,451

	December 31, 2022
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Treasuries	$	936	$	56	$	-	$	-
U.S. Government agencies and corporations		144,574		12,699		190,950		42,303
States 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
Total temporarily impaired securities	$	389,208	$	39,109	$	259,070	$	64,043

The Company evaluates securities available for sale that are in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to the extent to which the fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At September 30, 2023, the Company had 577 securities with a fair value of $591,307 in an unrealized loss position. The Company reviews securities in an unrealized loss position to evaluate credit risk. The Company considers payment history, risk ratings from external parties, financial statements for municipal and corporate securities, public statements from issuers and other available credible published sources in evaluating credit risk. No credit risk was found and no ACL on securities available for sale was recorded as of September 30, 2023. The unrealized losses are attributed to noncredit-related factors, including changes in interest rates and other market conditions. The Company does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. 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. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

Restricted Stock.

The Company holds restricted stock that is reported separately from available for sale securities. As a member of the Federal Reserve 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 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 $510,786 at September 30, 2023. The Company’s management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at September 30, 2023, did not determine any impairment.