Note 3 - Securities

12 Months Ended

Dec. 31, 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 fair value of debt securities available for sale, with gross unrealized gains and losses, as of the dates indicated, follows:

December 31, 2023	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. government agencies and corporations	$	353,904	$	-	$	42,060	$	311,844
States and political subdivisions		179,507		-		29,614		149,893
Mortgage-backed securities		156,875		-		6,724		150,151
Corporate debt securities		6,504		-		754		5,750
U.S. treasury		996		-		33		963
Total securities available for sale	$	697,786	$	-	$	79,185	$	618,601

December 31, 2022	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

No allowance for credit loss on securities available for sale was recorded as of December 31, 2023.

The deferred tax asset for the net unrealized loss on securities available for sale was $16,629 as of December 31, 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, by contractual maturity as of the date indicated, 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, 2023	Amortized Cost		Fair Value
Due in one year or less	$	3,795	$	3,748
Due after one year through five years		178,297		166,386
Due after five years through ten years		277,155		238,409
Due after ten years		238,539		210,058
Total securities available for sale	$	697,786	$	618,601

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 as of the dates indicated, follows:

December 31, 2023	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. government agencies and corporations	$	-	$	-	$	311,844	$	42,060
State and political subdivisions		884		1		148,763		29,613
Mortgage-backed securities		1,616		26		147,922		6,698
Corporate debt securities		-		-		5,750		754
U.S. treasury		-		-		963		33
Total temporarily impaired securities	$	2,500	$	27	$	615,242	$	79,158

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

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 December 31, 2023, the Company had 576 securities with a fair value of $617,742 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 December 31, 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.

Realized Securities Gains and Losses

During 2023, the Company sold securities and realized a net loss of $3,332. The Company did not have any realized gains or losses in 2022. Information pertaining to realized gains and losses on sold securities for the period indicated follows:

	For the Year Ended December 31, 2023
	Proceeds		Book Value		Gross Gain		Gross Loss		Net Loss
Available for sale	$	43,518	$	46,850	$	137	$	3,469	$	3,332

Restricted Stock

The Company held restricted stock of $1,264 as of December 31, 2023 and $941 as of December 31, 2022. 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 $508,768 as of December 31, 2023. Management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and as of December 31, 2023, management did not determine any impairment.

Pledged Securities

As of December 31, 2023 and 2022, securities with a carrying value of $534,465 and $345,689, respectively, were pledged to secure municipal deposits and Federal Reserve discount window borrowing capacity.