Note 6 - Investments, Available for Sale ("AFS")

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Investments in Debt Securities, Available for Sale [Text Block]

NOTE 6 - INVESTMENTS, AVAILABLE FOR SALE ("AFS")

The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of investments AFS at the dates indicated were as follows:

	June 30, 2023
	Amortized		Gross Unrealized		Gross Unrealized		Fair
	Cost		Gains		Losses		Value
Student Loan Pools	$	55,012,254	$	24,574	$	1,152,504	$	53,884,324
Small Business Administration (“SBA”) Bonds		86,796,430		456,505		3,092,775		84,160,160
Tax Exempt Municipal Bonds		21,565,323		389,470		1,293,005		20,661,788
Taxable Municipal Bonds		64,709,727		—		12,620,947		52,088,780
Mortgage-Backed Securities ("MBS")		366,537,252		20,821		35,400,499		331,157,574
Total Available For Sale	$	594,620,986	$	891,370	$	53,559,730	$	541,952,626

	December 31, 2022
	Amortized		Gross Unrealized		Gross Unrealized		Fair
	Cost		Gains		Losses		Value
Student Loan Pools	$	60,854,658	$	11,647	$	1,709,323	$	59,156,982
SBA Bonds		102,292,600		584,290		3,246,923		99,629,967
Tax Exempt Municipal Bonds		22,536,806		405,341		1,631,819		21,310,328
Taxable Municipal Bonds		65,249,883		—		14,480,144		50,769,739
MBS		353,223,361		29,861		33,971,954		319,281,268
Total Available For Sale	$	604,157,308	$	1,031,139	$	55,040,163	$	550,148,284

Student Loan Pools are typically 97% guaranteed by the United States government while SBA bonds are 100% backed by the full faith and credit of the United States government. The majority of the MBS included in the tables above and below are issued or guaranteed by an agency of the United States government such as Ginnie Mae, or by Government Sponsored Entities ("GSEs"), including Fannie Mae and Freddie Mac. Ginnie Mae MBS are backed by the full faith and credit of the United States government, while those issued by GSEs are not. Also included in MBS in the tables above and below are private label CMO securities, which are issued by non-governmental real estate mortgage investment conduits and are not backed by the full faith and credit of the United States government.  At June 30, 2023, the Company held an amortized cost and fair value of $79.0 million and $72.0 million in private label CMO securities, compared to an amortized cost and fair value of $60.1 million and $53.8 million at December 31, 2022, respectively. There was no allowance for credit losses recorded on investments AFS as of June 30, 2023.

The amortized cost and fair value of investments AFS at June 30, 2023 are shown below by contractual maturity.  Expected maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without call or prepayment penalties. Since MBS are not due at a single maturity date, they are disclosed separately, rather than allocated over the maturity groupings set forth in the table below.

	June 30, 2023
Investments AFS:	Amortized Cost		Fair Value
One Year or Less	$	15,149	$	15,048
After One – Five Years		4,941,009		4,923,354
After Five – Ten Years		74,445,408		70,014,896
More Than Ten Years		148,682,168		135,841,754
MBS AFS		366,537,252		331,157,574
Total AFS	$	594,620,986	$	541,952,626

At June 30, 2023, the amortized cost and fair value of investments AFS pledged as collateral for certain deposit accounts, FHLB advances and other borrowings were $362.8 million and $332.5 million, compared to an amortized cost and fair value of $318.0 million and $297.0 million at December 31, 2022, respectively.

There were no sales of investments AFS during the six months ended June 30, 2023 and 2022; and therefore, no proceeds from sales, gross gains or gross losses were recorded during those periods.

The following table shows the gross unrealized losses and estimated fair value of AFS securities for which an allowance for credit losses has not been recorded aggregated by category and length of time that securities have been in a continuous unrealized loss position at June 30, 2023.

	June 30, 2023
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Student Loan Pools	$	2,219,356	$	9,373	$	46,923,563	$	1,143,131	$	49,142,919	$	1,152,504
SBA Bonds		4,287,109		12,009		41,374,318		3,080,766		45,661,427		3,092,775
Tax Exempt Municipal Bonds		510,280		23,629		12,712,000		1,269,376		13,222,280		1,293,005
Taxable Municipal Bonds		—		—		52,088,780		12,620,947		52,088,780		12,620,947
MBS		38,697,258		1,140,729		290,776,832		34,259,770		329,474,090		35,400,499
	$	45,714,003	$	1,185,740	$	443,875,493	$	52,373,990	$	489,589,496	$	53,559,730

The following table shows the gross unrealized losses and estimated fair value of AFS aggregated by category and length of time that securities have been in a continuous unrealized loss position at December 31, 2022.

	December 31, 2022
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Student Loan Pools	$	24,768,260	$	637,963	$	30,684,124	$	1,071,360	$	55,452,384	$	1,709,323
SBA Bonds		8,403,975		120,766		45,969,373		3,126,157		54,373,348		3,246,923
Tax Exempt Municipal Bonds		8,050,944		718,645		4,929,289		913,174		12,980,233		1,631,819
Taxable Municipal Bonds		14,427,796		3,196,761		36,341,943		11,283,383		50,769,739		14,480,144
MBS		146,016,464		11,132,554		170,578,059		22,839,400		316,594,523		33,971,954
	$	201,667,439	$	15,806,689	$	288,502,788	$	39,233,474	$	490,170,227	$	55,040,163

Securities classified as investments AFS are recorded at fair market value.  At June 30, 2023 and December 31, 2022, 427 and 416 individual investments AFS were in a loss position, including 356 and 211 securities that were in a loss position for greater than 12 months, respectively. The Company has the ability and intent to hold these securities until such time as the value recovers or the securities mature.  

The Company believes, based on industry analyst reports and credit ratings, that the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, unrealized losses have not been recognized into income. The Company reviews its investment securities portfolio at least quarterly and more frequently when economic conditions warrant, assessing whether an allowance for credit loss is deemed necessary.

Accrued interest receivable on AFS debt securities totaled $2.8 million at June 30, 2023 and was excluded from the estimate of credit losses.