Note 7 - Investments, Held to Maturity ("HTM")

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Investments in Debt Securities, Held to Maturity [Text Block]

NOTE 7 - INVESTMENTS, HELD TO MATURITY ("HTM")

The Company’s investments HTM portfolio is recorded at amortized cost. The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of investments HTM at the date indicated were as follows:

	June 30, 2023
	Amortized		Gross Unrealized		Gross Unrealized		Fair
	Cost		Gains		Losses		Value
US Treasury Bonds	$	34,691,658	$	—	$	709,002	$	33,982,656
FHLB Bond		1,000,000		—		11,448		988,552
Student Loan Pools		17,975,057		69,938		81,883		17,963,112
SBA Bonds		13,148,556		604,114		—		13,752,670
Taxable Municipal Bonds		957,062		—		55,302		901,760
MBS		108,850,325		507		5,850,308		103,000,524
Total Held To Maturity	$	176,622,658	$	674,559	$	6,707,943	$	170,589,274

	December 31, 2022
	Amortized		Gross Unrealized		Gross Unrealized		Fair
	Cost		Gains		Losses		Value
US Treasury Bonds	$	34,511,849	$	—	$	682,198	$	33,829,651
FHLB Bond		1,000,000		—		1,360		998,640
Student Loan Pools		16,387,997		88,489		59,090		16,417,396
SBA Bonds		3,521,293		162,235		—		3,683,528
Taxable Municipal Bonds		951,864		—		60,134		891,730
MBS		111,064,613		29,194		5,451,179		105,642,628
Total HTM	$	167,437,616	$	279,918	$	6,253,961	$	161,463,573

At June 30, 2023 and December 31, 2022, 62 and 54 individual investments HTM were in a loss position, including 19 and 6 securities that were in a loss position for greater than 12 months, respectively. The Company believes, based on industry analyst reports and credit ratings, that the deterioration in value was attributable to changes in market interest rates and was not in the credit quality of the issuer. The Company has the ability and intent to hold these securities to maturity.

The estimate of expected credit losses on investments HTM is primarily based on the ratings assigned to the securities by debt rating agencies and the average of the annual historical loss rates associated with those ratings. The Company then multiplies those loss rates, as adjusted for any modifications to reflect current conditions and reasonable and supportable forecasts as considered necessary, by the remaining lives of each individual security to arrive at a lifetime expected loss amount. Additionally, private label CMO securities which are not explicitly or implicitly guaranteed by the U.S. government are evaluated utilizing underlying pool data such as historical loss rates, loan-to-value ratios and credit enhancement data.

All mortgage-backed securities issued by government-sponsored corporations are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major rating agencies and have a long history of no credit losses. The state and local governments securities held by the Company are highly rated by major rating agencies.

As a result of the analysis, there was no allowance for credit losses recorded for investments HTM as of June 30, 2023.

As of June 30, 2023, there were no HTM debt securities that were classified as either nonaccrual or 90 days or more past due and still accruing.

Accrued interest receivable on HTM debt securities totaled $729,000 at June 30, 2023 and was excluded from the estimate of credit losses.

The following tables show gross unrealized losses, fair value, and length of time that individual investments HTM have been in a continuous unrealized loss position at the dates indicated.

	June 30, 2023
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
US Treasury Bonds	$	33,982,656	$	709,002	$	—	$	—	$	33,982,656	$	709,002
FHLB Bond		988,552		11,448		—		—		988,552		11,448
Student Loan Pools		9,128,369		81,883		—		—		9,128,369		81,883
Taxable Municipal Bonds		901,760		55,302		—		—		901,760		55,302
MBS		74,800,709		2,268,240		28,177,551		3,582,068		102,978,260		5,850,308
	$	119,802,046	$	3,125,875	$	28,177,551	$	3,582,068	$	147,979,597	$	6,707,943

	December 31, 2022
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
US Treasury Bonds	$	33,829,651	$	682,198	$	—	$	—	$	33,829,651	$	682,198
FHLB Bond		998,640		1,360		—		—		998,640		1,360
Student Loan Pools		6,520,050		59,090		—		—		6,520,050		59,090
Taxable Municipal Bonds		891,730		60,134		—		—		891,730		60,134
MBS		88,351,096		3,145,166		9,334,438		2,306,013		97,685,534		5,451,179
	$	130,591,167	$	3,947,948	$	9,334,438	$	2,306,013	$	139,925,605	$	6,253,961

At June 30, 2023, the amortized cost and fair value of investments HTM that were pledged as collateral for certain deposit accounts, FHLB advances and other borrowings were $57.1 million and $54.1 million, compared to an amortized cost and fair value of $25.3 million and $24.5 million at December 31, 2022 respectively.