Note 3 - Investments, Held to Maturity

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

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

NOTE 3 - INVESTMENTS, HELD TO MATURITY

HTM securities are recorded at amortized cost. The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of HTM securities at the dates indicated were as follows:

	December 31, 2023
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Treasury Bonds	$	23,874	$	—	$	(278	)	$	23,596
FHLB Bond		1,000		—		—			1,000
Student Loan Pools		16,881		278		—			17,159
SBA Bonds		11,305		493		—			11,798
Taxable Municipal Bonds		962		—		(28	)		934
MBS		109,050		96		(5,093	)		104,053
Total HTM Securities	$	163,072	$	867	$	(5,399	)	$	158,540

	December 31, 2022
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Treasury Bonds	$	34,512	$	—	$	(682	)	$	33,830
FHLB Bond		1,000		—		(1	)		999
Student Loan Pools		16,388		88		(59	)		16,417
SBA Bonds		3,521		162		—			3,683
Taxable Municipal Bonds		952		—		(60	)		892
MBS		111,065		29		(5,451	)		105,643
Total HTM Securities	$	167,438	$	279	$	(6,253	)	$	161,464

At December 31, 2023, the amortized cost and fair value of HTM securities that were pledged as collateral for certain deposit accounts, FHLB advances and other borrowings were $107.5 million and $103.8 million compared to an amortized cost and fair value of $25.3 million and $24.5 million at December 31, 2022, respectively.

At December 31, 2023, HTM securities had a combined book value of $163.1 million and an average book yield of 4.85%, which was calculated by multiplying the carrying value of each HTM security by its yield and dividing the sum of these results by the total carrying value. The following table includes a summary of the amortized cost and average book yield of HTM securities by contractual maturity at December 31, 2023.  Since MBS do not have fixed maturity dates, they are disclosed separately.

	Carrying Value		Average Book Yield
HTM Securities:
Due in one year or less	$	11,978		2.94	%
Due after one year through five years		13,858		3.60	%
Due after five years through ten years		6,914		6.90	%
Due after ten years		21,272		7.07	%
MBS		109,050		4.66	%
Total HTM Securities	$	163,072		4.85	%

The following tables summarize gross unrealized losses and the related fair value, aggregated by investment category and length of time that individual HTM securities have been in a continuous unrealized loss position at the dates indicated.

	December 31, 2023
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
US Treasury Bonds	$	—	$	—	$	23,596	$	278	$	23,596	$	278
Taxable Municipal Bonds		—		—		934		28		934		28
MBS		40,732		458		58,731		4,635		99,463		5,093
	$	40,732	$	458	$	83,261	$	4,941	$	123,993	$	5,399

	December 31, 2022
	Less than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
US Treasury Bonds	$	33,830	$	682	$	—	$	—	$	33,830	$	682
FHLB Bond		999		1		—		—		999		1
Student Loan Pools		6,520		59		—		—		6,520		59
Taxable Municipal Bonds		892		60		—		—		892		60
MBS		88,351		3,145		9,334		2,306		97,685		5,451
	$	130,592	$	3,947	$	9,334	$	2,306	$	139,926	$	6,253

At December 31, 2023 and 2022, 55 and 54 individual HTM securities were in a loss position, including 42 and six 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 HTM securities 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. At December 31, 2023 the Bank held an amortized cost and fair value of $14.6 million and $14.3 million in HTM private label CMO securities, compared to an amortized cost and fair value of $16.7 million and $16.2 million at December 31, 2022, respectively. All MBS 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, the allowance for credit losses for HTM securities was not considered to be material as of December 31, 2023. The following table summarizes the amortized cost and credit ratings of our HTM securities that were considered to have greater than zero percent credit loss probability at December 31, 2023.

(Dollars in thousands)	Amortized Cost
Taxable Municipal Bond
AA		962
Total Taxable Municipal Bond		962
Private Label MBS
AAA		9,259
A		1,663
Not Rated		3,695
Total Private Label		14,617

As of December 31, 2023, there were no HTM securities that were classified as either nonaccrual or 90 days or more past due and still accruing. Accrued interest receivable on HTM securities totaled $788,000 at December 31, 2023 and was excluded from the estimate of credit losses.