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Note 2 - Investment Securities

3 Months Ended

Mar. 31, 2022

Investments in Debt and Equity Instruments, Cash and Cash Equivalents, Unrealized and Realized Gains (Losses) [Text Block]

2.	Investment Securities

Investment securities have been classified in the consolidated balance sheets according to management’s intent. Investment securities at March 31, 2022 and December 31, 2021 are summarized as follows:

			Gross		Gross
	*Amortized*		*Unrealized*		*Unrealized*		*Fair*
(In thousands)	*Cost*		*Gains*		*Losses*		*Value*

March 31, 2022
Securities available for sale:
Agency mortgage-backed securities	$	104,441	$	6	$	5,038	$	99,409
Agency CMO		6,344		3		64		6,283
Other debt securities:
Agency notes and bonds		142,250		108		7,426		134,932
Treasury notes and bonds		50,767		-		2,001		48,766
Municipal obligations		157,165		745		9,132		148,778

Total securities available for sale	$	460,967	$	862	$	23,661	$	438,168

Securities held to maturity:
Other debt securities:
Corporate notes	$	7,000	$	-	$	367	$	6,633

Total securities held to maturity	$	7,000	$	-	$	367	$	6,633

December 31, 2021
Securities available for sale:
Agency mortgage-backed securities	$	102,767	$	604	$	635	$	102,736
Agency CMO		7,863		98		-		7,961
Other debt securities:
Agency notes and bonds		130,641		489		2,034		129,096
Treasury notes and bonds		50,339		-		545		49,794
Municipal obligations		153,610		4,721		583		157,748

Total securities available for sale	$	445,220	$	5,912	$	3,797	$	447,335

Securities held to maturity:
Other debt securities:
Corporate notes	$	2,000	$	4	$	-	$	2,004

Total securities held to maturity	$	2,000	$	4	$	-	$	2,004

Agency notes and bonds, agency mortgage-backed securities and agency collateralized mortgage obligations (“CMO”) include securities issued by the Government National Mortgage Association (“GNMA”), a U.S. government agency, and the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”), the Federal Farm Credit Bank (“FFCB”) and the Federal Home Loan Bank (“FHLB”), which are government-sponsored enterprises. Corporate notes classified as held to maturity include subordinated debt obligations issues by other bank holding companies.

The amortized cost and fair value of debt securities as of March 31, 2022, by contractual maturity, are shown below. Expected maturities of mortgage-backed securities and CMO may differ from contractual maturities because the mortgages underlying the obligations may be prepaid without penalty.

	Securities Available for Sale				Securities Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
(In thousands)

Due in one year or less	$	201	$	201	$	-	$	-
Due after one year through five years		200,587		191,701		-		-
Due after five years through ten years		52,276		50,378		2,000		1,894
Due after ten years		97,118		90,196		5,000		4,739
		350,182		332,476		7,000		6,633
Mortgage-backed securities and CMO		110,785		105,692		-		-

	$	460,967	$	438,168	$	7,000	$	6,633

Information pertaining to investment securities with gross unrealized losses at March 31, 2022, aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows.

	Number of				Gross
	Investment		Fair		Unrealized
	Positions		Value		Losses
(Dollars in thousands)

March 31, 2022:
Securities available for sale:
Continuous loss position less than twelve months:
Agency mortgage-backed securities		93	$	93,083	$	4,596
Agency CMO		20		4,553		64
Agency notes and bonds		35		79,439		4,416
Treasury notes and bonds		14		48,766		2,001
Muncipal obligations		169		97,740		8,096
Total less than twelve months		331		323,581		19,173

Continuous loss position more than twelve months:
Agency mortgage-backed securities		4		5,607		442
Agency notes and bonds		15		41,339		3,010
Muncipal obligations		11		6,434		1,036
Total more than twelve months		30		53,380		4,488

Total securities available for sale		361	$	376,961	$	23,661

Securities held to maturity:
Continuous loss position less than twelve months:
Corporate notes		4	$	6,633	$	367
Total less than twelve months		4		6,633		367

Total held to maturity		4	$	6,633	$	367

Information pertaining to investment securities with gross unrealized losses at December 31, 2021, aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows.

	Number of				Gross
	Investment		Fair		Unrealized
	Positions		Value		Losses
(Dollars in thousands)

December 31, 2021:
Continuous loss position less than twelve months:
Agency mortgage-backed securities		23	$	67,512	$	607
Agency notes and bonds		39		98,042		1,710
Treasury notes and bonds		11		49,190		545
Muncipal obligations		49		32,642		479
Total less than twelve months		122		247,386		3,341

Continuous loss position more than twelve months:
Agency mortgage-backed securities		1		1,357		28
Agency notes and bonds		4		13,676		324
Muncipal obligations		4		2,957		104
Total more than twelve months		9		17,990		456

Total securities available for sale		131	$	265,376	$	3,797

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recover in fair value.

At March 31, 2022, the municipal obligations and U.S. government agency debt securities, including Treasury notes and bonds, agency notes and bonds, mortgage-backed securities and CMOs classified as available for sale and in a loss position had depreciated approximately 5.9% from the amortized cost basis. All of the U.S. government agency securities and municipal obligations are issued by U.S. government agencies, government-sponsored enterprises and municipal governments, or are secured by first mortgage loans and municipal project revenues. At March 31, 2022, the corporate notes classified as held to maturity in a loss position had depreciated approximately 5.2% from the amortized cost basis. These unrealized losses related principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As the Company has the ability to hold the debt securities until maturity, or the foreseeable future if classified as available for sale, no declines are deemed to be other-than-temporary.

While management does not anticipate any credit-related impairment losses at March 31, 2022, additional deterioration in market and economic conditions may have an adverse impact on credit quality in the future.

During the three months ended March 31, 2021, the Company realized gross gains of $12,000 and gross losses of $5,000 on sales of available for sale securities. During the three months ended March 31, 2022, the Company sold no securities.

Certain debt securities available for sale were pledged to secure public fund deposits and under a blanket collateral agreement with the FHLB at March 31, 2022 and December 31, 2021.

Equity Securities

In September 2018, the Company acquired 90,000 shares of common stock in another bank holding company, representing approximately 5% of the outstanding common stock of the entity, for a total investment of $1.9 million. During the three months ended March 31, 2022 and 2021, the Company recognized unrealized gains of $63,000 and $234,000, respectively, on this equity investment. At March 31, 2022 and December 31, 2021, the equity investment had a fair value of $1.9 million and is included in other assets on the consolidated balance sheets.

In October 2021, the Company entered into an agreement to invest in a bank technology fund through a limited partnership. At March 31, 2022 and December 31, 2021, the Company’s investment in the limited partnership was $1.0 million and is reflected in other assets on the consolidated balance sheets. The unfunded commitment related to the limited partnership investment at March 31, 2022 and December 31, 2021 was $880,000 and is reflected in other liabilities on the consolidated balance sheets. The Company expects to fulfill the commitment as capital calls are made through 2026. The investment is accounted for as an equity security without a readily determinable fair value, and has been recorded at cost, less any impairment, and adjustments resulting from observable price changes. There were no impairments or adjustments on equity securities without readily determinable fair values during the three months ended March 31, 2022 or 2021.