Note 2 - Securities

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 2 – Securities

The amortized cost and fair value of investments in securities available for sale at September 30, 2022 were as follows (dollars in thousands):

	September 30, 2022
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Securities available for sale:
U.S. Treasury	$	152,109	$	—	$	13,572	$	138,537
Federal agencies and GSEs		111,958		5		7,298		104,665
Mortgage-backed and CMOs		349,703		2		43,640		306,065
State and municipal		70,373		1		5,767		64,607
Corporate		31,294		—		3,284		28,010
Total securities available for sale	$	715,437	$	8	$	73,561	$	641,884

The amortized cost and fair value of investments in securities available for sale at December 31, 2021 were as follows (dollars in thousands):

	December 31, 2021
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Securities available for sale:
U.S. Treasury	$	150,751	$	—	$	1,174	$	149,577
Federal agencies and GSEs		104,518		993		931		104,580
Mortgage-backed and CMOs		357,981		2,854		4,525		356,310
State and municipal		65,939		1,021		488		66,472
Corporate		15,450		218		140		15,528
Total securities available for sale	$	694,639	$	5,086	$	7,258	$	692,467

Restricted Stock

Due to restrictions placed upon the Bank's common stock investment in the Federal Reserve Bank of Richmond ("FRB") and Federal Home Loan Bank of Atlanta ("FHLB"), these securities have been classified as restricted equity securities and carried at cost. The restricted securities are not subject to the investment security classification requirements and are included as a separate line item on the Company's consolidated balance sheets. The FRB requires the Bank to maintain stock with a par value equal to 3.00% of its outstanding capital and an additional 3.00% is on call. The FHLB requires the Bank to maintain stock in an amount equal to 3.75% of outstanding borrowings and a specific percentage of the Bank's total assets. The cost of restricted stock at September 30, 2022 and  December 31, 2021 was as follows (dollars in thousands):

	September 30, 2022		December 31, 2021
FRB stock	$	6,534	$	6,500
FHLB stock		1,849		1,556
Total restricted stock	$	8,383	$	8,056

Temporarily Impaired Securities

The following table shows estimated fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2022. The reference point for determining when securities are in an unrealized loss position is month end. Therefore, it is possible that a security's market value exceeded its amortized cost on other days during the past twelve-month period.

Available for sale securities that have been in a continuous unrealized loss position, at September 30, 2022, were as follows (dollars in thousands):

	Total				Less than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Treasury	$	138,537	$	13,572	$	48,059	$	3,670	$	90,478	$	9,902
Federal agencies and GSEs		103,981		7,298		44,539		2,898		59,442		4,400
Mortgage-backed and CMOs		305,858		43,640		124,623		11,396		181,235		32,244
State and municipal		63,634		5,767		46,860		2,953		16,774		2,814
Corporate		28,010		3,284		21,134		2,410		6,875		874
Total	$	640,020	$	73,561	$	285,215	$	23,327	$	354,804	$	50,234

The table below shows estimated fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position, at December 31, 2021 (dollars in thousands):

	Total				Less than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Treasury	$	149,577	$	1,174	$	149,577	$	1,174	$	—	$	—
Federal agencies and GSEs		73,640		931		63,042		512		10,598		419
Mortgage-backed and CMOs		253,444		4,525		213,292		3,014		40,152		1,511
State and municipal		26,646		488		23,341		354		3,305		134
Corporate		7,611		140		7,611		140		—		—
Total	$	510,918	$	7,258	$	456,863	$	5,194	$	54,055	$	2,064

U.S. Treasury securities: The unrealized losses on the Company's investment in 22 U.S. Treasury securities were caused by normal market fluctuations. Thirteen of these securities were in an unrealized loss position for 12 months or more. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2022.

Federal agencies and GSEs: The unrealized losses on the Company's investment in 45 government sponsored entities ("GSE") securities were caused by normal market fluctuations. Twenty of these securities were in an unrealized loss position for 12 months or more. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2022.

Mortgage-backed securities: The unrealized losses on the Company's investment in 142 GSE mortgage-backed securities were caused by normal market fluctuations. Seventeen of these securities were in an unrealized loss position for 12 months or more. The contractual cash flows of those investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company's investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2022.

Collateralized Mortgage Obligations: The unrealized losses associated with 56 GSE collateralized mortgage obligations ("CMOs") were due to normal market fluctuations. Twenty-seven of these securities were in an unrealized loss position for 12 months or more. The contractual cash flows of these investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company's investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2022.

State and municipal securities: The unrealized losses on 85 state and municipal securities were caused by normal market fluctuations. Twenty-nine of these securities were in an unrealized loss position for 12 months or more. These securities are of high credit quality (rated AA- or higher), and principal and interest payments have been made timely. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2022.

Corporate securities: The unrealized losses on 13 corporate securities were caused by normal market fluctuations and not credit deterioration. Three of these securities were in an unrealized loss position for 12 months or more. One of these securities is rated Aaa by Moody's, and another is rated Baa2. The remaining eleven securities are not rated, but the Company conducted thorough internal credit reviews prior to the purchase of each which determined the investment risk to be acceptable due to the issuers' experienced management teams, strong asset quality, and ample levels of capital and liquidity. The Company conducts ongoing quarterly reviews of these companies as well. The contractual terms of these investments do not permit the issuer to settle the security at a price less than the amortized cost basis of the investment. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at  September 30, 2022.

Restricted stock: When evaluating restricted stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Company does not consider restricted stock to be other-than-temporarily impaired at September 30, 2022, and no impairment has been recognized.

Other-Than-Temporarily-Impaired Securities

As of September 30, 2022 and December 31, 2021, there were no securities classified as other-than-temporarily impaired.

Realized Gains and Losses

The Company did not have any realized gains or losses on, or proceeds from the sale of securities available for sale during the three and nine months ended September 30, 2022 and 2021.