Note 3 - Securities

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

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

Note 3 - Securities

The amortized cost and estimated fair value of investments in securities at December 31, 2022 and 2021 were as follows (dollars in thousands):

	December 31, 2022
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
Securities available for sale:
U.S. Treasury	$	152,033	$	—	$	12,606	$	139,427
Federal agencies and GSEs		90,363		4		7,019		83,348
Mortgage-backed and CMOs		336,393		1		42,301		294,093
State and municipal		69,023		12		5,312		63,723
Corporate		31,299		—		3,828		27,471
Total securities available for sale	$	679,111	$	17	$	71,066	$	608,062

The Company had no equity securities at December 31, 2022 or  December 31, 2021.

(Dollars in thousands)	December 31, 2021
	Amortized		Unrealized		Unrealized
	Cost		Gains		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

The amortized cost and estimated fair value of investments in debt securities at December 31, 2022, by contractual maturity, are shown in the following table. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Because mortgage-backed securities have both known principal repayment terms as well as unknown principal repayments due to potential borrower pre-payments, it is difficult to accurately predict the final maturity of these investments. Mortgage-backed securities are shown separately (dollars in thousands):

	Available for Sale
	Amortized
	Cost		Fair Value
Due in one year or less	$	44,859	$	43,579
Due after one year through five years		208,162		191,338
Due after five years through ten years		74,582		65,037
Due after ten years		15,114		14,015
Mortgage-backed and CMOs		336,394		294,093
	$	679,111	$	608,062

Gross realized gains and losses on, and the proceeds from the sale of, securities available for sale were as follows (dollars in thousands):

	For the Year Ended December 31,
	2022		2021		2020
Gross realized gains	$	—	$	35	$	814
Gross realized losses		—		—		—
Proceeds from sales of securities		—		561		5,811

Securities with a carrying value of approximately $118.9 million and $150.4 million at December 31, 2022 and 2021, respectively, were pledged to secure public deposits, repurchase agreements, and for other purposes as required by law. FHLB letters of credit were used as additional collateral in the amounts of $170.0 million at December 31, 2022 and $275.0 million at December 31, 2021.

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 December 31, 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 are as follows (dollars in thousands):

	Total				Less than 12 Months				12 Months or More
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury	$	139,427	$	12,606	$	10,824	$	915	$	128,603	$	11,691
Federal agencies and GSEs		82,958		7,019		29,204		1,920		53,754		5,099
Mortgage-backed and CMOs		293,929		42,301		96,758		7,245		197,171		35,056
State and municipal		60,629		5,312		31,866		980		28,763		4,332
Corporate		27,471		3,828		18,991		2,556		8,480		1,272
Total	$	604,414	$	71,066	$	187,643	$	13,616	$	416,771	$	57,450

U.S. Treasury: The unrealized losses on the Company's investment in 22 U.S. Treasury securities were caused by normal market fluctuations. Nineteen 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 bases 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 bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2022.

Federal agencies and GSEs: The unrealized losses on the Company's investment in 43 government sponsored entities ("GSEs") were caused by normal market fluctuations. Twenty-one 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 bases 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 bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2022.

Mortgage-backed securities: The unrealized losses on the Company's investment in 138 GSE mortgage-backed securities were caused by normal market fluctuations. Twenty-one 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 bases 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 bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2022.

Collateralized Mortgage Obligations: The unrealized losses associated with 56 GSE collateralized mortgage obligations ("CMOs") were due to normal market fluctuations. Thirty-five 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 bases 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 its amortized cost bases, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at December 31, 2022.

State and municipal securities: The unrealized losses on 81 state and municipal securities were caused by normal market fluctuations. Forty-six of these securities were in an unrealized loss position for 12 months or more. These securities are of high credit quality (rated A- or higher), and principal and interest payments have been made timely. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost bases 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 bases, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2022.

Corporate securities: The unrealized losses on 13 corporate securities were caused by normal market fluctuations and not credit deterioration. Four of these securities were in an unrealized loss position for 12 months or more. These securities are not rated, but the Company conducted thorough internal credit reviews prior to purchase and conducts ongoing quarterly reviews of these companies as well, and the Company's analysis did not indicate the existence of credit loss. The contractual terms of these 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 December 31, 2022.

Due to restrictions placed upon the Bank's common stock investment in the Federal Reserve Bank of Richmond and FHLB, these securities have been classified as restricted equity securities and carried at cost. These 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 sheet. Restricted equity securities consist of Federal Reserve Bank of Richmond stock in the amount of $6.5 million as of  December 31, 2022 and 2021 and FHLB stock in the amount of $6.1 million and $1.6 million as of December 31, 2022 and 2021, respectively.

The table below shows gross unrealized losses and fair value, 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		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		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

Other-Than-Temporary-Impaired Securities

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