Note 4 - Securities

6 Months Ended

Jun. 30, 2022

Notes to Financial Statements

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

Note 4: Securities

The amortized costs, gross unrealized gains, gross unrealized losses and fair values for securities available for sale by major security type are as follows.

	June 30, 2022
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for Sale:
U.S. Treasuries	$	990	$	-	$	35	$	955
U.S. Government agencies and corporations		369,410		152		35,141		334,421
States and political subdivisions		193,019		103		29,341		163,781
Mortgage-backed securities		183,047		27		5,894		177,180
Corporate debt securities		6,500		-		586		5,914
Total securities available for sale	$	752,966	$	282	$	70,997	$	682,251

	December 31, 2021
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for Sale:
U.S. Government agencies and corporations	$	279,934	$	2,795	$	4,710	$	278,019
States and political subdivisions		195,365		5,314		2,007		198,672
Mortgage-backed securities		204,164		2,323		313		206,174
Corporate debt securities		3,004		248		37		3,215
Total securities available for sale	$	682,467	$	10,680	$	7,067	$	686,080

The amortized cost and fair value of single maturity securities available for sale at June 30, 2022, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities included in these totals are categorized by final maturity.

	June 30, 2022
	Amortized Cost		Fair Value
Available for Sale:
Due in one year or less	$	3,768	$	3,745
Due after one year through five years		104,168		100,560
Due after five years through ten years		328,929		298,257
Due after ten years		316,101		279,689
Total securities available for sale	$	752,966	$	682,251

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

	June 30, 2022
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Treasuries	$	955	$	35	$	-	$	-
U.S. Government agencies and corporations		262,561		22,913		64,695		12,228
States and political subdivisions		120,556		20,031		32,812		9,310
Mortgage-backed securities		164,176		5,302		9,442		592
Corporate debt securities		5,914		586		-		-
Total temporarily impaired securities	$	554,162	$	48,867	$	106,949	$	22,130

	December 31, 2021
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U.S. Government agencies and corporations	$	201,650	$	3,530	$	26,792	$	1,180
States and political subdivisions		50,659		1,214		20,542		793
Mortgage-backed securities		13,139		141		4,665		172
Corporate debt securities		966		37		-		-
Total temporarily impaired securities	$	266,414	$	4,922	$	51,999	$	2,145

The Company has 579 securities with a fair value of $661,111 that are temporarily impaired at June 30, 2022.  The total unrealized loss on these securities is $70,997. Of the temporarily impaired securities, 116 securities with a fair value of $106,949 and an unrealized loss of $22,130 have been in a continuous loss position for twelve months or more. The Company determined that these securities are temporarily impaired at June 30, 2022 for the reasons set out below.

U.S. Government agencies and corporations: Unrealized losses of $12,228 on 77 securities with a fair value of $64,695 were caused by interest rate and market fluctuations. The contractual terms of the investments do not permit the issuers to settle the securities at a price less than the cost basis of the investments. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company does not consider the securities to be other-than-temporarily impaired.         

States and political subdivisions: The unrealized loss of $9,310 on state and political subdivision securities stemmed from 35 securities with a fair value of $32,812. The Company reviewed financial statements and cash flows for each of the securities in a continuous loss position for more than 12 months. The Company’s analysis determined that the unrealized losses are primarily the result of interest rate and market fluctuations and not associated with impaired financial status. The contractual terms of the investments do not permit the issuers to settle the securities at a price less than the cost basis of each investment. The Company is monitoring bond market trends to develop strategies to address unrealized losses. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of amortized cost basis, which may be at maturity, the Company does not consider the investments to be other-than-temporarily impaired.         

Mortgage-backed securities: The unrealized loss of $592 on mortgage-backed securities stemmed from four securities with a fair value of $9,442. The unrealized loss was caused by interest rate and market fluctuations. The contractual terms of the investments do not permit the issuer to settle the securities at a price less than the cost basis of each investment. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of its amortized cost basis, which may be at maturity, the Company does not consider the investments to be other-than-temporarily impaired.

Management regularly monitors the credit quality of the investment portfolio. Changes in ratings are noted and follow-up research on the issuer is undertaken when warranted. Management intends to carefully monitor any changes in bond quality.

Restricted Stock.

The Company held restricted stock of $941 as of June 30, 2022 and $845 at December 31, 2021. Restricted stock is reported separately from available for sale securities. As a member bank of the Federal Reserve system and the Federal Home Loan Bank of Atlanta (“FHLB”), NBB is required to maintain certain minimum investments in the common stock of those entities. Required levels of investment are based upon NBB’s capital, current borrowings, and a percentage of qualifying assets. The correspondents provide calculations that require the Company purchase or sell stock back to the correspondents. The stock is held by member institutions only and is not actively traded.

Redemption of FHLB stock is subject to certain limitations and conditions. At its discretion, the FHLB may declare dividends on the stock. In addition to dividends, NBB also benefits from its membership with FHLB through eligibility to borrow from the FHLB, using as collateral NBB’s capital stock investment in the FHLB and qualifying NBB real estate mortgage loans totaling $630,515 at June 30, 2022. Management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at June 30, 2022, management did not determine any impairment.