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Note 3 - Securities
3 Months Ended
Mar. 31, 2024
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 securities available for sale along with gross unrealized gains and losses as of the dates indicated are summarized as follows:

 

March 31, 2024

 

Amortized

Cost

  

Gross

Unrealized Gains

  

Gross

Unrealized Losses

  

Fair Value

 

U.S. government agencies and corporations

 $352,961  $-  $44,972  $307,989 

States and political subdivisions

  179,343   -   31,344   147,999 

Mortgage-backed securities

  153,572   6   6,255   147,323 

Corporate debt securities

  6,505   -   817   5,688 

U.S. treasury

  997   -   28   969 

Total securities available for sale

 $693,378  $6  $83,416  $609,968 

 

December 31, 2023

 

Amortized

Cost

  

Gross

Unrealized Gains

  

Gross

Unrealized Losses

  

Fair Value

 

U.S. government agencies and corporations

 $353,904  $-  $42,060  $311,844 

States and political subdivisions

  179,507   -   29,614   149,893 

Mortgage-backed securities

  156,875   -   6,724   150,151 

Corporate debt securities

  6,504   -   754   5,750 

U.S. treasury

  996   -   33   963 

Total securities available for sale

 $697,786  $-  $79,185  $618,601 

 

No allowance for credit loss on securities available for sale was recorded as of March 31, 2024 or December 31, 2023.

 

Accrued interest receivable on securities, included in accrued interest receivable on the Consolidated Balance Sheets, totaled $3,444 at March 31, 2024 and $3,281 at December 31, 2023.

 

The deferred tax asset for the net unrealized loss on securities available for sale was $17,516 as of March 31, 2024 and $16,629 as of December 31, 2023. The deferred tax asset is included in other assets on the Consolidated Balance Sheets.

 

The amortized cost and fair value of single maturity securities available for sale at March 31, 2024, 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.

 

  

March 31, 2024

 
  

Amortized Cost

  

Fair Value

 

Available for Sale:

        

Due in one year or less

 $13,749  $13,419 

Due after one year through five years

  180,902   166,926 

Due after five years through ten years

  273,587   232,336 

Due after ten years

  225,140   197,287 

Total securities available for sale

 $693,378  $609,968 

 


 

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

 

March 31, 2024

 

Less Than 12 Months

  

12 Months or More

 
  

Fair

Value

  

Unrealized

Loss

  

Fair

Value

  

Unrealized

Loss

 

U.S. government agencies and corporations

 $-  $-  $307,989  $44,972 

State and political subdivisions

  1,507   126   146,492   31,218 

Mortgage-backed securities

  583   1   135,492   6,254 

Corporate debt securities

  -   -   5,688   817 

U.S. treasury

  -   -   969   28 

Total temporarily impaired securities

 $2,090  $127  $596,630  $83,289 

 

December 31, 2023

 

Less Than 12 Months

  

12 Months or More

 
  

Fair

Value

  

Unrealized

Loss

  

Fair

Value

  

Unrealized

Loss

 

U.S. government agencies and corporations

 $-  $-  $311,844  $42,060 

State and political subdivisions

  884   1   148,763   29,613 

Mortgage-backed securities

  1,616   26   147,922   6,698 

Corporate debt securities

  -   -   5,750   754 

U.S. treasury

  -   -   963   33 

Total temporarily impaired securities

 $2,500  $27  $615,242  $79,158 

 

The Company evaluates securities available for sale that are in unrealized loss positions to determine whether the impairment is due to credit-related factors or noncredit-related factors. Consideration is given to the extent to which the fair value is less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At March 31, 2024, the Company had 574 securities with a fair value of $598,720 in an unrealized loss position. The Company reviews securities in an unrealized loss position to evaluate credit risk. The Company considers payment history, risk ratings from external parties, financial statements for municipal and corporate securities, public statements from issuers and other available credible published sources in evaluating credit risk. No credit risk was found and no ACL on securities available for sale was recorded as of March 31, 2024. The unrealized losses are attributed to noncredit-related factors, including changes in interest rates and other market conditions. The Company does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. 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. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline.

 

Restricted Stock.

The Company holds restricted stock that is reported separately from available for sale securities. As a member of the Federal Reserve 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 and a percentage of qualifying assets. The Company purchases stock from or sells stock back to the correspondents based on their calculations. 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 $506,896 at March 31, 2024. The Company’s management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at March 31, 2024, did not determine any impairment.

 

Realized Securities Gains and Losses

There were no sales of securities during 2024. During the first three months of 2023, the Company realized net securities gains of $12 on the sale of securities with an amortized cost basis of $17,987. The sales were part of the Company’s interest rate risk management strategy.