Note 5 - Debt 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 5.  DEBT SECURITIES

Debt Securities Available for Sale

The amortized cost, unrealized gains, unrealized losses and estimated fair values of debt securities available for sale at  March 31, 2024 and  December 31, 2023 are summarized as follows:

	March 31, 2024
	Amortized		Unrealized				Estimated
Dollars in thousands	Cost		Gains		Losses		Fair Value
Debt Securities Available for Sale
Taxable debt securities
U.S. Government sponsored agencies and corporations	$	22,116	$	33	$	646	$	21,503
Residential mortgage-backed securities:
Government-sponsored agencies		129,634		133		6,648		123,119
Nongovernment-sponsored entities		78,023		137		4,304		73,856
State and political subdivisions
General obligations		80,334		12		14,978		65,368
Various tax revenues		10,657		—		2,052		8,605
Other revenues		26,816		—		4,797		22,019
Corporate debt securities		38,201		39		1,651		36,589
Asset-backed securities		41,287		133		70		41,350
Total taxable debt securities		427,068		487		35,146		392,409
Tax-exempt debt securities
State and political subdivisions
General obligations		80,408		100		4,699		75,809
Other revenues		24,774		4		2,725		22,053
Total tax-exempt debt securities		105,182		104		7,424		97,862
Total debt securities available for sale	$	532,250	$	591	$	42,570	$	490,271

	December 31, 2023
	Amortized		Unrealized				Estimated
Dollars in thousands	Cost		Gains		Losses		Fair Value
Debt Securities Available for Sale
Taxable debt securities
U.S. Government sponsored agencies and corporations	$	23,295	$	38	$	508	$	22,825
Residential mortgage-backed securities:
Government-sponsored agencies		133,709		729		4,871		129,567
Nongovernment-sponsored entities		78,350		22		4,503		73,869
State and political subdivisions
General obligations		79,323		3		14,995		64,331
Various tax revenues		10,665		—		2,107		8,558
Other revenues		26,822		—		4,782		22,040
Corporate debt securities		39,618		52		1,763		37,907
Asset-backed securities		44,388		81		264		44,205
Total taxable debt securities		436,170		925		33,793		403,302
Tax-exempt debt securities
State and political subdivisions
General obligations		80,144		581		3,716		77,009
Other revenues		24,882		28		2,459		22,451
Total tax-exempt debt securities		105,026		609		6,175		99,460
Total debt securities available for sale	$	541,196	$	1,534	$	39,968	$	502,762

Accrued interest receivable on debt securities available for sale totaled $2.9 million at  March 31, 2024 and $3.1 million at  December 31, 2023, and is included in accrued interest and fees receivable in the accompanying consolidated balance sheets.

The below information is relative to the five states where issuers with the highest volume of state and political subdivision securities held in our available for sale portfolio are located.  We own no such securities of any single issuer which we deem to be a concentration.

	March 31, 2024
	Amortized		Unrealized				Estimated
Dollars in thousands	Cost		Gains		Losses		Fair Value
California	$	43,888	$	—	$	8,389	$	35,499
Texas		27,926		28		3,733		24,221
Oregon		16,283		—		2,938		13,345
Michigan		14,502		—		1,616		12,886
Pennsylvania		10,662		7		1,273		9,396

Management performs pre-purchase and ongoing analysis to confirm that all investment securities meet applicable credit quality standards.  

The maturities, amortized cost and estimated fair values of debt securities available for sale at March 31, 2024, are summarized as follows:

	Amortized		Estimated
Dollars in thousands	Cost		Fair Value
Due in one year or less	$	61,182	$	59,324
Due from one to five years		155,429		149,212
Due from five to ten years		113,695		104,397
Due after ten years		201,944		177,338
Total	$	532,250	$	490,271

The proceeds from sales, calls and maturities of debt securities available for sale, including principal payments received on mortgage-backed obligations, and the related gross gains and losses realized, for the three months ended March 31, 2024 and 2023 are as follows:

	Proceeds from						Gross realized
			Calls and		Principal
Dollars in thousands	Sales		Maturities		Payments		Gains		Losses
For the Three Months Ended
March 31,
2024	$	14,874	$	1,500	$	10,721	$	55	$	149
2023	$	36,940	$	1,145	$	8,048	$	446	$	505

Provided below is a summary of debt securities available for sale which were in an unrealized loss position at  March 31, 2024 and  December 31, 2023.

	March 31, 2024
			Less than 12 months				12 months or more				Total
	# of securities		Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
Dollars in thousands	in loss position		Fair Value		Loss		Fair Value		Loss		Fair Value		Loss
Taxable debt securities
U.S. Government sponsored agencies and corporations		38	$	1,929	$	4	$	18,013	$	642	$	19,942	$	646
Residential mortgage-backed securities:
Government-sponsored agencies		140		35,647		1,060		75,938		5,588		111,585		6,648
Nongovernment-sponsored entities		34		5,955		736		58,633		3,568		64,588		4,304
State and political subdivisions:
General obligations		54		—		—		63,352		14,978		63,352		14,978
Various tax revenues		7		—		—		8,605		2,052		8,605		2,052
Other revenues		21		—		—		22,020		4,797		22,020		4,797
Corporate debt securities		19		4,626		44		19,089		1,607		23,715		1,651
Asset-backed securities		9		4,397		9		7,219		61		11,616		70
Tax-exempt debt securities
State and political subdivisions:
General obligations		52		28,338		419		41,116		4,280		69,454		4,699
Other revenues		21		1,237		12		19,762		2,713		20,999		2,725
Total		395	$	82,129	$	2,284	$	333,747	$	40,286	$	415,876	$	42,570

	December 31, 2023
			Less than 12 months				12 months or more				Total
	# of securities		Estimated		Unrealized		Estimated		Unrealized		Estimated		Unrealized
Dollars in thousands	in loss position		Fair Value		Loss		Fair Value		Loss		Fair Value		Loss
Taxable debt securities
U.S. Government sponsored agencies and corporations		39	$	11,809	$	287	$	9,329	$	221	$	21,138	$	508
Residential mortgage-backed securities:
Government-sponsored agencies		133		68,815		1,528		32,902		3,343		101,717		4,871
Nongovernment-sponsored entities		35		27,804		1,493		40,274		3,010		68,078		4,503
State and political subdivisions:
General obligations		54		—		—		63,336		14,995		63,336		14,995
Various tax revenues		7		—		—		8,558		2,107		8,558		2,107
Other revenues		21		1,530		56		18,854		4,726		20,384		4,782
Corporate debt securities		21		6,758		341		18,310		1,422		25,068		1,763
Asset-backed securities		17		23,823		110		9,961		154		33,784		264
Tax-exempt debt securities
State and political subdivisions:
General obligations		39		7,479		69		43,626		3,647		51,105		3,716
Other revenues		19		807		28		19,317		2,431		20,124		2,459
Total		385	$	148,825	$	3,912	$	264,467	$	36,056	$	413,292	$	39,968

We do not intend to sell the above securities, and it is more likely than not that we will not be required to sell these securities before recovery of their amortized cost bases.  We believe that this decline in value is primarily attributable to changes in market interest rates, and in some cases limited market liquidity and is not due to credit quality, as none of these securities are in default and all carry above investment grade ratings. Accordingly, no allowance for credit losses has been recognized relative to these securities.

Debt Securities Held to Maturity

The amortized cost, unrealized gains, unrealized losses and estimated fair values of debt securities held to maturity at  March 31, 2024 and  December 31, 2023 are summarized as follows:

	March 31, 2024
	Amortized		Unrealized				Estimated
Dollars in thousands	Cost		Gains		Losses		Fair Value
Debt Securities Held to Maturity
Tax-exempt debt securities
State and political subdivisions:
General obligations	$	68,603	$	—	$	4,567	$	64,036
Water and sewer revenues		7,768		—		461		7,307
Lease revenues		4,130		—		354		3,776
Sales tax revenues		4,428		—		450		3,978
Various tax revenues		5,403		—		649		4,754
Other revenues		3,405		—		227		3,178
Total debt securities held to maturity	$	93,737	$	—	$	6,708	$	87,029

	December 31, 2023
	Amortized		Unrealized				Estimated
Dollars in thousands	Cost		Gains		Losses		Fair Value
Debt Securities Held to Maturity
Tax-exempt debt securities
State and political subdivisions:
General obligations	$	68,966	$	—	$	4,029	$	64,937
Water and sewer revenues		7,816		—		417		7,399
Lease revenues		4,151		—		321		3,830
Sales tax revenues		4,446		—		409		4,037
Various tax revenues		5,425		—		536		4,889
Other revenues		3,423		—		196		3,227
Total debt securities held to maturity	$	94,227	$	—	$	5,908	$	88,319

Accrued interest receivable on debt securities held to maturity totaled $937,000 at  March 31, 2024 and $1.1 million at   December 31, 2023, respectively and is included in accrued interest and fees receivable in the accompanying consolidated balance sheets.

The below information is relative to the five states where issuers with the highest volume of state and political subdivision securities held in our held to maturity portfolio are located.  We own no such securities of any single issuer which we deem to be a concentration.

	March 31, 2024
	Amortized		Unrealized				Estimated
Dollars in thousands	Cost		Gains		Losses		Fair Value
Texas	$	14,718	$	—	$	955	$	13,763
California		9,396		—		521		8,875
Pennsylvania		8,282		—		493		7,789
Florida		7,297		—		710		6,587
Michigan		6,739		—		561		6,178

The following table displays the amortized cost of held to maturity debt securities by credit rating at  March 31, 2024 and  December 31, 2023.

	March 31, 2024
Dollars in thousands	AAA		AA		A		BBB		Below Investment Grade
Tax-exempt state and political subdivisions	$	14,791	$	71,697	$	7,249	$	—	$	—

	December 31, 2023
Dollars in thousands	AAA		AA		A		BBB		Below Investment Grade
Tax-exempt state and political subdivisions	$	14,866	$	72,086	$	7,275	$	—	$	—

We owned no past due or nonaccrual held to maturity debt securities at March 31, 2024 or December 31, 2023.

The maturities, amortized cost and estimated fair values of held to maturity debt securities at March 31, 2024, are summarized as follows:

	Amortized		Estimated
Dollars in thousands	Cost		Fair Value
Due in one year or less	$	—	$	—
Due from one to five years		—		—
Due from five to ten years		4,003		3,809
Due after ten years		89,734		83,220
Total	$	93,737	$	87,029

There were no proceeds from calls and maturities of debt securities held to maturity for the three months ended March 31, 2024 or 2023.

At March 31, 2024, no allowance for credit losses on debt securities held to maturity has been recognized.