Note 2 - Securities

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

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

2. Securities

Equity Securities. The Corporation held equity securities with fair values of $5,000 and $15,000 as of December 31, 2021 and 2020, respectively.  Changes in the fair value of these securities are included in other income on the consolidated statements of net income.  The Corporation recognized losses of $10,000 and $4,000 on the equity securities held at December 31, 2021 and 2020, respectively.

Debt Securities - Available for Sale. The following table summarizes the Corporation’s securities as of December 31:

(Dollar amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2021:
U.S. government sponsored entities and agencies	$	8,142	$	52	$	(35	)	$	8,159
U.S. agency mortgage-backed securities: residential		12,049		116		(130	)		12,035
U.S. agency collateralized mortgage obligations: residential		50,202		92		(804	)		49,490
State and political subdivisions		92,307		1,099		(844	)		92,562
Corporate debt securities		23,705		424		(105	)		24,024
Total securities available-for-sale	$	186,405	$	1,783	$	(1,918	)	$	186,270
December 31, 2020:
U.S. government sponsored entities and agencies	$	3,036	$	11	$	(40	)	$	3,007
U.S. agency mortgage-backed securities: residential		16,151		436		(6	)		16,581
U.S. agency collateralized mortgage obligations: residential		15,658		263		(10	)		15,911
State and political subdivisions		53,834		1,781		(38	)		55,577
Corporate debt securities		21,553		434		(22	)		21,965
Total securities available-for-sale	$	110,232	$	2,925	$	(116	)	$	113,041

Securities with carrying values of $51.0 million and $36.0 million as of December 31, 2021 and 2020, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

Gains on sales of available for sale debt securities for the years ended December 31 were as follows: 

	2021			2020
Proceeds	$	9,127		$	43,906
Gains		265			699
Losses		(20	)		(12	)
Tax provision related to gains (losses)		52			144

The following table summarizes scheduled maturities of the Corporation’s debt securities as of December 31, 2021. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities and collateralized mortgage obligations are not due at a single maturity and are shown separately.

(Dollar amounts in thousands)	Available-for-sale
	Amortized Cost		Fair Value
Due in one year or less	$	—	$	—
Due after one year through five years		4,607		4,679
Due after five years through ten years		32,691		33,034
Due after ten years		86,856		87,032
Mortgage-backed securities: residential		12,049		12,035
Collateralized mortgage obligations: residential		50,202		49,490
Total securities available-for-sale	$	186,405	$	186,270

Information pertaining to securities with gross unrealized losses at December 31, 2021 and 2020 aggregated by investment category and length of time that individual securities have been in a continuous loss position are included in the table below: 

(Dollar amounts in thousands)	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
December 31, 2021:
U.S. government sponsored entities and agencies	$	4,568	$	(35	)	$	—	$	—		$	4,568	$	(35	)
U.S. agency mortgage-backed securities: residential		7,254		(130	)		—		—			7,254		(130	)
U.S. agency collateralized mortgage obligations: residential		39,964		(801	)		1,584		(3	)		41,548		(804	)
State and political subdivisions		39,872		(814	)		1,442		(30	)		41,314		(844	)
Corporate debt securities		6,104		(105	)		—		—			6,104		(105	)
Total	$	97,762	$	(1,885	)	$	3,026	$	(33	)	$	100,788	$	(1,918	)
December 31, 2020:
U.S. government sponsored entities and agencies	$	1,996	$	(40	)	$	—	$	—		$	1,996	$	(40	)
U.S. agency mortgage-backed securities: residential		1,547		(6	)		—		—			1,547		(6	)
U.S. agency collateralized mortgage obligations: residential		1,515		(4	)		4,845		(6	)		6,360		(10	)
State and political subdivisions		1,705		(11	)		1,641		(27	)		3,346		(38	)
Corporate debt securities		2,509		(10	)		988		(12	)		3,497		(22	)
Total	$	9,272	$	(71	)	$	7,474	$	(45	)	$	16,746	$	(116	)

Management evaluates debt securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic, market or other conditions warrant such evaluation. Consideration is given to: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions and (4) whether the Corporation has the intent to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the Corporation intends to sell an impaired security, or if it is more likely than not the Corporation will be required to sell the security before its anticipated recovery, the Corporation records an other-than-temporary loss in an amount equal to the entire difference between fair value and amortized cost. Otherwise, only the credit portion of the estimated loss on debt securities is recognized in earnings, with the other portion of the loss recognized in other comprehensive income.

There were 126 debt securities in an unrealized loss position as of December 31, 2021, of which 4 were in an unrealized loss position for more than 12 months. Of these 126 securities, 71 were state and political subdivisions securities, 28 were collateralized mortgage obligations (issued by U.S. government sponsored entities), 17 were corporate securities, 7 were mortgage-backed securities and 3 were U.S. government sponsored entities and agencies securities. The unrealized losses associated with these securities were not due to the deterioration in the credit quality of the issuer that is likely to result in the non-collection of contractual principal and interest, but rather have been caused by a rise in interest rates from the time the securities were purchased. Based on that evaluation and other general considerations, and given that the Corporation’s current intention is not to sell any impaired securities and it is more likely than not it will not be required to sell these securities before the recovery of its amortized cost basis, the Corporation does not consider the debt securities with unrealized losses as of December 31, 2021 to be other-than-temporarily impaired.