Note 3 - Securities

9 Months Ended

Sep. 30, 2022

Notes to Financial Statements

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

3. Securities

Equity Securities

The Corporation held equity securities with fair values of $3,000 and $5,000 at  September 30, 2022 and December 31, 2021, respectively. Changes in the fair value of these securities are included in other income on the consolidated statements of net income. During the three and nine months ended September 30, 2022, the Corporation recognized a gain of $1,000 and a loss of $2,000, respectively, on equity securities held at September 30, 2022, compared to a loss of $4,000 and $10,000, respectively, for the same periods in 2021. During the three and nine months ended September 30, 2022 and 2021, the Corporation did not sell any equity securities.

Debt Securities - Available-for-Sale

The following table summarizes the Corporation’s debt securities as of  September 30, 2022 and December 31, 2021:

(Dollar amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
September 30, 2022:
U.S. government sponsored entities and agencies	$	6,104	$	—	$	(1,297	)	$	4,807
U.S. agency mortgage-backed securities: residential		6,794		—		(825	)		5,969
U.S. agency collateralized mortgage obligations: residential		42,874		—		(7,389	)		35,485
State and political subdivisions		89,237		—		(23,432	)		65,805
Corporate debt securities		24,918		28		(1,590	)		23,356
Total securities available-for-sale	$	169,927	$	28	$	(34,533	)	$	135,422
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

The following table summarizes scheduled maturities of the Corporation’s debt securities as of September 30, 2022. 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		4,927		4,759
Due after five years through ten years		35,787		32,065
Due after ten years		79,545		57,144
Mortgage-backed securities: residential		6,794		5,969
Collateralized mortgage obligations: residential		42,874		35,485
Total securities available-for-sale	$	169,927	$	135,422

Information pertaining to debt securities with gross unrealized losses at September 30, 2022 and December 31, 2021, 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
September 30, 2022:
U.S. government sponsored entities and agencies	$	3,981	$	(926	)	$	826	$	(371	)	$	4,807	$	(1,297	)
U.S. agency mortgage-backed securities: residential		1,309		(70	)		4,660		(755	)		5,969		(825	)
U.S. agency collateralized mortgage obligations: residential		13,020		(1,959	)		22,465		(5,430	)		35,485		(7,389	)
State and political subdivisions		38,219		(10,863	)		27,586		(12,569	)		65,805		(23,432	)
Corporate debt securities		14,782		(1,129	)		4,489		(461	)		19,271		(1,590	)
Total	$	71,311	$	(14,947	)	$	60,026	$	(19,586	)	$	131,337	$	(34,533	)
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	)

Gains and losses on sales of securities for the three and nine months ended September 30, 2022 and 2021 were as follows:

(Dollar amounts in thousands)	For the three months ended September 30,					For the nine months ended September 30,
	2022			2021		2022			2021
Proceeds	$	4,132		$	4,597	$	10,990		$	4,845
Gains		3			170		19			201
Losses		(184	)		—		(293	)		—
Tax provision related to gains (losses)		(38	)		35		(58	)		42

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 239 debt securities in an unrealized loss position as of September 30, 2022, 109 of which were in an unrealized loss position for more than 12 months. Of these 239 securities, 148 were state and political subdivision securities, 48 were corporate securities, 33 were collateralized mortgage obligations (issued by U.S. government sponsored entities), 6 were mortgage-backed securities and four were agency securities. Management believes the unrealized losses associated with these securities were not due to the deterioration in the credit quality of the issuer that would likely 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 their amortized cost basis, the Corporation does not consider these debt securities with unrealized losses as of  September 30, 2022 to be other-than-temporarily impaired.