Note 3 - Securities

3 Months Ended

Mar. 31, 2022

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 $5,000 and $5,000 at March 31, 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 months ended March 31, 2022 and 2021, the Corporation recognized losses of $0 and $2,000, respectively, on equity securities held at March 31. During the three months ended March 31, 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 March 31, 2022 and December 31, 2021:

(Dollar amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2022:
U.S. government sponsored entities and agencies	$	6,107	$	—	$	(560	)	$	5,547
U.S. agency mortgage-backed securities: residential		11,308		19		(511	)		10,816
U.S. agency collateralized mortgage obligations: residential		49,276		4		(3,255	)		46,025
State and political subdivisions		89,353		35		(10,630	)		78,758
Corporate debt securities		25,443		95		(529	)		25,009
Total securities available-for-sale	$	181,487	$	153	$	(15,485	)	$	166,155

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

3.	Securities (continued)

The following table summarizes scheduled maturities of the Corporation’s debt securities as of March 31, 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		4,607		4,622
Due after five years through ten years		33,443		32,311
Due after ten years		82,853		72,381
Mortgage-backed securities: residential		11,308		10,816
Collateralized mortgage obligations: residential		49,276		46,025
Total securities available-for-sale	$	181,487	$	166,155

Information pertaining to debt securities with gross unrealized losses at March 31, 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
March 31, 2022:
U.S. government sponsored entities and agencies	$	5,547	$	(560	)	$	—	$	—		$	5,547	$	(560	)
U.S. agency mortgage-backed securities: residential		5,365		(165	)		4,460		(346	)		9,825		(511	)
U.S. agency collateralized mortgage obligations: residential		40,792		(2,929	)		4,502		(326	)		45,294		(3,255	)
State and political subdivisions		59,987		(8,209	)		11,538		(2,421	)		71,525		(10,630	)
Corporate debt securities		12,698		(437	)		1,658		(92	)		14,356		(529	)
Total	$	124,389	$	(12,300	)	$	22,158	$	(3,185	)	$	146,547	$	(15,485	)

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 months ended March 31, 2022 and 2021 were as follows:

(Dollar amounts in thousands)	*For the three months ended March 31,*
	*2022*			*2021*
Proceeds	$	4,939		$	—
Gains		16			26
Losses		(7	)		—
Tax provision related to gains (losses)		2			5

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 231 debt securities in an unrealized loss position as of March 31, 2022, 43 of which were in an unrealized loss position for more than 12 months. Of these 231 securities, 133 were state and political subdivision securities, 46 were collateralized mortgage obligations (issued by U.S. government sponsored entities), 35 were corporate securities, 13 were mortgage-backed securities and four were U.S government sponsored entities and agencies security. 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 March 31, 2022 to be other-than-temporarily impaired.

EMCLAIRE FINANCIAL CORP 10-Q