NSTS Bancorp, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Note 2 - Securities

Note 2 - Securities

9 Months Ended

Sep. 30, 2023

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

Note 2: Securities

The amortized cost and estimated fair value of debt securities at September 30, 2023 and December 31, 2022, by contractual maturity, are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or repaid without any penalties, therefore, these securities have been included in the below table based on average remaining life.

										*Mortgage-backed*			*Collateralized*
	*U.S. Treasury Notes*			*U.S. government*			*Municipal*			*residential*			*mortgage*			*Total available-for-*
September 30, 2023				*agency obligations*			*obligations*			*obligations*			*obligations*			*sale*
	(Dollars in thousands)
1 year or less	$	3,941		$	—		$	1,285		$	—		$	—		$	5,226
1 to 5 years		1,925			14,748			4,177			10,883			22,513			54,246
5 to 10 years		—			5,100			3,180			19,281			8,846			36,407
After 10 years		—			—			9,496			795			3,356			13,647
Fair value		5,866			19,848			18,138			30,959			34,715			109,526
Gross unrealized gains		—			—			—			—			—			—
Gross unrealized losses		(112	)		(2,015	)		(3,834	)		(6,530	)		(5,740	)		(18,231	)
Amortized cost	$	5,978		$	21,863		$	21,972		$	37,489		$	40,455		$	127,757

										Mortgage-backed			Collateralized
	*U.S. Treasury Notes*			*U.S. government*			*Municipal*			*residential*			*mortgage*			*Total available-for-*
December 31, 2022				*agency obligations*			*obligations*			*obligations*			*obligations*			*sale*
	(Dollars in thousands)
1 year or less	$	2,433		$	1,007		$	528		$	—		$	—		$	3,968
1 to 5 years		4,855			11,511			5,394			20,033			22,809			64,602
5 to 10 years		—			8,872			2,655			15,046			11,848			38,421
After 10 years		—			—			11,060			659			2,495			14,214
Fair value		7,288			21,390			19,637			35,738			37,152			121,205
Gross unrealized gains		—			—			6			—			—			6
Gross unrealized losses		(155	)		(1,870	)		(2,972	)		(5,464	)		(5,105	)		(15,566	)
Amortized cost	$	7,443		$	23,260		$	22,603		$	41,202		$	42,257		$	136,765

As of September 30, 2023, and December 31, 2022, no securities were pledged to secure public deposits or for other purposes as required or permitted by law.

Information pertaining to securities with gross unrealized losses at September 30, 2023 and December 31, 2022, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows:

	*Less than 12 Months*				*12 Months or Longer*				*Total*
	(Dollars in thousands)
	*Fair*		*Unrealized*		*Fair*		*Unrealized*		*Fair*		*Unrealized*
	*Value*		*Losses*		*Value*		*Losses*		*Value*		*Losses*
September 30, 2023
U.S. Treasury Notes	$	—	$	—	$	5,866	$	112	$	5,866	$	112
U.S. government agency obligations		3,657		67		16,191		1,948		19,848		2,015
Municipal obligations		3,104		155		15,034		3,679		18,138		3,834
Mortgage-backed residential obligations		—		—		30,959		6,530		30,959		6,530
Collateralized mortgage obligations		593		26		34,122		5,714		34,715		5,740
Total	$	7,354	$	248	$	102,172	$	17,983	$	109,526	$	18,231
December 31, 2022
U.S. Treasury Notes	$	7,288	$	155	$	—	$	—	$	7,288	$	155
U.S. government agency obligations		17,274		1,296		4,116		574		21,390		1,870
Municipal obligations		16,823		2,349		2,037		623		18,860		2,972
Mortgage-backed residential obligations		14,365		1,618		21,373		3,846		35,738		5,464
Collateralized mortgage obligations		21,449		2,014		15,703		3,091		37,152		5,105
Total	$	77,199	$	7,432	$	43,229	$	8,134	$	120,428	$	15,566

At September 30, 2023 and December 31, 2022, certain investment securities were in unrealized loss positions. There were no securities with identified credit losses at September 30, 2023 and December 31, 2022, respectively. Unrealized losses have not been recognized into income because, based on management's evaluation, the decline in fair value is largely due to increased market rates, temporary market conditions and trading spreads, and, as such, are considered to be temporary by the Bank. In addition, management has the intent and ability to hold the securities until they mature or they recover their carrying values.

All U.S. Treasuries, U.S. government agency obligations, mortgage-based residential obligations and collateralized mortgage obligations are agency-issued or government-sponsored enterprise issued. Agency-issued securities are generally guaranteed by a U.S. government agency, such as the Government National Mortgage Association. Government-sponsored enterprises, such as the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association, or the Small Business Administration, have either a direct or implied guarantee by the U.S. government.

The Bank holds two classifications of municipal bonds, general obligation bonds and revenue bonds. General obligation bonds are backed by the general revenue of the issuing municipality, while revenue bonds are supported by a specific revenue source. All general obligation and revenue bonds have a bond rating of investment grade by Standard and Poor's or Moody's Investor Services or are not rated. There have been no declines in investment grades on bonds in a loss position and as of September 30, 2023, all municipal bonds are paying as agreed.

There were no sales of securities available-for-sale during the three and nine months ended September 30, 2023 and 2022.