NOTE 2 – SECURITIES

Available for Sale

The amortized cost and approximate fair value of securities available for sale as of March 31, 2020 and December 31, 2019 are summarized as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
March 31, 2020
U.S. government agencies	$	8,235	$	—	$	(135)	$	8,100
U.S. government-sponsored enterprises		53,906		22		(2,908)		51,020
State and political subdivisions		45,232		2,682		—		47,914
Mortgage-backed securities -
U.S. government-sponsored enterprises		82,891		3,160		(377)		85,674
Private mortgage-backed securities		26,858		331		(357)		26,832
Corporate Debt		13,005		92		(432)		12,665
	$	230,127	$	6,287	$	(4,209)	$	232,205
December 31, 2019
U.S. government agencies	$	8,758	$	5	$	(84)	$	8,679
U.S. government-sponsored enterprises		54,338		—		(1,089)		53,249
State and political subdivisions		31,501		938		(225)		32,214
Mortgage-backed securities -
U.S. government-sponsored enterprises		81,449		1,198		(178)		82,469
Private mortgage-backed securities		22,110		368		(33)		22,445
Corporate Debt		13,019		113		(7)		13,125
	$	211,175	$	2,622	$	(1,616)	$	212,181

Securities with a carrying value of approximately $4.1 million and $2.5 million at March 31, 2020 and December 31, 2019, respectively, were pledged to secure public deposits and for borrowings at the Federal Reserve Bank as required or permitted by applicable laws and regulations.

The amortized cost and fair value of securities available for sale at March 31, 2020 are shown below by contractual maturity. Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Investments which pay principal on a periodic basis are not included in the maturity categories.


	Amortized		Fair
(Dollars in thousands)	Cost		Value
Due in one year or less	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		12,914		13,013
Due after ten years		45,323		47,566
Total bonds and obligations		58,237		60,579
U.S. government agencies		8,235		8,100
U.S. government-sponsored enterprises		53,906		51,020
Mortgage-backed securities:
U.S. government-sponsored enterprises		82,891		85,674
Private mortgage-backed securities (1)		26,858		26,832
Total available for sale securities	$	230,127	$	232,205

There were no gross realized gains or losses on sales of securities available for sale and no gross realized losses for the three months ended March 31, 2020 and 2019, respectively.

Temporarily Impaired Securities

The following table shows gross unrealized losses and fair value of securities with unrealized losses that are not deemed to be other than temporarily impaired, aggregated by category and length of time that individual available for sale securities have been in a continuous unrealized loss position at March 31, 2020 and December 31, 2019.


	Less Than 12 Months				12 Months or More				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
March 31, 2020
U.S. government agencies	$	2,404	$	(64)	$	5,696	$	(71)	$	8,100	$	(135)
U.S. government-sponsored enterprises		28,184		(1,411)		20,400		(1,497)		48,584		(2,908)
State and political subdivisions		—		—		—		—		—		—
Mortgage-backed securities -
U.S. government-sponsored enterprises		19,331		(323)		4,310		(54)		23,641		(377)
Private mortgage-backed securities		12,101		(357)		—		—		12,101		(357)
Corporate Debt		8,089		(432)		—		—		8,089		(432)
Total temporarily impaired securities	$	70,109	$	(2,587)	$	30,406	$	(1,622)	$	100,515	$	(4,209)
December 31, 2019
U.S. government agencies	$	—	$	—	$	5,966	$	(84)	$	5,966	$	(84)
U.S. government-sponsored enterprises		44,110		(770)		9,139		(319)		53,249		(1,089)
State and political subdivisions		17,421		(225)		—		—		17,421		(225)
Mortgage-backed securities -
U.S. government-sponsored enterprises		17,205		(113)		4,973		(65)		22,178		(178)
Private mortgage-backed securities		6,973		(33)		—		—		6,973		(33)
Corporate Debt		2,142		(7)		—		—		2,142		(7)
Total temporarily impaired securities	$	87,851	$	(1,148)	$	20,078	$	(468)	$	107,929	$	(1,616)

For each security whose fair value is less than its amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred. As of March 31, 2020, we reviewed our available for sale securities portfolio for indications of impairment. This review included analyzing the length of time and the extent to which the fair value was lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and likelihood of selling the security. The intent and likelihood of sale of debt and equity securities are evaluated based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position.

U.S. Government Agencies

At March 31, 2020 and December 31, 2019, the declines in fair value and the unrealized losses for our U.S. government agencies securities were primarily due to changes in spreads and market conditions and not credit quality. At March 31, 2020, there were seven securities with a fair value of $8.1 million that had an unrealized loss that amounted to $135 thousand. As of March 31, 2020, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of the U.S. government agencies securities at March 31, 2020 were deemed to be other-than-temporarily impaired (“OTTI”).

At December 31, 2019, there were six securities with a fair value of $6.0 million that had an unrealized loss that amounted to $84 thousand.

U.S. Government Sponsored Enterprises

At March 31, 2020 and December 31, 2019, the change in fair value and unrealized losses for our U.S. government sponsored enterprises securities were primarily due to changes in spreads and market conditions and not credit quality. At March 31, 2020, there were 25 securities with a fair value of $48.6 million that had an unrealized loss that amounted to $2.9 million. As of March 31, 2020, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of the U.S. government sponsored enterprise securities at March 31, 2020, were deemed to be OTTI.

At December 31, 2019, there were 26 securities with a fair value of $53.2 million that had an unrealized loss of $1.1 million in the aggregate.

State and Political Subdivisions

At March 31, 2020, there were no state and political subdivisions securities that had an unrealized loss.

At December 31, 2019, there were fourteen securities with a fair value of $17.4 million that had an unrealized loss that amounted to $225 thousand.

Mortgage-Backed Securities - U.S. government-sponsored enterprises

At March 31, 2020 and December 31, 2019, the change in fair value and unrealized losses for our mortgage-backed securities guaranteed by U.S. government-sponsored enterprises were primarily due to changes in spreads and market conditions and not credit quality. At March 31, 2020 there were 15 securities with a fair value of $23.6 million that had an unrealized loss that amounted to $377 thousand. As of March 31, 2020, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of our mortgage-backed securities at March 31, 2020 were deemed to be OTTI.

At December 31, 2019, there were 13 securities with a fair value of $22.2 million that had an unrealized loss that amounted to $178 thousand.

Mortgage-Backed Securities – Private mortgage-backed securities

At March 31, 2020 and December 31, 2019, the change in fair value and the unrealized losses for our private mortgage-backed securities were primarily due to changes in spreads and mark conditions and not credit quality. At March 31, 2020, there were five securities with a fair value of $12.1 million that had an unrealized loss that amounted to $357 thousand. As of March 31, 2020, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of our mortgage-backed securities at March 31, 2020, were deemed to be other-then-temporarily impaired.

At December 31, 2019, there were three securities with a fair value of $7.0 million that had an unrealized loss that amounted to $33 thousand.

Corporate Debt

At March 31, 2020, there were four securities with a fair value of $8.1 million that had an unrealized loss of $432 thousand. These securities typically have maturity dates greater than 5 years and the fair values are more sensitive to changes in market interest rates. As of March 31, 2020, we did not intend to sell and it was not more-likely-than-not that we would be required to sell any of these securities before recovery of their amortized cost basis. Therefore, none of our corporate debt securities at March 31, 2020, were deemed to be OTTI.

At December 31, 2019, there was one security with a fair value of $2.1 million that had an unrealized loss of $7 thousand.

Held to Maturity Securities

The amortized cost and approximate fair value of securities held to maturity as of March 31, 2020 and December 31, 2019 are summarized as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
March 31, 2020
State and political subdivisions	$	6,339	$	60	$	—	$	6,399
December 31, 2019
State and political subdivisions	$	4,012	$	71	$	—	$	4,083

The amortized cost and carrying value of securities held to maturity at March 31, 2020 are shown below by contractual maturity. Actual maturities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Amortized		Fair
(Dollars in thousands)	Cost		Value
Due in one year or less	$	3,823	$	3,824
Due after one year through five years		1,500		1,527
Due after five years through ten years		1,016		1,048
Due after ten years		—		—
Total held to maturity securities	$	6,339	$	6,399

Temporarily Impaired Securities

For each security whose fair value is less than its amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred. As of March 31, 2020, there were no securities that had an unrealized loss. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and the intent and likelihood of selling the security. The intent and likelihood of sale of debt securities is evaluated based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. For each security whose fair value is less than their amortized cost basis, a review is conducted to determine if an other-than-temporary impairment has occurred.

At December 31, 2019, there were no held to maturity securities with an unrealized loss.