SECURITIES

12 Months Ended

Dec. 31, 2018

Investments, Debt and Equity Securities [Abstract]

SECURITIES

NOTE 3 - SECURITIES

The composition of securities is as follows:

(in thousands)	Amortized cost (1)		Gross un- realized gains		Gross un- realized losses		Fair value
December 31, 2018
Available-for-sale
U.S. Government Agency notes	$	4,991	$	58	$	—	$	5,049
Municipal bonds		5,334		45		—		5,379
Mortgage-backed securities:
U.S. Government agencies and U.S. Government- sponsored enterprises		32,522		56		251		32,327
Collateralized mortgage obligations:
U.S. Government agencies		17,835		85		173		17,747
SBA bonds		27,914		139		313		27,740
Corporate bonds		3,500		76		—		3,576
Total securities available-for-sale	$	92,096	$	459	$	737	$	91,818
CRA mutual fund	$	836	$	—	$	—	$	836
Non-marketable securities
Federal Home Loan Bank of Boston stock	$	4,496	$	—	$	—	$	4,496
(in thousands)	Amortized cost (1)		Gross un- realized gains		Gross un- realized losses		Fair value
December 31, 2017
Available-for-sale
Municipal bonds	$	3,476	$	11	$	1	$	3,486
Mortgage-backed securities:
U.S. Government agencies and U.S. Government- sponsored enterprises		45,983		152		267		45,868
Collateralized mortgage obligations:
U.S. Government agencies		10,462		2		87		10,377
Non-agency		2,271		410		17		2,664
SBA bonds		12,278		9		20		12,267
Corporate bonds		3,500		59		9		3,550
Total securities available-for-sale	$	77,970	$	643	$	401	$	78,212
CRA mutual fund	$	835	$	—	$	—	$	835
Non-marketable securities
Federal Home Loan Bank of Boston stock	$	3,813	$	—	$	—	$	3,813

(1) Net of other-than-temporary impairment write-downs recognized in prior years.

Sales of securities available-for-sale and gross gains and gross losses realized are as follows:

Years ended December 31, (in thousands)		2018			2017			2016
Proceeds	$	10,036		$	199		$	4,865
Gains realized		361			192			569
Losses realized		(43	)		(14	)		—
Net gains realized		318			178			569
Income tax provision		67			61			193

The following table summarizes the aggregate fair value and gross unrealized loss of securities that have been in a continuous unrealized loss position as of the dates presented:

	Less than 12 Months				12 Months or Longer				Total
December 31, 2018 (in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair Value		Unrealized losses
Available-for-sale
Mortgage-backed securities	$	5,754	$	40	$	19,973	$	211	$	25,727	$	251
Collateralized mortgage obligations
U.S. Government Agencies		—		—		8,281		173		8,281		173
SBA bonds		7,343		135		7,336		178		14,679		313
Total temporarily impaired securities		13,097		175		35,590		562		48,687		737
Other-than-temporarily impaired securities		—		—		—		—		—		—
Total temporarily impaired and other-than-temporarily impaired securities	$	13,097	$	175	$	35,590	$	562	$	48,687	$	737

December 31, 2017 (in thousands)
Available-for-sale
Municipal bonds	$	479	$	1	$	—	$	—	$	479	$	1
Mortgage-backed securities		15,914		99		17,892		168		33,806		267
Collateralized mortgage obligations
U.S. Government Agencies		9,317		87		—		—		9,317		87
Non-agency		—		—		77		3		77		3
SBA bonds		8,519		20		—		—		8,519		20
CRA mutual funds		835		16		—		—		835		16
Corporate bonds		1,491		9		—		—		1,491		9
Total temporarily impaired securities		36,555		232		17,969		171		54,524		403
Other-than-temporarily impaired securities
Collateralized mortgage obligations
Non-agency		101		14		—		—		101		14
Total temporarily impaired and other-than-temporarily impaired securities	$	36,656	$	246	$	17,969	$	171	$	54,625	$	417

The amortized cost, fair value and tax equivalent yield of securities, by maturity, are as follows:

December 31, 2018 (in thousands)	Maturity	Amortized cost			Fair value	Yield(1)
U.S. Government agency notes	After 5 years but within 10 years	$	4,991	$	5,049	3.59	%
	Total		4,991		5,049	3.59
Municipal bonds	Within 1 year		296		296	1.97
	After 1 year but within 5 years		137		137	2.78
	After 10 years but within 15 years		4,368		4,410	4.79
	After 15 years		533		536	3.35
	Total		5,334		5,379	4.44
Mortgage-backed securities	U.S. Government agency and U.S. Government-sponsored enterprises		32,522		32,327	3.01
Collateralized mortgage obligations	U.S. Government agency and U.S. Government-sponsored enterprises		17,835		17,747	3.00
SBA bonds			27,914		27,740	3.12
Corporate bonds	After 5 years but within 10 years		3,500		3,576	5.57
Securities available-for-sale		$	92,096	$	91,818	3.25	%

(1) Yield is based on amortized cost.

Salisbury evaluates securities for OTTI where the fair value of a security is less than its amortized cost basis at the balance sheet date. As part of this process, Salisbury considers whether it has the intent to sell each debt security and whether it is more likely than not that it will be required to sell the security before its anticipated recovery. If either of these conditions is met, Salisbury recognizes an OTTI charge to earnings equal to the entire difference between the security’s amortized cost basis and its fair value at the balance sheet date. For securities that meet neither of these conditions, an analysis is performed to determine if any of these securities are at risk for OTTI.

The following summarizes, by security type, the basis for evaluating if the applicable securities were OTTI at December 31, 2018.

U.S. Government agency mortgage-backed securities and collateralized mortgage obligations: The contractual cash flows are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Twenty-nine securities had unrealized losses at December 31, 2018, which approximated 1.23% of their amortized cost. Changes in fair values are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities. Furthermore, Salisbury evaluates these securities for strategic fit and may reduce its position in these securities, although it is not more likely than not that Salisbury will be required to sell these securities before recovery of their cost basis, which may be maturity, and does not intend to sell these securities. Therefore, management does not consider these investments to be other-than-temporarily impaired at December 31, 2018.

SBA bonds: The contractual cash flows are guaranteed by the U.S. government. Ten securities had unrealized losses at December 31, 2018, which approximated 2.09% of their amortized cost. Changes in fair values are a function of changes in investment spreads and interest rate movements and not changes in credit quality since time of purchase. Management expects to recover the entire amortized cost basis of these securities. Furthermore, Salisbury evaluates these securities for strategic fit and may reduce its position in these securities, although it is not more likely than not that Salisbury will be required to sell these securities before recovery of their cost basis, which may be maturity, and does not intend to sell these securities. Management evaluated the impairment status of these debt securities, and concluded that the gross unrealized losses were temporary in nature. Therefore, management does not consider these investments to be other-than temporarily impaired at December 31, 2018.

See note 6 for summary of pledged securities.