Investment Securities

Investment securities have been classified in the consolidated balance sheets according to management’s intent. Investment securities at

September 30, 2019

and

December 31, 2018

are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value

September 30, 2019
Securities available for sale:
Agency mortgage-backed securities	$	75,414	$	52	$	810	$	74,656
Agency CMO		43,911		193		307		43,797
Other debt securities:
Agency notes and bonds		63,605		536		156		63,985
Municipal obligations		69,681		2,910		1		72,590

Total securities available for sale	$	252,611	$	3,691	$	1,274	$	255,028

December 31, 2018
Securities available for sale:
Agency mortgage-backed securities	$	94,746	$	-	$	3,489	$	91,257
Agency CMO		33,222		152		382		32,992
Other debt securities:
Agency notes and bonds		75,461		59		1,016		74,504
Municipal obligations		63,008		651		571		63,088

Total securities available for sale	$	266,437	$	862	$	5,458	$	261,841

Agency notes and bonds, agency mortgage-backed securities and agency collateralized mortgage obligations (“CMO”) include securities issued by the Government National Mortgage Association (“GNMA”), a U.S. government agency, and the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) and the Federal Home Loan Bank (“FHLB”), which are government-sponsored enterprises.

The amortized cost and fair value of debt securities as of

September 30, 2019,

by contractual maturity, are shown below. Expected maturities of mortgage-backed securities and CMO

may

differ from contractual maturities because the mortgages underlying the obligations

may

be prepaid without penalty.

	Securities Available for Sale
	Amortized		Fair
	Cost		Value
(In thousands)

Due in one year or less	$	26,974	$	26,899
Due after one year through five years		45,469		46,060
Due after five years through ten years		28,055		29,166
Due after ten years		32,788		34,450
		133,286		136,575
Mortgage-backed securities and CMO		119,325		118,453

	$	252,611	$	255,028

Information pertaining to investment securities available for sale with gross unrealized losses at

September 30, 2019,

aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows.

	Number of				Gross
	Investment		Fair		Unrealized
	Positions		Value		Losses
(Dollars in thousands)

Continuous loss position less than twelve months:
Agency mortgage-backed securities		10	$	4,951	$	7
Agency CMO		11		14,247		219
Agency notes and bonds		1		1,999		1
Municipal obligations		1		302		1

Total less than twelve months		23		21,499		228

Continuous loss position more than twelve months:
Agency mortgage-backed securities		60		62,392		803
Agency CMO		16		7,692		88
Agency notes and bonds		11		42,616		155
Municipal obligations		1		100		-

Total more than twelve months		88		112,800		1,046

Total securities available for sale		111	$	134,299	$	1,274

Information pertaining to investment securities available for sale with gross unrealized losses at

December 31, 2018,

aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows.



	Number of				Gross
	Investment		Fair		Unrealized
	Positions		Value		Losses
(Dollars in thousands)

Continuous loss position less than twelve months:
Agency mortgage-backed securities		1	$	1,563	$	13
Agency CMO		4		2,870		1
Agency notes and bonds		1		499		1
Municipal obligations		11		3,552		12

Total less than twelve months		17		8,484		27

Continuous loss position more than twelve months:
Agency mortgage-backed securities		97		89,680		3,476
Agency CMO		24		12,168		381
Agency notes and bonds		22		67,927		1,015
Municipal obligations		49		25,316		559

Total more than twelve months		192		195,091		5,431

Total securities available for sale		209	$	203,575	$	5,458

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (

) the length of time and the extent to which the fair value has been less than cost, (

) the financial condition and near-term prospects of the issuer, and (

) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recover in fair value.

September 30, 2019,

the U.S. government agency debt securities, including agency notes and bonds, mortgage-backed securities and CMO, and municipal obligations in a loss position had depreciated approximately

0.9%

from the amortized cost basis. All of the U.S. government agency securities and municipal obligations are issued by U.S. government agencies, government-sponsored enterprises and municipal governments, or are secured by

first

mortgage loans and municipal project revenues. These unrealized losses related principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As the Company has the ability to hold the debt securities until maturity, or the foreseeable future if classified as available for sale,

declines are deemed to be other-than-temporary.

While management does

not

anticipate any credit-related impairment losses at

September 30, 2019,

additional deterioration in market and economic conditions

may

have an adverse impact on credit quality in the future.

During the

three

months ended

September 30, 2019,

the Company realized gross gains of

$22,000

and gross losses of

$55,000

on sales of available for sale securities and gross losses of

$2,000

on sales of time deposits. During the

nine

months ended

September 30, 2019,

the Company realized gross gains of

$22,000

and gross losses of

$141,000

on sales of available for sale securities and gross losses of

$13,000

on sales of time deposits. During the

three

months ended

September 30, 2018,

the Company did

not

have any security sales. During the

nine

months ended

September 30, 2018,

the Company realized gross gains of

$218,000

and gross losses of

$313,000

on sales of available for sale securities.

Certain available for sale debt securities were pledged to secure public fund deposits at

September 30, 2019

and

December 31, 2018.

Equity Securities

September 2018,

the Company acquired

90,000

shares of common stock in another bank holding company, representing approximately

of the outstanding common stock of the entity, for a total investment of

$1.9

million. During the

three

months ended

September 30, 2019,

the Company recognized an unrealized loss of

$9,000

on this equity investment. During the

nine

months ended

September 30, 2019,

the Company recognized an unrealized gain of

$108,000

on this equity investment. At

September 30, 2019

and

December 31, 2018,

the equity investment had a fair value of

$1.8

million and

$1.7

million, respectively, and is included in other assets on the consolidated balance sheets.