NOTE 2 – Investment Securities

The amortized costs and fair value of investment securities are as follows:


	March 31, 2018
	Amortized		Gross Unrealized		Fair
(dollars in thousands)	Cost		Gains	Losses	Value
Available for sale
US government agencies	$	7,743	1	214	7,530
SBA securities		3,925	-	100	3,825
State and political subdivisions		6,388	54	94	6,348
Mortgage-backed securities
FHLMC		8,771	-	295	8,476
FNMA		27,798	2	702	27,098
GNMA		5,377	1	149	5,229
Total mortgage-backed securities		41,946	3	1,146	40,803
Total investment securities available for sale	$	60,002	58	1,554	58,506


	December 31, 2017
	Amortized		Gross Unrealized		Fair
(dollars in thousands)	Cost		Gains	Losses	Value
Available for sale
US government agencies	$	8,749	1	97	8,653
SBA securities		4,087	-	24	4,063
State and political subdivisions		11,242	179	25	11,396
Mortgage-backed securities
FHLMC		9,102	-	149	8,953
FNMA		29,383	3	386	29,000
GNMA		5,618	2	82	5,538
Total mortgage-backed securities		44,103	5	617	43,491
Total	$	68,181	185	763	67,603

During the first three months of 2018, the Company sold $5.8 million of investment securities, resulting in a loss on sale of $1,000. During the first three months of 2017, there were no investment securities either sold or called.

Contractual maturities and yields on the Company’s investment securities at March 31, 2018 and December 31, 2017 are shown in the following table. 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.


	March 31, 2018
	Less than one year				One to five years			Five to ten years			Over ten years			Total
(dollars in thousands)	Amount		Yield		Amount	Yield		Amount	Yield		Amount	Yield		Amount	Yield
Available for sale
US government agencies	$	-	-		2,655	2.12	%	4,875	2.48	%	-	-		7,530	2.35	%
SBA securities		-	-		-	-		-	-		3,825	2.53	%	3,825	2.53	%
State and political subdivisions		-	-		521	2.14	%	4,523	3.11	%	1,304	2.63	%	6,348	2.93	%
Mortgage-backed securities		282	0.52	%	795	1.81	%	11,587	1.87	%	28,139	2.17	%	40,803	2.06	%
Total	$	282	0.52	%	3,971	2.06	%	20,985	2.28	%	33,268	2.23	%	58,506	2.22	%

	December 31, 2017
	Less than one year				One to five years			Five to ten years			Over ten years			Total
(dollars in thousands)	Amount		Yield		Amount	Yield		Amount	Yield		Amount	Yield		Amount	Yield
Available for sale
US government agencies	$	995	1.15	%	1,503	2.04	%	6,155	2.40	%	-	-		8,653	2.20	%
SBA securities		-	-		-	-		-	-		4,063	2.45	%	4,063	2.45	%
State and political subdivisions		-	-		1,163	1.96	%	7,162	2.84	%	3,071	2.76	%	11,396	2.73	%
Mortgage-backed securities		432	0.99	%	-	-		11,328	1.84	%	31,731	2.06	%	43,491	1.99	%
Total	$	1,427	1.10	%	2,666	1.59	%	24,645	2.27	%	38,865	2.15	%	67,603	2.17	%

The tables below summarize gross unrealized losses on investment securities and the fair market value of the related securities at March 31, 2018 and December 31, 2017, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	March 31, 2018
	Less than 12 months					12 months or longer					Total
		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(dollars in thousands)	#	value		losses		#	value		losses		#	value		losses
Available for sale
US government agencies	5	$	4,121	$	85	3	$	2,908	$	129	8	$	7,029	$	214
SBA securities	1		2,781		84	1		1,044		16	2		3,825		100
State and political subdivisions	6		2,618		57	2		769		37	8		3,387		94
Mortgage-backed securities
FHLMC	3		2,740		75	7		5,736		220	10		8,476		295
FNMA	11		13,412		314	13		13,639		388	24		27,051		702
GNMA	3		4,393		92	1		816		57	4		5,209		149
Total	29	$	30,065	$	707	27	$	24,912	$	847	56	$	54,977	$	1,554

	December 31, 2017
	Less than 12 months					12 months or longer					Total
		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(dollars in thousands)	#	value		losses		#	value		losses		#	value		losses
Available for sale
US government agencies	5	$	4,184	$	22	4	$	3,968	$	75	9	$	8,152	$	97
SBA securities	1		2,936		13	1		1,127		11	2		4,063		24
State and political subdivisions	3		1,214		9	2		792		16	5		2,006		25
Mortgage-backed securities
FHLMC	3		2,897		26	7		6,056		123	10		8,953		149
FNMA	11		14,345		135	13		14,597		251	24		28,942		386
GNMA	2		2,270		40	1		971		42	3		3,241		82
Total	25	$	27,846	$	245	28	$	27,511	$	518	53	$	55,357	$	763

At March 31, 2018, the Company had 29 individual investments with a fair market value of $30.1 million that were in an unrealized loss position for less than 12 months and 27 individual investments with a fair market value of $24.9 million that were in an unrealized loss position for 12 months or longer. The unrealized losses were primarily attributable to changes in interest rates, rather than deterioration in credit quality. The individual securities are each investment grade securities. The Company considers the length of time and extent to which the fair value of available-for-sale debt securities have been less than cost to conclude that such securities are not other-than-temporarily impaired. The Company also considers other factors such as the financial condition of the issuer including credit ratings and specific events affecting the operations of the issuer, volatility of the security, underlying assets that collateralize the debt security, and other industry and macroeconomic conditions.

As the Company has no intent to sell securities with unrealized losses and it is not more-likely-than-not that the Company will be required to sell these securities before recovery of amortized cost, the Company has concluded that these securities are not impaired on an other-than-temporary basis.Other investments are comprised of the following and are recorded at cost which approximates fair value.


(dollars in thousands)	March 31, 2018		December 31, 2017
Federal Home Loan Bank stock	$	2,524	3,754
Investment in Trust Preferred securities		403	403
Other investments		129	305
Total other investments	$	3,056	4,462

The Company has evaluated the Federal Home Loan Bank (“FHLB”) stock for impairment and determined that the investment in the FHLB stock is not other than temporarily impaired as of March 31, 2018 and ultimate recoverability of the par value of this investment is probable. All of the FHLB stock is used to collateralize advances with the FHLB.

At March 31, 2018 and December 31, 2017, $4.1 million and $7.7 million, respectively, of securities were pledged as collateral for repurchase agreements from brokers.