NOTE 2 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at September 30, 2017 and December 31, 2016 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses (dollars in thousands):



			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
September 30, 2017	Cost		Gains		Losses		Value
Available-for-Sale Securities:
Residential mortgage-backed securities	$	26,145	$	154	$	(129)	$	26,170
Residential collateralized mortgage obligations		3,022		-		(72)		2,950
Commercial mortgage backed securities
guaranteed by U.S. government sponsored
agencies		1,591		-		(25)		1,566
Municipal bond		1,105		21		-		1,126
CRA mutual fund		2,148		-		(38)		2,110
Total securities available-for-sale	$	34,011	$	175	$	(264)	$	33,922

Held to Maturity Securities:
Residential mortgage-backed securities	$	5,656	$	-	$	(51)	$	5,605
Foreign government securities		25		-		-		25
Total securities held-to-maturity	$	5,681	$	-	$	(51)	$	5,630



			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2016	Cost		Gains		Losses		Value
Available-for-Sale Securities:
Residential mortgage-backed securities	$	29,152	$	165	$	(290)	$	29,027
Residential collateralized mortgage obligations		5,233		-		(130)		5,103
Municipal bond		1,122		14		-		1,136
CRA mutual fund		2,115		-		(52)		2,063
Total securities available-for-sale	$	37,622	$	179	$	(472)	$	37,329



Held to Maturity Securities:
Residential mortgage-backed securities	$	6,475	$	-	$	(81)	$	6,394
Foreign government securities		25		-		-		25
Total securities held-to-maturity	$	6,500	$	-	$	(81)	$	6,419

NOTE 2 – INVESTMENT SECURITIES (Continued)

The proceeds from sales and calls of securities and the associated gains and losses are listed below for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands):



For the three months ended September 30,

	2017		2016
Proceeds	$	-	$	-
Gross gains		-		-
Gross losses		-		-



For the nine months ended September 30,

	2017		2016
Proceeds	$	-	$	2,771
Gross gains		-		40
Gross losses		-		-

The tax provision related to the net realized gain was $17,000 in 2016.

NOTE 2 – INVESTMENT SECURITIES (Continued)

The amortized cost and fair value of debt securities at September 30, 2017 and December 31, 2016 are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mutual funds and mortgage-backed securities are shown separately (dollars in thousands):



	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
September 30, 2017	Cost		Value		Cost		Value
Within one year	$	-	$	-	$	-	$	-
One to five years		25		25		-		-
Five to ten years		-		-		-		-
Beyond ten years		-		-		1,105		1,126
		25		25		1,105		1,126

Residential mortgage-backed securities		5,656		5,605		26,145		26,170
Residential collateralized mortgage obligations		-		-		3,022		2,950
Commercial mortgage backed securities guaranteed
by U.S. government sponsored agencies		-		-		1,591		1,566
CRA mutual fund		-		-		2,148		2,110
	$	5,681	$	5,630	$	34,011	$	33,922

	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
December 31, 2016	Cost		Value		Cost		Value
Within one year	$	-	$	-	$	-	$	-
One to five years		25		25		-		-
Five to ten years		-		-		-		-
Beyond ten years		-		-		1,122		1,136
		25		25		1,122		1,136

Residential mortgage-backed securities		6,475		6,394		29,152		29,027
Residential collateralized mortgage obligations		-		-		5,233		5,103
CRA mutual fund		-		-		2,115		2,063
	$	6,500	$	6,419	$	37,622	$	37,329

NOTE 2 - INVESTMENT SECURITIES (Continued)

There were no securities pledged at September 30, 2017 and December 31, 2016 to secure borrowings.

At September 30, 2017 and December 31, 2016, all of the mortgage-backed securities and collateralized mortgage obligations held by the Bank were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support.

Securities with unrealized losses at September 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (dollars in thousands):



	Less than 12 Months				12 months or more				Total
September 30, 2017	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
Residential mortgage-backed securities	$	13,943	$	(129)	$	-	$	-	$	13,943	$	(129)
Residential collateralized mortgage obligations		1,103		(23)		1,847		(49)		2,950		(72)
Commercial mortgage backed securities		-		-		1,566		(25)		1,566		(25)
CRA mutual fund		-		-		2,110		(38)		2,110		(38)
Total available for sale	$	15,046	$	(152)	$	5,523	$	(112)	$	20,569	$	(264)


Residential mortgage-backed securities		5,605		(51)		-		-		5,605		(51)
Total held-to-maturity	$	5,605	$	(51)	$	-	$	-	$	5,605	$	(51)

December 31, 2016
Residential mortgage-backed securities	$	16,733	$	(290)	$	-	$	-	$	16,733	$	(290)
Residential collateralized mortgage obligations		2,887		(60)		2,216		(70)		5,103		(130)
CRA mutual fund		-		-		2,063		(52)		2,063		(52)
Total available for sale	$	19,620	$	(350)	$	4,279	$	(122)	$	23,899	$	(472)


Residential mortgage-backed securities	$	6,394	$	(81)	$	-	$	-	$	6,394	$	(81)
Total held-to-maturity	$	6,394	$	(81)	$	-	$	-	$	6,394	$	(81)

Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2017 and December 31, 2016.

At September 30, 2017 and December 31, 2016, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.