Note 3 - Investment Securities

9 Months Ended

Sep. 30, 2019

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE

3

.

INVESTMENT SECURITIES

Investment securities are summarized as follows:

	September 30, 2019									December 31, 2018
			Gross									Gross
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		(Losses)			Value		Cost		Gains		(Losses)			Value
	(In Thousands)
Available-for-Sale:
U.S. government and agency obligations	$	13,817	$	312	$	-		$	14,129	$	9,333	$	58	$	(44	)	$	9,347
Municipal obligations		51,253		2,103		(1	)		53,355		69,024		244		(990	)		68,278
Corporate obligations		11,385		43		(25	)		11,403		11,411		8		(300	)		11,119
Mortgage-backed securities		11,670		67		(50	)		11,687		19,635		86		(373	)		19,348
Collateralized mortgage obligations		35,340		572		(89	)		35,823		24,229		6		(360	)		23,875
Asset-backed securities		10,167		-		(181	)		9,986		10,350		6		(158	)		10,198
Total	$	133,632	$	3,097	$	(346	)	$	136,383	$	143,982	$	408	$	(2,225	)	$	142,165

Proceeds from sales of available-for-sale securities and the associated gross realized gains and losses were as follows:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2019		2018			2019			2018
	(In Thousands)
Proceeds from sale of available-for-sale securities	$	-	$	978		$	53,257		$	46,058
Gross realized gain on sale of available-for-sale securities	$	-	$	-		$	549		$	191
Gross realized loss on sale of available-for-sale securities		-		(23	)		(500	)		(304	)
Net realized gain (loss) on sale of available-for-sale securities	$	-	$	(23	)	$	49		$	(113	)

The amortized cost and fair value of securities by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers

may

have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2019
	Amortized		Fair
	Cost		Value
	(In Thousands)
Due in one year or less	$	9,626	$	9,640
Due from one to five years		13,036		13,108
Due from five to ten years		9,201		9,589
Due after ten years		54,759		56,536
		86,622		88,873
Mortgage-backed securities		11,670		11,687
Collateralized mortgage obligations		35,340		35,823
Total	$	133,632	$	136,383

Maturities of securities do

not

reflect repricing opportunities present in adjustable rate securities.

As of

September 30, 2019

and

December 31, 2018

securities with a fair value of

$19,180,000

 and

$21,408,000,

respectively were pledged to secure public deposits and for other purposes required or permitted by law.

The Company’s investment securities that have been in a continuous unrealized loss position for less than

twelve

months and those that have been in a continuous unrealized loss position for

twelve

or more months were as follows:

	September 30, 2019
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
	(In Thousands)
U.S. government and agency	$	-	$	-		$	-	$	-
Municipal obligations		1,091		(1	)		-		-
Corporate obligations		-		-			2,975		(25	)
Mortgage-backed securities and collateralized mortgage obligations		10,017		(27	)		8,382		(112	)
Asset-backed securities		4,837		(82	)		5,149		(99	)
Total	$	15,945	$	(110	)	$	16,506	$	(236	)

	December 31, 2018
	Less Than 12 Months					12 Months or Longer
			Gross					Gross
	Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses
U.S. government and agency	$	-	$	-		$	3,385	$	(44	)
Municipal obligations		17,887		(140	)		32,712		(850	)
Corporate obligations		2,890		(110	)		7,220		(190	)
Mortgage-backed securities and collateralized mortgage obligations		5,575		(98	)		22,559		(635	)
Asset-backed securities		8,200		(158	)		-		-
Total	$	34,552	$	(506	)	$	65,876	$	(1,719	)

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. The unrealized losses associated with these investments are believed to be caused by changing market conditions, primarily spreads related to U.S. treasuries, that are considered to be temporary and the Company does not intend to sell the securities, and it is not likely to be required to sell these securities prior to maturity. Based on the Company’s evaluation of these securities, no other-than-temporary impairment was recorded for the nine months ended September 30, 2019, or 2018. As of September 30, 2019 and December 31, 2018, there were, respectively, 22 and 108 securities in unrealized loss positions that were considered to be temporarily impaired and therefore an impairment charge has not been recorded.

As of

September 30, 2019

,

2

 U.S. government and agency securities and municipal obligations had unrealized losses with aggregate depreciation of approximately

0.09%

from the Company’s amortized cost basis of these securities. At

December 31, 2018

,

74

U.S. government and agency securities and municipal obligations had unrealized losses with aggregate depreciation of approximately

1.88%

from the Company’s amortized cost basis of these securities. As of

September 30, 2019

,

3

 corporate obligations had unrealized losses of approximately

0.83%

from the Company’s amortized cost basis of these securities. At

December 31, 2018

,

11

corporate obligations had an unrealized loss with aggregate depreciation of approximately

2.88%

from the Company's amortized cost basis of these securities. As management has the ability to hold debt securities until maturity, or for the foreseeable future,

no

declines are deemed to be other than temporary.

As of

September 30, 2019

,

12

 mortgage-backed securities (“MBSs”) and collateralized mortgage obligations (“CMOs”) had unrealized losses with aggregate depreciation of approximately

0.75%

from the Company’s amortized cost basis of these securities. At

December 31, 2018

,

19

MBSs and CMOs had unrealized losses with aggregate depreciation of approximately

2.54%

from the Company’s amortized cost basis of these securities. Management believes that these securities are only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and

not

due to concerns regarding the underlying credit of the issuers or the underlying collateral. 

As of

September 30, 2019

,

5

 asset-backed securities (“ABSs”) had unrealized losses with aggregate depreciation of approximately

1.78%

from the Company’s amortized cost basis of these securities. At

December 31, 2018

,

4

ABSs had unrealized losses with aggregate depreciation of approximately

1.89%

from the Company’s amortized cost basis of these securities. Management believes that these securities are only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and

not

due to concerns regarding the underlying credit of the issuers or the underlying collateral.