INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

NOTE 2 – INVESTMENT SECURITIES

Investment Portfolio Composition. The amortized cost and related market value of investment securities available-for-sale and
held-to-maturity were as follows:
	September 30, 2019									December 31, 2018
	Amortized		Unrealized		Unrealized		Market		Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value		Cost		Gain		Losses		Value
Available for Sale
U.S. Government Treasury	$	216,707	$	858	$	300	$	217,265	$	264,298	$	167	$	2,616	$	261,849
U.S. Government Agency		137,798		572		332		138,038		133,201		520		515		133,206
States and Political Subdivisions		13,041		6		3		13,044		42,509		-		144		42,365
Mortgage-Backed Securities		708		79		-		787		903		40		-		943
Equity Securities⁽¹⁾		7,847		-		-		7,847		7,794		-		-		7,794
Total	$	376,101	$	1,515	$	635	$	376,981	$	448,705	$	727	$	3,275	$	446,157

Held to Maturity
U.S. Government Treasury	$	25,050	$	10	$	46	$	25,014	$	35,088	$	-	$	477	$	34,611
States and Political Subdivisions		3,356		-		1		3,355		6,512		-		26		6,486
Mortgage-Backed Securities		211,897		1,856		235		213,518		175,720		220		2,624		173,316
Total	$	240,303	$	1,866	$	282	$	241,887	$	217,320	$	220	$	3,127	$	214,413

Total Investment Securities	$	616,404	$	3,381	$	917	$	618,868	$	666,025	$	947	$	6,402	$	660,570

⁽¹⁾ Includes Federal Home Loan Bank and Federal Reserve Bank stock, recorded at cost of $3.1 million, $4.8 million, respectively, at September 30, 2019 and includes Federal Home Loan Bank and Federal Reserve Bank stock recorded at cost of $3.0 million and $4.8 million, respectively, at December 31, 2018.

Securities with an amortized cost of $262.8 million and $319.6 million at September 30, 2019 and December 31, 2018, respectively, were pledged to secure public deposits and for other purposes.

The Bank, as a member of the Federal Home Loan Bank of Atlanta (“FHLB”), is required to own capital stock in the FHLB based generally upon the balances of residential and commercial real estate loans and FHLB advances. FHLB stock, which is included in equity securities, is pledged to secure FHLB advances. No ready market exists for this stock, and it has no quoted market value; however, redemption of this stock has historically been at par value.

As a member of the Federal Reserve Bank of Atlanta, the Bank is required to maintain stock in the Federal Reserve Bank of Atlanta based on a specified ratio relative to the Bank’s capital. Federal Reserve Bank stock is carried at cost.

Maturity Distribution. At September 30, 2019, the Company's investment securities had the following maturity distribution based on contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations. Mortgage-backed securities and certain amortizing U.S. government agency securities are shown separately because they are not due at a certain maturity date.

	Available for Sale				Held to Maturity
(Dollars in Thousands)	Amortized Cost		Market Value		Amortized Cost		Market Value
Due in one year or less	$	141,609	$	141,370	$	13,354	$	13,331
Due after one year through five years		90,139		90,937		15,052		15,038
Mortgage-Backed Securities		708		787		211,897		213,518
U.S. Government Agency		135,798		136,040		-		-
Equity Securities		7,847		7,847		-		-
Total	$	376,101	$	376,981	$	240,303	$	241,887

Unrealized Losses on Investment Securities. The following table summarizes the investment securities with unrealized losses aggregated by major security type and length of time in a continuous unrealized loss position:

	Less Than				Greater Than
	12 Months				12 Months				Total
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in Thousands)	Value		Losses		Value		Losses		Value		Losses
September 30, 2019
Available for Sale
U.S. Government Treasury	$	4,973	$	8	$	128,152	$	292	$	133,125	$	300
U.S. Government Agency		29,698		179		28,524		153		58,222		332
States and Political Subdivisions		5,428		3		-		-		5,428		3
Total		40,099		190		156,676		445		196,775		635

Held to Maturity
U.S. Government Treasury		-		-		19,996		46		19,996		46
States and Political Subdivisions		1,794		1		500		-		2,294		1
Mortgage-Backed Securities		29,466		78		16,318		157		45,784		235
Total	$	31,260	$	79	$	36,814	$	203	$	68,074	$	282

December 31, 2018
Available for Sale
U.S. Government Treasury	$	28,420	$	80	$	193,501	$	2,536	$	221,921	$	2,616
U.S. Government Agency		53,237		271		28,735		244		81,972		515
States and Political Subdivisions		8,243		12		31,417		132		39,660		144
Mortgage-Backed Securities		10		-		-		-		10		-
Total		89,910		363		253,653		2,912		343,563		3,275

Held to Maturity
U.S. Government Treasury		-		-		34,612		477		34,612		477
States and Political Subdivisions		204		-		6,281		26		6,485		26
Mortgage-Backed Securities		51,327		389		84,705		2,235		136,032		2,624
Total	$	51,531	$	389	$	125,598	$	2,738	$	177,129	$	3,127

Management evaluates securities for other than temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Declines in the fair value of available-for-sale (“AFS”) and held-to-maturity (“HTM”) securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, the Company considers, (i) whether it has decided to sell the security, (ii) whether it is more likely than not that the Company will have to sell the security before its market value recovers, and (iii) whether the present value of expected cash flows is sufficient to recover the entire amortized cost basis. When assessing a security’s expected cash flows, the Company considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost and (ii) the financial condition and near-term prospects of the issuer. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by rating agencies have occurred, regulatory issues, and analysts’ reports.

At September 30, 2019, there were 242 positions (combined AFS and HTM) with unrealized losses totaling $0.9 million. 31 of these positions were U.S. government treasury securities guaranteed by the U.S. government. 187 of these positions were U.S. government agency and mortgage-backed securities issued by U.S. government sponsored entities. The remaining 24 positions were municipal securities. Because the declines in the market value of these securities were attributable to changes in interest rates and not credit quality, and because the Company had the ability and intent to hold these investments until there is a recovery in fair value, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired at September 30, 2019.