XML 82 R9.htm IDEA: XBRL DOCUMENT

3. Investments

12 Months Ended

Dec. 31, 2016

Disclosure Text Block [Abstract]

3. INVESTMENTS

The amortized cost, gross unrealized holding gains and losses, and estimated fair value of the investment securities by major security type at December 31, 2016 and 2015 are as follows:

(In 000’s)	2016
		Gross	Gross
	Amortized	Unrealized	unrealized	Fair
	Cost	Gains	losses	Value

U.S. Government agency securities	$ 2,350	$ -	$ (82)	$ 2,268
Government Sponsored Enterprises residential mortgage-backed securities	3,193	25	(38)	3,180
Investments in money market funds	130	-	-	130
	$ 5,673	$ 25	$ (120)	$ 5,578

	2015
		Gross	Gross
	Amortized	Unrealized	unrealized	Fair
	Cost	Gains	losses	Value

U.S. Government agency securities	$ 3,697	$ 3	$ (38)	$ 3,662
Government Sponsored Enterprises residential mortgage-backed securities	3,774	36	(30)	3,780
Investments in money market funds	130	-	-	130
	$ 7,601	$ 39	$ (68)	$ 7,572

In 2016 and 2015, $5,450,000 and $1,600,000 in U.S. Government agencies securities were called, respectively. There were no gross gains or losses from these transactions during 2015.

There were no sales of securities in 2016 and 2015.

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2016 (in thousands):

	Number	Less than 12 months		12 months or longer		Total
Description of	Of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	Securities	value	Losses	Value	Losses	value	Losses

U.S. Government
agency securities	7	$ 2,268	$ (82)	$ -	$ -	$ 2,268	$ (82)

Mortgage backed
Securities	10	2,026	(38)	-	-	2,026	(38)
Total temporarily
impaired investment
Securities	17	$ 4,294	$ (120)	$ -	$ -	$ 4,294	$ (120)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2015 (in thousands):

	Number	Less than 12 months		12 months or longer		Total
Description of	Of	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Securities	Securities	Value	Losses	Value	Losses	Value	Losses

U.S. Government
agency securities	9	$ 2,416	$ (32)	$ 243	$ (6)	$ 2,659	$ (38)

Mortgage backed
Securities	8	1,486	(19)	227	(11)	1,713	(30)
Total temporarily
impaired investment
Securities	17	$ 3,902	$ (51)	$ 470	$ (17)	$ 4,372	$ (68)

U.S. Government and Agency Securities. Unrealized losses on the Company’s investments in direct obligations of U.S. government agencies were caused by market rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2016 and 2015.

Residential Government Sponsored Enterprise Mortgage-Backed Securities. Unrealized losses on the Company’s investment in government sponsored enterprise mortgage-backed securities were caused by market rate changes. The Company purchased those investments at a discount relative to their face amount, and the contractual cash flows of those investments are guaranteed by an agency of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost bases of the Company’s investments. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2016 and 2015.

The Company has a process in place to identify debt securities that could potentially have a credit impairment that is other than temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues. On a quarterly basis, we review all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. The Company considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for fixed maturity securities, our intent to sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, our ability and intent to hold the security for a period of time that allows for the recovery in value.

Maturities of investment securities at December 31, 2016 were as follows. Expected maturities may differ from contractual maturities because the underlying mortgages supporting mortgage backed securities may be prepaid without any penalties. Consequently, mortgage-backed securities are not presented by maturity category.

(In 000’s)	Amortized	Fair
	Cost	Value

Due in one year	$ -	$ -
Due after one year through five years	-	-
Due after five years through ten years	2,350	2,268
Government-sponsored enterprises residential mortgage-backed securities	3,193	3,180
Total debt securities	5,543	5,448
Investments in money market funds	130	130
	$ 5,673	$ 5,578

As of December 31, 2016 and 2015, investment securities with a carrying value of $4,432,000 and $7,076,000, respectively, were pledged as collateral to secure public deposits and contingent borrowing at the Discount Window.