NOTE 2 – Investment Securities

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


		March 31, 2017
		Amortized		Gross Unrealized		Fair
(dollars in thousands)		Cost		Gains	Losses	Value
Available for sale
US government agencies		$	6,266	4	90	6,180
SBA securities			1,436	-	16	1,420
State and political subdivisions			20,584	186	198	20,572
Mortgage-backed securities			35,076	14	426	34,664
Total investment securities available for sale		$	63,362	204	730	62,836

	December 31, 2016
		Amortized		Gross Unrealized		Fair
		Cost		Gains	Losses	Value
Available for sale
US government agencies		$	6,271	1	113	6,159
SBA securities			1,453	-	16	1,437
State and political subdivisions			20,625	141	292	20,474
Mortgage-backed securities			36,895	21	506	36,410
Total investment securities available for sale		$	65,244	163	927	64,480

During the first quarter of 2017, there were no investment securities either sold or called. During the first quarter of 2016, approximately $12.2 million of investment securities were either sold or called, subsequently resulting in a gain on sale of $307,000.

Contractual maturities and yields on the Company’s investment securities at March 31, 2017 and December 31, 2016 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, 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	$	-	-	2,014	1.61	%	4,166	2.27	%	-	-		6,180	2.06	%
SBA securities		-	-	-	-		-	-		1,420	1.56	%	1,420	1.56	%
State and political subdivisions		-	-	2,822	1.80	%	12,063	2.36	%	5,687	2.82	%	20,572	2.41	%
Mortgage-backed securities		-	-	-	-		8,014	1.66	%	26,650	1.82	%	34,664	1.78	%
Total	$	-	-	4,836	1.72	%	24,243	2.11	%	33,757	1.98	%	62,836	2.01	%


	December 31, 2016
	Less than one year			One to five years			Five to ten years			Over ten years				Total
	Amount		Yield	Amount	Yield		Amount	Yield		Amount	Yield		Amount	Yield
Available for sale
US government agencies	$	-	-	997	1.15	%	5,162	2.23	%	-	-		6,159	2.06	%
SBA securities		-	-	-	-		-	-		1,437	1.32	%	1,437	1.32	%
State and political subdivisions		-	-	2,271	1.73	%	12,287	2.35	%	5,916	2.77	%	20,474	2.40	%
Mortgage-backed securities		-	-	-	-		8,527	1.64	%	27,883	1.68	%	36,410	1.67	%
Total	$	-	-	3,268	1.55	%	25,976	2.10	%	35,236	1.85	%	64,480	1.93	%


The tables below summarize gross unrealized losses on investment securities and the fair market value of the related securities at March 31, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	March 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		4	$	3,967	$	90	-	$	-	$	-	4	$	3,967	$	90
SBA securities		-		-		-	1		1,421		16	1		1,421		16
State and political subdivisions		24		10,519		198	-		-		-	24		10,519		198
Mortgage-backed securities		26		28,837		396	2		3,722		30	28		32,559		426
Total		54	$	43,323	$	684	3	$	5,143	$	46	57	$	48,466	$	730

	December 31, 2016
		Less than 12 months					12 months or longer								Total
			Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
		#	value		losses		#	value		losses		#	value		losses
Available for sale
US government agencies		5	$	5,144	$	113	-	$	-	$	-	5	$	5,144	$	113
SBA securities		1		1,437		16	-		-		-	1		1,437		16
State and political subdivisions		32		13,936		292	-		-		-	32		13,936		292
Mortgage-backed securities		25		27,292		476	2		3,991		30	27		31,283		506
Total		63	$	47,809	$	897	2	$	3,991	$	30	65	$	51,800	$	927

At March 31, 2017, the Company had 54 individual investments with a fair market value of $43.3 million that were in an unrealized loss position for less than 12 months and three individual investments with a fair market value of $5.1 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, 2017	December 31, 2016
Federal Home Loan Bank stock	$	4,965	5,173
Investment in Trust Preferred securities		403	403
Other investments		155	166
Total other investments	$	5,523	5,742

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, 2017 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, 2017, $20.7 million of securities were pledged as collateral for repurchase agreements from brokers and no securities were pledged to secure client deposits. At December 31, 2016, $21.0 million of securities were pledged as collateral for repurchase agreements from brokers, and approximately $21.1 million of securities were pledged to secure client deposits.