NOTE 2 – Investment Securities

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


	June 30, 2018
	Amortized		Gross Unrealized		Fair
(dollars in thousands)	Cost		Gains	Losses	Value
Available for sale
US government agencies	$	8,987	1	274	8,714
SBA securities		3,904	-	135	3,769
State and political subdivisions		8,530	49	107	8,472
Asset-backed securities		6,703	3	15	6,691
Mortgage-backed securities
FHLMC		8,401	-	327	8,074
FNMA		32,089	2	780	31,311
GNMA		3,181	1	146	3,036
Total mortgage-backed securities		43,671	3	1,253	42,421
Total investment securities available for sale	$	71,795	56	1,784	70,067

	December 31, 2017
	Amortized		Gross Unrealized		Fair
	Cost		Gains	Losses	Value
Available for sale
US government agencies	$	8,749	1	97	8,653
SBA securities		4,087	-	24	4,063
State and political subdivisions		11,242	179	25	11,396
Mortgage-backed securities
FHLMC		9,102	-	149	8,953
FNMA		29,383	3	386	29,000
GNMA		5,618	2	82	5,538
Total mortgage-backed securities		44,103	5	617	43,491
Total investment securities available for sale	$	68,181	185	763	67,603

During the first six months of 2018, there were $5.8 million of investment securities sold, resulting in a loss on sale of $1,000. During the first six months of 2017, there were $415,000 of investment securities either sold or called, subsequently resulting in a gain on sale of $2,000.

Contractual maturities and yields on the Company’s investment securities at June 30, 2018 and December 31, 2017 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.


	June 30, 2018
	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	$	-	-	2,641	2.12%	6,073	2.74%	-	-	8,714	2.55%
SBA securities		-	-	-	-	-	-	3,769	2.60%	3,769	2.60%
State and political subdivisions		-	-	514	2.14%	4,514	3.11%	3,444	2.83%	8,472	2.94%
Asset-backed securities		-	-	-	-	-	-	6,691	2.89%	6,691	2.89%
Mortgage-backed securities		115	0.31%	790	1.94%	12,101	1.86%	29,415	2.53%	42,421	2.40%
Total	$	115	0.31%	3,945	2.09%	22,688	2.34%	43,319	2.61%	70,067	2.49%

	December 31, 2017
	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	$	995	1.15%	1,503	2.04%	6,155	2.40%	-	-	8,653	2.20%
SBA securities		-	-	-	-	-	-	4,063	2.45%	4,063	2.45%
State and political subdivisions		-	-	1,163	1.96%	7,162	2.84%	3,071	2.76%	11,396	2.73%
Mortgage-backed securities		432	0.99%	-	-	11,328	1.84%	31,731	2.06%	43,491	1.99%
Total	$	1,427	1.10%	2,666	1.59%	24,645	2.27%	38,865	2.15%	67,603	2.17%

The tables below summarize gross unrealized losses on investment securities and the fair market value of the related securities at June 30, 2018 and December 31, 2017, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	June 30, 2018
		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	6	$	5,336	$	118	3	$	2,878	$	156	9	$	8,214	$	274
SBA securities	1		2,759		106	1		1,010		29	2		3,769		135
State and political subdivisions	7		4,747		71	2		769		36	9		5,516		107
Asset-backed securities	3		4,851		15	-		-		-	3		4,851		15
Mortgage-backed securities
FHLMC	3		2,610		90	7		5,464		237	10		8,074		327
FNMA	12		14,882		297	16		16,386		483	28		31,268		780
GNMA	1		1,223		59	2		1,792		87	3		3,015		146
Total	33	$	36,408	$	756	31	$	28,299	$	1,028	64	$	64,707	$	1,784

													December 31, 2017
			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	$	4,184	$	22	4	$	3,968	$	75	9	$	8,152	$	97
SBA securities	1		2,936		13	1		1,127		11	2		4,063		24
State and political subdivisions	3		1,214		9	2		792		16	5		2,006		25
Mortgage-backed securities
FHLMC	3		2,897		26	7		6,056		123	10		8,953		149
FNMA	11		14,345		135	13		14,597		251	24		28,942		386
GNMA	2		2,270		40	1		971		42	3		3,241		82
Total	25	$	27,846	$	245	28	$	27,511	$	518	53	$	55,357	$	763

At June 30, 2018, the Company had 33 individual investments with a fair market value of $36.4 million that were in an unrealized loss position for less than 12 months and 31 individual investments with a fair market value of $28.3 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)	June 30, 2018		December 31, 2017
Federal Home Loan Bank stock	$	2,524	3,754
Investment in Trust Preferred securities		403	403
Other investments		132	305
Total other investments	$	3,059	4,462

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 June 30, 2018 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 June 30, 2018, $4.2 million of securities were pledged as collateral for repurchase agreements from brokers and no securities were pledged to secure client deposits. At December 31, 2017, $7.7 million of securities were pledged as collateral for repurchase agreements from brokers.