NOTE 2 – Investment Securities

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


	June 30, 2019
		Amortized		Gross Unrealized		Fair
(dollars in thousands)		Cost		Gains	Losses	Value
Available for sale
US government agencies		$	7,716	33	4	7,745
SBA securities			4,066	60	21	4,105
State and political subdivisions			8,019	191	1	8,209
Asset-backed securities			10,909	1	91	10,819
Mortgage-backed securities
FHLMC			11,370	225	59	11,536
FNMA			28,946	123	179	28,890
GNMA			3,988	6	46	3,948
Total mortgage-backed securities			44,304	354	284	44,374
Total investment securities available for sale		$	75,014	639	401	75,252

	December 31, 2018
		Amortized		Gross Unrealized		Fair
		Cost		Gains	Losses	Value
Available for sale
US government agencies		$	8,975	1	194	8,782
SBA securities			3,628	-	103	3,525
State and political subdivisions			8,371	48	63	8,356
Asset-backed securities			9,595	12	49	9,558
Mortgage-backed securities
FHLMC			12,258	87	242	12,103
FNMA			29,068	25	551	28,542
GNMA			4,170	1	132	4,039
Total mortgage-backed securities			45,496	113	925	44,684
Total		$	76,065	174	1,334	74,905

Contractual maturities and yields on the Company’s investment securities at June 30, 2019 and December 31, 2018 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, 2019
	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	$	-	-	3,969	2.14	%	3,776	2.68	%	-	-		7,745	2.40	%
SBA securities		-	-	-	-		752	2.88	%	3,353	2.77	%	4,105	2.79	%
State and political subdivisions		-	-	1,127	2.97	%	4,175	2.95	%	2,907	2.88	%	8,209	2.93	%
Asset-backed securities		-	-	-	-		1,682	3.19	%	9,137	3.19	%	10,819	3.19	%
Mortgage-backed securities		-	-	4,658	1.94	%	8,922	2.15	%	30,794	2.63	%	44,374	2.46	%
Total	$	-	-	9,754	2.14	%	19,307	2.55	%	46,191	2.76	%	75,252	2.63	%

													December 31, 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	$	-	-	2,665	2.12	%	6,117	2.77	%	-	-		8,782	2.57	%
SBA securities		-	-	-	-		-	-		3,525	2.72	%	3,525	2.72	%
State and political subdivisions		-	-	819	2.60	%	4,637	3.04	%	2,900	2.88	%	8,356	2.94	%
Asset-backed securities		-	-	-	-		1,862	3.22	%	7,696	3.29	%	9,558	3.27	%
Mortgage-backed securities		-	-	5,094	1.89	%	9,763	2.22	%	29,827	2.70	%	44,684	2.50	%
Total	$	-	-	8,578	2.03	%	22,379	2.62	%	43,948	2.81	%	74,905	2.67	%

The tables below summarize gross unrealized losses on investment securities and the fair market value of the related securities at June 30, 2019 and December 31, 2018, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	June 30, 2019
		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	1	$	500	$	1	2	$	1,997	$	3	3	$	2,497	$	4
SBA securities	-		-		-	1		649		21	1		649		21
State and political subdivisions	-		-		-	2		979		1	2		979		1
Asset-backed securities	5		7,614		89	1		1,682		2	6		9,296		91
Mortgage-backed securities
FHLMC	-		-		-	9		6,049		59	9		6,049		59
FNMA	1		1,550		1	22		19,632		178	23		21,182		179
GNMA	-		-		-	3		2,975		46	3		2,975		46
Total	7	$	9,664	$	91	40	$	33,963	$	310	47	$	43,627	$	401

	December 31, 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	1	$	1,246	$	3	8	$	7,035	$	191	9	$	8,281	$	194
SBA securities	-		-		-	2		3,525		103	2		3,525		103
State and political subdivisions	-		-		-	7		2,829		63	7		2,829		63
Asset-backed securities	4		6,707		49	-		-		-	4		6,707		49
Mortgage-backed securities
FHLMC	-		-		-	10		7,402		242	10		7,402		242
FNMA	2		2,689		6	23		22,814		545	25		25,503		551
GNMA	1		1,104		6	3		2,919		126	4		4,023		132
Total	8	$	11,746	$	64	53	$	46,524	$	1,270	61	$	58,270	$	1,334

At June 30, 2019, the Company had seven individual investments with a fair market value of $9.7 million that were in an unrealized loss position for less than 12 months and 40 individual investments with a fair market value of $34.0 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, 2019		December 31, 2018
Federal Home Loan Bank stock	$	2,774	3,587
Other investments		134	131
Investment in Trust Preferred securities		403	403
Total other investments	$	3,311	4,121

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, 2019 and that ultimate recoverability of the par value of this investment is probable. All of the FHLB stock is used to collateralize advances with the FHLB.