Securities

3 Months Ended

Mar. 31, 2020

Investments Debt And Equity Securities [Abstract]

NOTE 3 SECURITIES

Mortgage-backed securities, as shown in the following tables, are all government sponsored enterprises. The amortized cost and fair value of securities, with gross unrealized gains and losses at March 31, 2020 and December 31, 2019, are as follows:

	(In Thousands)
	March 31, 2020
	Amortized		Gross Unrealized		Gross Unrealized			Fair
	Cost		Gains		Losses			Value
Available-for-Sale:
U.S. Treasury	$	10,016	$	57	$	-		$	10,073
U.S. Government agencies		47,869		1,880		-			49,749
Mortgage-backed securities		97,726		2,968		-			100,694
State and local governments		42,393		1,215		(3	)		43,605
Total available-for-sale securities	$	198,004	$	6,120	$	(3	)	$	204,121

	(In Thousands)
	December 31, 2019
	Amortized		Gross Unrealized		Gross Unrealized			Fair
	Cost		Gains		Losses			Value
Available-for-Sale:
U.S. Treasury	$	10,023	$	10	$	(12	)	$	10,021
U.S. Government agencies		61,882		584		(21	)		62,445
Mortgage-backed securities		94,998		426		(227	)		95,197
State and local governments		54,001		749		(120	)		54,630
Total available-for-sale securities	$	220,904	$	1,769	$	(380	)	$	222,293

Investment securities will at times depreciate to an unrealized loss position. The Company utilizes the following criteria to assess whether impairment is other than temporary. No one item by itself will necessarily signal that a security should be recognized as an other than temporary impairment.

The fair value of the security has significantly declined from book value.

A downgrade has occurred that lowered the credit rating to below investment grade (below Baa3 by Moody and BBB – by Standard and Poors.)

Dividends have been reduced or eliminated or scheduled interest payments have not been made.

The underwater security has longer than 10 years to maturity and the loss position had existed for more than 3 years.

Management does not possess both the intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value.

If the impairment is judged to be other than temporary, the cost basis of the individual security shall be written down to fair value, thereby establishing a new cost basis. The new cost basis shall not be changed for subsequent recoveries in fair value. The amount of the write down shall be included in current earnings as a realized loss. The recovery in fair value, if any, shall be recognized in earnings when the security is sold. The table below is presented by category of security and length of time in a continuous loss position. The Company currently does not hold any securities with other than temporary impairment.

Information pertaining to securities with gross unrealized losses at March 31, 2020 and December 31, 2019, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

	(In Thousands)
	March 31, 2020
	Less Than Twelve Months					Twelve Months & Over					Total
	Gross Unrealized			Fair		Gross Unrealized			Fair		Gross Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
U.S. Treasury	$	-		$	-	$	-		$	-	$	-		$	-
U.S. Government agencies		-			-		-			-		-			-
Mortgage-backed securities		-			-		-			-		-			-
State and local governments		(1	)		513		(2	)		2,044		(3	)		2,557
Total available-for-sale securities	$	(1	)	$	513	$	(2	)	$	2,044	$	(3	)	$	2,557

	(In Thousands)
	December 31, 2019
	Less Than Twelve Months					Twelve Months & Over					Total
	Gross Unrealized			Fair		Gross Unrealized			Fair		Gross Unrealized			Fair
	Losses			Value		Losses			Value		Losses			Value
U.S. Treasury	$	-		$	-	$	(12	)	$	5,030	$	(12	)	$	5,030
U.S. Government agencies		(16	)		10,549		(5	)		10,745		(21	)		21,294
Mortgage-backed securities		(102	)		27,696		(125	)		11,332		(227	)		39,028
State and local governments		(120	)		16,845		-			-		(120	)		16,845
Total available-for-sale securities	$	(238	)	$	55,090	$	(142	)	$	27,107	$	(380	)	$	82,197

Unrealized losses on securities have not been recognized into income because the issuers’ bonds are of high credit quality, values have only been impacted by rate changes, and the Company has the intent and ability to hold the securities for the foreseeable future. Additionally, the decline in value is primarily due to changes in interest rates since the securities were purchased. The fair value is expected to recover as the bonds approach the maturity date.

Below are the gross realized gains and losses for the three months ended March 31, 2020 and March 31, 2019.

	Three Months
	(In Thousands)
	2020		2019
Gross realized gains	$	270	$	16
Gross realized losses		-		(42	)
Net realized gains (losses)	$	270	$	(26	)
Tax expense (benefit) related to net realized gains (losses)	$	57	$	(5	)

The net realized losses on sales and related tax expense is a reclassification out of accumulated other comprehensive income (loss). The net realized gains (losses) is included in net gains (losses) on sale of available-for-sale securities and the related tax expense (benefit) is included in income taxes in the condensed consolidated statements of income and comprehensive income.

The amortized cost and fair value of debt securities at March 31, 2020, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	(In Thousands)
	Amortized
	Cost		Fair Value
One year or less	$	16,663	$	16,766
After one year through five years		19,720		20,130
After five years through ten years		59,816		62,399
After ten years		4,079		4,132
Total	$	100,278	$	103,427
Mortgage-backed securities		97,726		100,694
Total	$	198,004	$	204,121

Investments with a carrying value of $88.7 million and $88.8 million at March 31, 2020 and December 31, 2019, respectively, were pledged to secure public deposits and securities sold under repurchase agreements.

Other securities includes Federal Home Loan Bank of Cincinnati and Indianapolis stock as of March 31, 2020 and December 31, 2019.