Note 7 - Securities

The following tables summarize the Bank’s holdings for both securities held-to-maturity and securities available-for-sale as of September 30, 2017 and December 31, 2016 (amounts in thousands):


		September 30, 2017
	Amortized	Gross Unrealized		Fair Value
	Costs	Gains	(Losses)
Held-to-Maturity
US agency obligations	$3,282	$21	$(40)	$3,263

Available-for-Sale
US Treasuries	1,955	-	(81)	1,874
US agency obligations	18,252	6	(797)	17,461
Mortgage-backed securities	14,263	2	(227)	14,038
Municipals	12,591	32	(325)	12,298
Corporates	4,121	-	(128)	3,993
	$51,182	$40	$(1,558)	$49,664

		December 31, 2016
	Amortized	Gross Unrealized		Fair Value
	Costs	Gains	(Losses)
Held-to-Maturity
US agency obligations	$3,299	$65	$(91)	$3,273

Available-for-Sale
US Treasuries	1,952	-	(119)	1,833
US agency obligations	14,332	5	(1,224)	13,113
Mortgage-backed securities	12,358	-	(353)	12,005
Municipals	10,426	55	(534)	9,947
Corporates	4,132	-	(254)	3,878
	$43,200	$60	$(2,484)	$40,776

Note 7 – Securities (continued)

The following tables show the gross unrealized losses and fair value of the Bank’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2017 and December 31, 2016 (amounts in thousands):


	Less than 12 months		More than 12 months		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
September 30, 2017	Value	Losses	Value	Losses	Value	Losses
Description of securities
Held-to-maturity
US agency obligations	$1,237	$40	$ -	$ -	$1,237	$40

Available-for-sale
US Treasuries	1,874	81	-	-	1,874	81
US agency obligations	4,935	88	12,520	709	17,455	797
Mortgage-backed securities	10,468	195	2,654	32	13,122	227
Municipals	5,461	67	3,742	258	9,203	325
Corporates	1,978	53	2,015	75	3,993	128
Total	$25,953	$524	$20,931	$1,074	$46,884	$1,598

	Less than 12 months		More than 12 months		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
December 31, 2016	Value	Losses	Value	Losses	Value	Losses
Description of securities
Held-to-maturity
US agency obligations	$1,193	$91	$ -	$ -	$1,193	$91

Available-for-sale
US Treasuries	1,833	119	-	-	1,833	119
US agency obligations	13,109	1,224	-	-	13,109	1,224
Mortgage-backed securities	11,331	353	-	-	11,331	353
Municipals	7,170	534	-	-	7,170	534
Corporates	3,878	254	-	-	3,878	254
Total	$38,514	$2,575	$ -	$ -	$38,514	$2,575

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and may do so more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) the intent of Financial, if any, to sell the security; (4) whether Financial more likely than not will be required to sell the security before recovering its cost; and (5) whether Financial does not expect to recover the security’s entire amortized cost basis (even if Financial does not intend to sell the security).

Note 7 – Securities (continued)

At September 30, 2017, the Company did not consider the unrealized losses as other-than-temporary losses due to the nature of the securities involved. As of September 30, 2017, the Bank owned 47 securities in an unrealized loss position that were being evaluated for other than temporary impairment. Eleven of these securities were S&P rated AAA, 33 were rated AA and three were rated A. As of September 30, 2017, 27 of these securities were direct obligations of the U.S. government or government sponsored entities, 15 were municipal issues, and five were investments in domestic corporate issued securities.

Based on the analysis performed by management as mandated by the Bank’s investment policy, management believes the default risk to be minimal. Because management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to change in interest rates and other market conditions, no declines currently are deemed to be other-than-temporary.

Gross gains on available-for-sale securities were $51 and $113 during the three and nine month periods ended September 30, 2017 compared to $209 and $437 for the same respective periods in 2016. There were no losses on sales of available-for-sale securities and no sales of held-to-maturity securities during the three and nine month periods ended September 30, 2017 and 2016.