NOTE

3—SECURITIES

The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at

June 30, 2020

and

2019

and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses:

Available-for-sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 20 20
Obligations of U.S. Treasury	$	1,248	$	8	$	—		$	1,256
Obligations of U.S. government-sponsored entities and agencies		10,133		399		—			10,532
Obligations of state and political subdivisions		60,343		3,149		—			63,492
U.S. Government-sponsored mortgage-backed securities - residential		48,645		1,515		(4	)		50,156
U.S. Government-sponsored mortgage-backed securities - commercial		8,444		55		(2	)		8,497
U.S. Government-sponsored collateralized mortgage obligations – residential		9,712		285		(12	)		9,985
Total available-for-sale securities	$	138,525	$	5,411	$	(18	)	$	143,918

Held-to-maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
June 30, 2020
Obligations of state and political subdivisions	$	3,541	$	327	$	—	$	3,868
Total held-to-maturity securities	$	3,541	$	327	$	—	$	3,868

Available-for-sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 20 19
Obligations of U.S. government-sponsored entities and agencies	$	19,227	$	287	$	(1	)	$	19,513
Obligations of state and political subdivisions		56,405		1,557		(33	)		57,929
U.S. Government-sponsored mortgage-backed securities - residential		56,309		450		(448	)		56,311
U.S. Government-sponsored collateralized mortgage obligations – residential		10,087		198		(28	)		10,257
Total available-for-sale securities	$	142,028	$	2,492	$	(510	)	$	144,010

Held-to-maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
June 30, 201 9
Obligations of state and political subdivisions	$	3,786	$	35	$	—	$	3,821
Total held-to-maturity securities	$	3,786	$	35	$	—	$	3,821

Proceeds from sales of available-for-sale securities during fiscal year

2020

and fiscal year

2019

were as follows:

	20 20		201 9
Proceeds from sales	$	18,421	$	7,670
Gross realized gains		355		606
Gross realized losses		—		45

The income tax provision related to these net realized gains amounted to

$74

in fiscal year

2020

and

$118

in fiscal year

2019.

The amortized cost and fair values of debt securities at

June

30,

2020

by expected 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. Securities

not

due at a single maturity date, primarily mortgage-backed securities and collateralized mortgage obligations are shown separately.

Available-for-sale	Amortized Cost		Fair Value
Due in one year or less	$	5,861	$	5,905
Due after one year through five years		17,042		17,661
Due after five years through ten years		16,057		16,748
Due after ten years		32,764		34,966
Total		71,724		75,280
U.S. Government-sponsored mortgage-backed and related securities		66,801		68,638
Total	$	138,525	$	143,918

Held-to-maturity	Amortized Cost		Fair Value
Due after five years through ten years	$	373	$	398
Due after ten years		3,168		3,470
Total	$	3,541	$	3,868

Securities with a carrying value of approximately

$69,048

and

$72,600

were pledged at

June 30, 2020

and

2019,

respectively, to secure public deposits and commitments as required or permitted by law. At

June 30, 2020

and

2019,

there were

holdings of securities of any

one

issuer, other than obligations of U.S. government-sponsored entities and agencies, with an aggregate book value greater than

10%

of shareholders' equity.

The following table summarizes the securities with unrealized and unrecognized losses at

June 30, 2020

and

2019,

aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position:

	Less than 12 Months					12 Months or more					Total
Available-for-sale	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
June 30, 20 20
Mortgage-backed securities – residential	$	—	$	—		$	625	$	(4	)	$	625	$	(4	)
Mortgage-backed securities – commercial		1,806		(2	)		—		—			1,806		(2	)
Collateralized mortgage obligations - residential		1,700		(12	)		—		—			1,700		(12	)
Total temporarily impaired	$	3,506	$	(14	)	$	625	$	(4	)	$	4,131	$	(18	)

	Less than 12 Months				12 Months or more					Total
Available-for-sale	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss			Fair Value		Unrealized Loss

June 30, 201 9
Obligations of U.S. government-sponsored entities and agencies	$	—	$	—	$	998	$	(1	)	$	998	$	(1	)
Obligations of states and political subdivisions		—		—		5,201		(33	)		5,201		(33	)
Mortgage-backed securities – residential		—		—		36,362		(448	)		36,362		(448	)
Collateralized mortgage obligations – residential		—		—		3,277		(28	)		3,277		(28	)
Total temporarily impaired	$	—	$	—	$	45,838	$	(510	)	$	45,838	$	(510	)

Management evaluates securities for other-than-temporary impairment (OTTI) on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The securities portfolio is evaluated for OTTI by segregating the portfolio into

two

general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under FASB ASC Topic

320,

Accounting for Certain Investments in Debt and Equity Securities

In determining OTTI under the ASC Topic

320

model, management considers many factors, including: (

) the length of time and the extent to which the fair value has been less than cost, (

) the financial condition and near-term prospects of the issuer, (

) whether the market decline was affected by macroeconomic conditions, and (

) whether the entity has the intent to sell the debt security or more likely than

not

will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

As of

June 30, 2020,

the Corporation's securities portfolio consisted of

255

available-for-sale and

three

held-to-maturity securities. There were

four

available-for-sale securities in an unrealized loss position at

June 30, 2020,

one

of which was in a continuous loss position for

twelve

or more months. There were

held-to-maturity securities in an unrealized loss position at

June 30, 2020.

The unrealized losses within the mortgage-backed and collateralized mortgage obligation securities portfolios in fiscal year

2020

were primarily attributed to higher than expected prepayments and uncertainty in prepayment behavior was likely affecting the market values. At

June 30, 2020,

all the mortgage-backed securities and collateralized mortgage obligations held by the Corporation were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support. Also, management monitors the financial condition of the individual municipal securities to ensure they meet minimum credit standards. Since the Corporation does

not

intend to sell these securities and it is

not

likely the Corporation will be required to sell these securities at an unrealized loss position prior to any anticipated recovery in fair value, which

may

be maturity, management does

not

believe there is any OTTI related to these securities at

June 30, 2020.

Also, there was

OTTI recognized at

June 30, 2019.