Note 4 - Securities

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 4: Securities

The amortized cost and approximate fair values of securities classified as available-for-sale were as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Approximate Fair Value
As of September 30, 2020
Debt Securities:
U. S. government agencies	$	7,282,000	$	19,524	$	-		$	7,301,524
Municipals		53,659,414		2,588,022		(34,637	)		56,212,799
Corporates		27,572,087		213,432		(146,793	)		27,638,726
Mortgage-backed securities - private label		13,145,778		237,257		(51,732	)		13,331,303
Government sponsored asset-backed securities and SBA loan pools		46,342,320		1,450,530		(40,694	)		47,752,156
	$	148,001,599	$	4,508,765	$	(273,856	)	$	152,236,508

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Approximate Fair Value
As of December 31, 2019
Debt Securities:
U. S. government agencies	$	2,499,755	$	-	$	(11,962	)	$	2,487,793
Municipals		35,625,038		675,382		(125,693	)		36,174,727
Corporates		15,395,190		154,942		(14,945	)		15,535,187
Mortgage-backed securities - private label		13,788,728		52,035		(29,392	)		13,811,371
Government sponsored mortgage-backed securities and SBA loan pools		49,844,049		585,641		(193,454	)		50,236,236
	$	117,152,760	$	1,468,000	$	(375,446	)	$	118,245,314

Maturities of available-for-sale debt securities as of September 30, 2020:

	Amortized Cost		Approximate Fair Value
1-5 years	$	1,151,319	$	1,149,719
6-10 years		42,499,397		43,180,499
After 10 years		44,862,785		46,822,831
Mortgage-backed securities - private label not due on a single maturity date		13,145,778		13,331,303
Government sponsored asset-backed securities and SBA loan pools not due on a single maturity date		46,342,320		47,752,156
	$	148,001,599	$	152,236,508

The book value of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $7,534,885 and $5,261,664 as of September 30, 2020 and December 31, 2019, respectively. The approximate fair value of pledged securities amounted to $7,939,918 and $5,358,929 as of September 30, 2020 and December 31, 2019, respectively.

Realized gains and losses are recorded as net securities gains. Gains and losses on sales of securities are determined on the specific identification method. Gross gains of $552,366 and $214,125 and gross losses of $91,016 and $134,369 for the nine months ended September 30, 2020 and September 30, 2019, respectively, were realized from the sale of available-for-sale securities. The tax effect of these net gains and losses was $96,883 and $16,749 for the nine months ended September 30, 2020 and September 30, 2019, respectively.

The Company evaluates all securities quarterly to determine if any unrealized losses are deemed to be other than temporary. Certain investment securities are valued at less than their historical cost. These declines are primarily the result of the rate for these investments yielding less than current market rates. Based on evaluation of available evidence, management believes the declines in fair value for these securities are temporary. It is management’s intent to hold the debt securities to maturity or until recovery of the unrealized loss. Should the impairment of any of these debt securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified, to the extent the loss is related to credit issues, and to other comprehensive income to the extent the decline on debt securities is related to other factors and the Company does not intend to sell the security prior to recovery of the unrealized loss.

Certain other investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at September 30, 2020 and December 31, 2019, was $29,444,701 and $42,570,363, respectively, which is approximately 19% and 36% of the Company’s investment portfolio.

The following table shows gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2020 and December 31, 2019.

As of September 30, 2020
	Less than 12 Months					12 Months or More				Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government agencies	$	-	$	-		$	-	$	-	$	-	$	-
Municipals		3,038,531		(34,637	)		-		-		3,038,531		(34,637	)
Corporates		9,177,777		(146,793	)		-		-		9,177,777		(146,793	)
Mortgage-backed securities - private label		5,305,270		(51,732	)		-		-		5,305,270		(51,732	)
Government sponsored asset-backed securities and SBA loan pools		11,923,123		(40,694	)		-		-		11,923,123		(40,694	)
	$	29,444,701	$	(273,856	)	$	-	$	-	$	29,444,701	$	(273,856	)

As of December 31, 2019
	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government agencies	$	2,487,795	$	(11,962	)	$	-	$	-		$	2,487,795	$	(11,962	)
Municipals		7,083,208		(125,693	)		-		-			7,083,208		(125,693	)
Corporates		2,452,005		(14,945	)		-		-			2,452,005		(14,945	)
Mortgage-backed securities - private label		9,416,669		(29,392	)		-		-			9,416,669		(29,392	)
Government sponsored mortgage-backed securities and SBA loan pools		18,112,148		(125,906	)		3,018,538		(67,548	)		21,130,686		(193,454	)
	$	39,551,825	$	(307,898	)	$	3,018,538	$	(67,548	)	$	42,570,363	$	(375,446	)