SECURITIES

12 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

SECURITIES

NOTE 3 - SECURITIES

The composition of securities is as follows:

(in thousands)	Amortized cost (1)		Gross un- realized gains		Gross un- realized losses			Fair value
December 31, 2015
Available-for-sale
U.S. Treasury notes	$	2,499	$	42	$	—		$	2,541
U.S. Government agency notes		498		—		—			498
Municipal bonds		29,752		633		—			30,385
Mortgage-backed securities
U.S. Government agencies and U.S. Government-sponsored enterprises		31,900		385		(83	)		32,202
Collateralized mortgage obligations
U.S. Government agencies		2,002		12		—			2,014
Non-agency		4,487		468		(7	)		4,948
SBA bonds		3,065		31		—			3,096
CRA mutual funds		766		—		(2	)		764
Preferred stock		20		226		—			246
Total securities available-for-sale	$	74,989	$	1,797	$	(92	)	$	76,694
Non-marketable securities
Federal Home Loan Bank of Boston stock	$	3,176	$	—	$	—		$	3,176

(in thousands)	Amortized cost (1)		Gross un- realized gains		Gross un- realized losses			Fair value
December 31, 2014
Available-for-sale
U.S. Treasury notes	$	2,699	$	107	$	—		$	2,806
U.S. Government agency notes		5,850		24		—			5,874
Municipal bonds		38,962		1,455		(65	)		40,352
Mortgage-backed securities
U.S. Government agencies and U.S. Government-sponsored enterprises		27,036		688		(15	)		27,709
Collateralized mortgage obligations
U.S. Government agencies		2,657		22		—			2,679
Non-agency		6,056		552		(12	)		6,596
SBA bonds		4,336		129		—			4,465
CRA mutual funds		502		2		—			504
Preferred stock		20		307		—			327
Total securities available-for-sale	$	88,118	$	3,286	$	(92	)	$	91,312
Non-marketable securities
Federal Home Loan Bank of Boston stock	$	3,515	$	—	$	—		$	3,515

(1) Net of other-than-temporary impairment write-downs recognized in prior years.

Sales of securities available-for-sale and gains realized are as follows:

Years ended December 31, (in thousands)		2015			2014		2013
Proceeds	$	3,861		$	—	$	—
Gains realized		180			—		—
Losses realized		(27	)		—		—
Net gains realized		153			—		—
Income tax provision		52			—		—

The following table summarizes the aggregate fair value and gross unrealized loss of securities that have been in a continuous unrealized loss position as of the dates presented:

	Less than 12 Months				12 Months or Longer				Total
(in thousands)	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair Value		Unrealized losses
December 31, 2015
Available-for-sale
Mortgage-backed securities	$	14,750	$	83	$	53	$	—	$	14,803	$	83
Collateralized mortgage obligations
Non-agency		237		—		226		7		463		7
CRA mutual funds		764		2		—		—		764		2
Total temporarily impaired securities	$	15,751	$	85	$	279	$	7	$	16,030	$	92
December 31, 2014
Available-for-sale
Municipal bonds	$	177	$	1	$	1,589	$	64	$	1,766	$	65
Mortgage-backed securities		56		1		1,885		14		1,941		15
Collateralized mortgage obligations
Non-agency		441		7		164		5		605		12
Total temporarily impaired securities	$	674	$	9	$	3,638	$	83	$	4,312	$	92

The amortized cost, fair value and tax equivalent yield of securities, by maturity, are as follows:

December 31, 2015 (dollars in thousands)		Amortized cost			Fair value	Yield(1)
U.S. Treasury notes	Within 1 year	$	2,499	$	2,541	3.00	%
	Total		2,499		2,541	3.00	%
U.S. Government agency notes	After 1 year but within 5 years		498		498	0.88	%
	Total		498		498	0.88	%
Municipal bonds	Within 1 year		254		254	5.60	%
	After 1 year but within 5 years		1,217		1,225	5.57	%
	After 5 years but within 10 years		1,894		1,922	6.38	%
	After 10 years but within 15 years		2,632		2,708	6.30	%
	After 15 years		23,755		24,276	6.68	%
	Total		29,752		30,385	6.57	%
Mortgage-backed securities	U.S. Government agency and U.S. Government-sponsored enterprises		31,900		32,202	2.96	%
Collateralized mortgage obligations	U.S. Government agency and U.S. Government-sponsored enterprises		2,002		2,014	1.02	%
	Non-agency		4,487		4,948	4.20	%
SBA bonds			3,065		3,096	2.93	%
CRA mutual funds			766		764	2.07	%
Preferred stock			20		246	2.26	%
Securities available-for-sale		$	74,989	$	76,694	4.47	%

(1) Yield is based on amortized cost.

Salisbury evaluates securities for OTTI where the fair value of a security is less than its amortized cost basis at the balance sheet date. As part of this process, Salisbury considers whether it has the intent to sell each debt security and whether it is more likely than not that it will be required to sell the security before its anticipated recovery. If either of these conditions is met, Salisbury recognizes an OTTI charge to earnings equal to the entire difference between the security’s amortized cost basis and its fair value at the balance sheet date. For securities that meet neither of these conditions, an analysis is performed to determine if any of these securities are at risk for OTTI.

The following summarizes, by security type, the basis for evaluating if the applicable securities were OTTI at December 31, 2015.

U.S. Government agency mortgage-backed securities: The contractual cash flows are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Changes in fair values are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities. Furthermore, Salisbury evaluates these securities for strategic fit and may reduce its position in these securities, although it is not more likely than not that Salisbury will be required to sell these securities before recovery of their cost basis, which may be maturity, and does not intend to sell these securities. Therefore, management does not consider the sixteen securities with unrealized losses at December 31, 2015 to be OTTI.

Non-agency CMOs: Salisbury performed a detailed cash flow analysis of its non-agency CMOs at December 31, 2015, to assess whether any of the securities were OTTI. Salisbury uses cash flow forecasts for each security based on a variety of market driven assumptions and securitization terms, including prepayment speed, default or delinquency rate, and default severity for losses including interest, legal fees, property repairs, expenses and realtor fees, that, together with the loan amount are subtracted from collateral sales proceeds to determine severity. In 2009, Salisbury determined that five non-agency CMO securities reflected OTTI and recognized losses for deterioration in credit quality of $1,128,000. Salisbury judged the four remaining securities not to have additional OTTI and all other CMO securities not to be OTTI as of December 31, 2015. It is possible that future loss assumptions could change necessitating Salisbury to recognize future OTTI for further deterioration in credit quality. Salisbury evaluates these securities for strategic fit and depending upon such factor could reduce its position in these securities, although it has no present intention to do so, and it is not more likely than not that Salisbury will be required to sell these securities before recovery of their cost basis.

CRA mutual funds consist of an investment in a fixed income mutual fund ($764,000 in total fair value and $2,000 in total unrealized losses).  The severity of the impairment (fair value is approximately 0.26% less than cost) and the duration of the impairment correlates with interest rates in 2015.  Salisbury evaluated the near-term prospects of this fund in relation to the severity and duration of the impairment.  Based on that evaluation, Salisbury does not consider this investment to be other-than-temporarily impaired at December 31, 2015.

The Company did not recognize any OTTI during the years ended December 31, 2015, 2014 and 2013.