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Securities
 12 Months Ended
Dec. 31, 2018
Investments Debt And Equity Securities [Abstract]  
Securities

Note 2.

Securities

 

The amortized cost and fair value of securities available for sale, with unrealized gains and losses follows:

 

 

 

December 31, 2018

 

(In thousands)

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

(Losses)

 

 

Fair

Value

 

Obligations of U.S. Government corporations and agencies

 

$

57,673

 

 

$

26

 

 

$

(1,290

)

 

$

56,409

 

Obligations of states and political subdivisions

 

 

14,605

 

 

 

93

 

 

 

(118

)

 

 

14,580

 

Corporate bonds

 

 

680

 

 

 

215

 

 

 

-

 

 

 

895

 

 

 

$

72,958

 

 

$

334

 

 

$

(1,408

)

 

$

71,884

 

 

 

 

December 31, 2017

 

(In thousands)

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

(Losses)

 

 

Fair

Value

 

Obligations of U.S. Government corporations and agencies

 

$

52,872

 

 

$

113

 

 

$

(608

)

 

$

52,377

 

Obligations of states and political subdivisions

 

 

15,124

 

 

 

191

 

 

 

(60

)

 

 

15,255

 

Corporate bonds

 

 

3,816

 

 

 

476

 

 

 

(153

)

 

 

4,139

 

Mutual funds

 

 

386

 

 

 

-

 

 

 

(4

)

 

 

382

 

 

 

$

72,198

 

 

$

780

 

 

$

(825

)

 

$

72,153

 

 

The amortized cost and fair value of securities available for sale, by contractual maturity, are shown below.  Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.

 

 

 

December 31, 2018

 

(In thousands)

 

Amortized

Cost

 

 

Fair

Value

 

Due in one year or less

 

$

1,001

 

 

$

1,000

 

Due after one year through five years

 

 

8,227

 

 

 

8,067

 

Due after five years through ten years

 

 

21,930

 

 

 

21,442

 

Due after ten years

 

 

41,800

 

 

 

41,375

 

 

 

$

72,958

 

 

$

71,884

 

 

Proceeds from maturities, calls and principal repayments of securities available for sale during 2018, 2017 and 2016 were $11.7 million, $12.9 million and $14.2 million, respectively. Gains on calls of securities available for sale were $838,000 and $1,000, during 2018 and 2016, respectively.  There were no gains from calls of securities available for sale during 2017. Securities available for sale totaling $12.4 million, $34.2 million and $9.9 million were purchased in 2018, 2017 and 2016, respectively.

 

The following table shows the Company securities with 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 December 31, 2018 and 2017, respectively.

 

(In thousands)

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

December 31, 2018

 

Fair

Value

 

 

Unrealized

(Losses)

 

 

Fair

Value

 

 

Unrealized

(Losses)

 

 

Fair

Value

 

 

Unrealized

(Losses)

 

Obligations of U.S. Government corporations and agencies

 

$

14,901

 

 

$

(104

)

 

$

37,186

 

 

$

(1,186

)

 

$

52,087

 

 

$

(1,290

)

Obligations of states and political subdivisions

 

 

3,179

 

 

 

(31

)

 

 

4,086

 

 

 

(87

)

 

 

7,265

 

 

 

(118

)

Total temporarily impaired securities

 

$

18,080

 

 

$

(135

)

 

$

41,272

 

 

$

(1,273

)

 

$

59,352

 

 

$

(1,408

)

 

(In thousands)

 

Less than 12 Months

 

 

12 Months or More

 

 

Total

 

December 31, 2017

 

Fair

Value

 

 

Unrealized

(Losses)

 

 

Fair Value

 

 

Unrealized

(Losses)

 

 

Fair

Value

 

 

Unrealized

(Losses)

 

Obligations of U.S. Government corporations and agencies

 

$

32,512

 

 

$

(330

)

 

$

10,008

 

 

$

(278

)

 

$

42,520

 

 

$

(608

)

Obligations of states and political subdivisions

 

 

4,172

 

 

 

(60

)

 

 

-

 

 

 

-

 

 

 

4,172

 

 

 

(60

)

Corporate bonds

 

 

-

 

 

 

-

 

 

 

1,540

 

 

 

(153

)

 

 

1,540

 

 

 

(153

)

Mutual funds

 

 

382

 

 

 

(4

)

 

 

-

 

 

 

-

 

 

 

382

 

 

 

(4

)

Total temporarily impaired securities

 

$

37,066

 

 

$

(394

)

 

$

11,548

 

 

$

(431

)

 

$

48,614

 

 

$

(825

)

 

At December 31, 2018, there were 84 securities that were considered temporarily impaired due to market conditions, primarily interest rates, and not due to credit concerns.  Because the Company intends to hold these investments to maturity and it is more likely than not that the Company will not be required to sell these investments before a recovery of unrealized losses, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2018 and no other-than-temporary impairment has been recognized.

 

At December 31, 2018, the Company held one corporate bond with a cost basis, net of OTTI losses, totaling $680,000.  The value of this bond is based on quoted market prices for similar assets and is a “Class B” or subordinated “mezzanine” tranche of pooled trust preferred securities.  Trust preferred securities are collateralized by the interest and principal payments made on trust preferred capital offerings by a geographically diversified pool of several different financial institutions. This bond has an estimated average maturity of 16 years and could have been called by the Company at par on the five-year anniversary date of issuance, which has already passed. The bond reprices every three months at a fixed rate index above the three-month London Interbank Offered Rate (“LIBOR”) and has sufficient collateralization and cash flow projections to satisfy its valuation as of December 31, 2018. This bond is projected to repay the full outstanding interest and principal, and is classified as performing. During 2018, two corporate bonds, previously held by the Company, went to auction and were settled at their par value of $4.0 million, resulting in gains of $838,000.  During 2018, 2017 and 2016, $112,000, $214,000 and $187,000 of interest income was recorded, respectively.

 

Additional information regarding the pooled trust preferred security as of December 31, 2018 follows:

 

(In thousands)

Cost, net of OTTI

 

 

Fair Value (1)

 

 

Percent of Underlying Collateral Performing

 

 

Percent of Underlying Collateral in Deferral

 

 

Percent of Underlying Collateral in Default

 

 

Cumulative Amount of OTTI

 

 

Cumulative Other Comprehensive Income,

net of tax

 

$

680

 

 

$

895

 

 

 

88.0

%

 

 

4.7

%

 

 

7.3

%

 

$

320

 

 

$

(170

)

 

(1)

Current Moody’s Ratings range from B2 to Ba2.

 

The following reflects the amount, in thousands, related to credit losses recognized in earnings:

 

(In thousands)

 

 

 

 

Beginning balance as of December 31, 2017

 

$

1,201

 

Increases in cash flows expected to be collected that are recognized over the remaining life of the security

 

 

(43

)

Reduction for gains on securities called during the period

 

 

(838

)

Ending balance as of December 31, 2018

 

$

320

 

 

The carrying value of securities pledged to secure deposits and for other purposes amounted to $16.5 million and $47.6 million at December 31, 2018 and 2017, respectively.