Note 3 - Available-for-sale Securities

3 Months Ended

Mar. 31, 2020

Notes to Financial Statements

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

Note

3.

     Available-for-Sale Securities

The amortized cost, gross unrealized gains, gross unrealized losses and fair values of available-for-sale securities at

March 31, 2020

and

December 31, 2019

are as follows:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
March 31, 2020:
U. S. Government agency mortgage-backed securities	$	15,334	$	305	$	(21	)	$	15,618
Corporate bonds		18,017		-		(2,522	)		15,495
Subordinated notes		9,025		126		(204	)		8,947
SBA loan pools		4,805		-		(35	)		4,770
	$	47,181	$	431	$	(2,782	)	$	44,830
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	16,663	$	90	$	(68	)	$	16,685
Corporate bonds		18,018		133		(838	)		17,313
Subordinated notes		9,022		182		-			9,204
U.S. Treasury notes		5,157		-		(42	)		5,115
	$	48,860	$	405	$	(948	)	$	48,317

The following table presents the available-for-sale securities’ gross unrealized losses and fair value, aggregated by the length of time the individual securities have been in a continuous loss position as of

March 31, 2020

and

December 31, 2019:

(In thousands)	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)
March 31, 2020:
U. S. Government agency mortgage-backed securities	$	107	$	(4	)	$	1,585	$	(17	)	$	1,692	$	(21	)
Corporate bonds		3,739		(278	)		11,756		(2,244	)		15,495		(2,522	)
Subordinated notes		5,321		(204	)		-		-			5,321		(204	)
SBA loan pools		4,770		(35	)		-		-			4,770		(35	)
	$	13,937	$	(521	)	$	13,341	$	(2,261	)	$	27,278	$	(2,782	)
December 31, 2019:
U. S. Government agency mortgage-backed securities	$	2,609	$	(20	)	$	3,919	$	(48	)	$	6,528	$	(68	)
Corporate bonds		-		-			13,162		(838	)		13,162		(838	)
SBA loan pools		5,115		(42	)		-		-			5,115		(42	)
	$	7,724	$	(62	)	$	17,081	$	(886	)	$	24,805	$	(948	)

At

March 31, 2020

and

December 31, 2019,

16

of

26

and

15

of

27

available-for-sale securities had unrealized losses with an aggregate decline of

9.3%

and

3.7%

from the amortized cost of those securities, respectively.

Based on its quarterly reviews, management believes that

none

of the losses on available-for-sale securities noted above constitute other-than-temporary impairment (“OTTI”). The noted losses are considered temporary due to market fluctuations in available interest rates on U.S. Government agency debt, mortgage-backed securities issued by U.S. Government agencies, subordinated notes, and corporate debt. Management considers the issuers of the securities to be financially sound, the corporate bonds are investment grade, and the collectability of all contractual principal and interest payments is reasonably expected. SBA government guaranteed loan pools securities were purchased at a premium and the impairment was attributable primarily to increased prepayment speeds. The timely payment of principal and interest on these securities is guaranteed by the U.S. Government agency. The unrealized losses on the subordinated notes were caused by interest rate increases. The contractual terms of those investments do

not

permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Since Patriot is

not

more-likely-than-

not

to be required to sell the investments before recovery of the amortized cost basis and does

not

intend to sell the securities at a loss,

none

of the available-for-sale securities noted are considered to be OTTI as of

March 31, 2020.

As of

March 31, 2020

and

December 31, 2019,

available-for-sale securities of

$4.6

million and

$4.8

million were pledged primarily to secure municipal deposits, respectively. The securities were pledged to the Federal Reserve Bank (“FRB”).

The following summarizes, by class and contractual maturity, the amortized cost and estimated fair value of available-for-sale debt securities held as of

March 31, 2020

and

December 31, 2019.

The mortgages underlying the mortgage-backed securities are

not

due at a single maturity date. Additionally, these mortgages often are and generally

may

be pre-paid without penalty, creating a degree of uncertainty that such investments can be held until maturity. For convenience, mortgage-backed securities have been included in the summary as a separate line item.

(In thousands)	Amortized Cost								Fair Value
	Due Within 5 years		Due After 5 years through 10 years		Due After 10 years		Total		Due Within 5 years		Due After 5 years through 10 years		Due After 10 years		Total
March 31, 2020:
Corporate bonds	$	4,017	$	14,000	$	-	$	18,017	$	3,739	$	11,756	$	-	$	15,495
Subordinated notes		-		9,025		-		9,025		-		8,947		-		8,947
SBA loan pools		-		4,805		-		4,805		-		4,770		-		4,770
Available-for-sale securities with stated maturity dates		4,017		27,830		-		31,847		3,739		25,473		-		29,212
U. S. Government agency mortgage-backed securities		3,487		1,915		9,932		15,334		3,502		1,934		10,182		15,618
	$	7,504	$	29,745	$	9,932	$	47,181	$	7,241	$	27,407	$	10,182	$	44,830
December 31, 2019:
Corporate bonds	$	4,018	$	14,000	$	-	$	18,018	$	4,151	$	13,162	$	-	$	17,313
Subordinated notes		-		9,022		-		9,022		-		9,204		-		9,204
SBA loan pools		-		5,157		-		5,157		-		5,115		-		5,115
Available-for-sale securities with stated maturity dates		4,018		28,179		-		32,197		4,151		27,481		-		31,632
U. S. Government agency mortgage-backed securities		3,805		2,047		10,811		16,663		3,810		2,016		10,859		16,685
	$	7,823	$	30,226	$	10,811	$	48,860	$	7,961	$	29,497	$	10,859	$	48,317

During the

three

months ended

March 31, 2020,

the Bank did

not

purchase and sell any available-for-sale securities. During the

three

months ended

March 31, 2019,

$1.4

million subordinated notes were purchased, and there was

no

sale of available-for-sale securities.