Note 3 - Investment Securities Available for Sale

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

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

3.   INVESTMENT SECURITIES AVAILABLE FOR SALE

The amortized cost and estimated fair value of investment securities at September 30, 2020 and December 31, 2019 consisted of the following, in thousands:

Available-for-Sale	September 30, 2020
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	105,925	$	4,086	$	(2	)	$	110,009
U.S. Government-agencies collateralized by mortgage obligations-commercial		5,400		16		-			5,416
Obligations of states and political subdivisions		40,525		2,110		(58	)		42,577
	$	151,850	$	6,212	$	(60	)	$	158,002

Unrealized gains on available-for-sale investment securities totaling $6,152,000 were recorded, net of $1,818,000 in tax expense, as accumulated other comprehensive income within shareholders' equity at September 30, 2020.  No securities were sold during the nine months ended September 30, 2020.

Available-for-Sale	December 31, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations- residential	$	123,940	$	1,924	$	(186	)	$	125,678
Obligations of states and political subdivisions		32,470		1,201		(29	)		33,642
	$	156,410	$	3,125	$	(215	)	$	159,320

Unrealized gains on available-for-sale investment securities totaling $2,910,000 were recorded, net of $861,000 in tax expense, as accumulated other comprehensive income within shareholders' equity at December 31, 2019. During the three and nine months ended September 30, 2019 the Company sold forty available-for-sale investment securities for total proceeds of $11,379,000 recording a $20,000 gain on sale. The Company realized a gain on sale from twenty-three of these securities totaling $59,000 and a loss on sale on seventeen securities of $39,000.  No securities were sold during the nine months ended September 30, 2020.

There were no transfers of available-for-sale investment securities during the nine months ended September 30, 2020 and twelve months ended December 31, 2019. There were no securities classified as held-to-maturity at September 30, 2020 or December 31, 2019.

Investment securities with unrealized losses at September 30, 2020 and December 31, 2019 are summarized and classified according to the duration of the loss period as follows, in thousands:

September 30, 2020	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations-residential	$	3,849	$	2	$	-	$	-	$	3,849	$	2
U.S. Government-agencies collateralized by mortgage obligations-commercial		-		-		-		-		-		-
Obligations of states and political subdivisions		3,368		58		-		-		3,368		58
	$	7,217	$	60	$	-	$	-	$	7,217	$	60

December 31, 2019	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
Debt securities:
U.S. Government-sponsored agencies collateralized by mortgage obligations-residential	$	10,319	$	31	$	19,733	$	155	$	30,052	$	186
Obligations of states and political subdivisions		2,965		29		-		-		2,965		29
	$	13,284	$	60	$	19,733	$	155	$	33,017	$	215

At September 30, 2020, the Company held 206 securities of which 9 were in a loss position. All of the securities in a loss position were in a loss position for less than twelve months. Of the 206 securities, 100 are U.S. Government-sponsored agencies collateralized by residential mortgage obligations, 2 are U.S. Government- agencies collateralized by commercial mortgage obligations  and 104 were obligations of states and political subdivisions. The unrealized losses relate principally to market rate conditions. All of the securities continue to pay as scheduled. When analyzing an issuer’s financial condition, management considers the length of time and extent to which the market value has been less than cost; the historical and implied volatility of the security; the financial condition of the issuer of the security; and the Company’s intent and ability to hold the security to recovery. As of September 30, 2020, management does not have the intent to sell these securities nor does it believe it is more likely than not that it will be required to sell these securities before the recovery of its amortized cost basis. Based on the Company’s evaluation of the above and other relevant factors, the Company does not believe the securities that are in an unrealized loss position as of September 30, 2020 are other than temporarily impaired.

The amortized cost and estimated fair value of investment securities at September 30, 2020 by contractual maturity are shown below, in thousands.

	Amortized Cost		Estimated Fair Value
Within one year	$	120	$	120
After one year through five years		3,903		4,076
After five years through ten years		5,552		5,893
After ten years		30,950		32,488
Investment securities not due at a single maturity date:
Government- agencies commercial mortgage-backed securities		5,400		5,416
Government-sponsored agencies residential mortage-backed securities		105,925		110,009
	$	151,850	$	158,002

Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

Investment securities with amortized costs totaling $104,625,000 and $83,596,000 and estimated fair values totaling $108,649,000 and $84,625,000 at September 30, 2020 and December 31, 2019, respectively, were pledged to secure deposits and repurchase agreements.