Securities

6 Months Ended

Jun. 30, 2020

Securities [Abstract]

Securities

Note 2. Securities

Amortized costs and fair values of securities available for sale and held to maturity at June 30, 2020 and December 31, 2019 were as follows (dollars in thousands):

	June 30, 2020
			Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value
Securities Available for Sale
U.S. Treasury securities	$	21,750	$	—	$	(1)	$	21,749
U.S. Government agencies		20,700		99		(518)		20,281
State, county and municipal		103,963		5,732		(26)		109,669
Mortgage backed securities		30,391		1,855		(3)		32,243
Asset backed securities		23,467		110		(427)		23,150
Corporate bonds		19,306		475		(6)		19,775
Total Securities Available for Sale	$	219,577	$	8,271	$	(981)	$	226,867
Securities Held to Maturity
State, county and municipal	$	24,169	$	1,113	$	—	$	25,282
Total Securities Held to Maturity	$	24,169	$	1,113	$	—	$	25,282

	December 31, 2019
			Gross Unrealized
	Amortized Cost		Gains		Losses		Fair Value
Securities Available for Sale
U.S. Government agencies	$	22,104	$	51	$	(219)	$	21,936
State, county and municipal		95,467		3,167		(42)		98,592
Mortgage backed securities		48,045		808		(113)		48,740
Asset backed securities		11,637		49		(82)		11,604
Corporate bonds		6,016		84		(3)		6,097
Total Securities Available for Sale	$	183,269	$	4,159	$	(459)	$	186,969
Securities Held to Maturity
U.S. Government agencies	$	10,000	$	—	$	(12)	$	9,988
State, county and municipal		25,733		913		(1)		26,645
Total Securities Held to Maturity	$	35,733	$	913	$	(13)	$	36,633

The amortized cost and fair value of securities at June 30, 2020 by final contractual maturity are shown below. Expected maturities may differ from final contractual maturities because issuers may have the right to call or prepay obligations without any penalties.

	Held to Maturity				Available for Sale
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	2,713	$	2,733	$	37,627	$	37,790
Due after one year through five years		15,429		16,216		73,790		75,941
Due after five years through ten years		5,776		6,044		84,317		88,756
Due after ten years		251		289		23,843		24,380
Total securities	$	24,169	$	25,282	$	219,577	$	226,867

Proceeds from sales and calls of securities were $14.4 million and $24.3 million during the three months ended June 30, 2020 and 2019, respectively, and $20.6 million and $41.1 million for the six months ended June 30, 2020 and 2019, respectively. Gains and losses on securities transactions are determined using the specific identification method. Gross realized gains and losses on securities transactions during the three and six months ended June 30, 2020 and 2019 were as follows (dollars in thousands):

	Three months ended				Six months ended
	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Gross realized gains	$	267	$	364	$	296	$	417
Gross realized losses		(25)		(126)		(93)		(193)
Net securities gain	$	242	$	238	$	203	$	224

In estimating other than temporary impairment (OTTI) losses, management considers the length of time and the extent to which the fair value has been less than cost, the financial condition and short-term prospects for the issuer, and the intent and ability of management to hold its investment for a period of time to allow a recovery in fair value. There were no investments held that had OTTI losses for the three and six months ended June 30, 2020 and 2019.

The fair value and gross unrealized losses for securities, segregated by the length of time that individual securities have been in a continuous gross unrealized loss position, at June 30, 2020 and December 31, 2019 were as follows (dollars in thousands):

	June 30, 2020
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Treasury securities	$	21,749	$	(1)	$	—	$	—	$	21,749	$	(1)
U.S. Government agencies		3,210		(103)		7,381		(415)		10,591		(518)
State, county and municipal		1,111		(13)		304		(13)		1,415		(26)
Mortgage backed securities		1,454		(2)		268		(1)		1,722		(3)
Asset backed securities		12,270		(277)		4,059		(150)		16,329		(427)
Corporate bonds		719		(6)		—		—		719		(6)
Total	$	40,513	$	(402)	$	12,012	$	(579)	$	52,525	$	(981)

	December 31, 2019
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Securities Available for Sale
U.S. Government agencies	$	6,396	$	(102)	$	8,020	$	(117)	$	14,416	$	(219)
State, county and municipal		7,088		(32)		308		(10)		7,396		(42)
Mortgage backed securities		11,001		(40)		4,287		(73)		15,288		(113)
Asset backed securities		4,861		(74)		625		(8)		5,486		(82)
Corporate bonds		248		(3)		—		—		248		(3)
Total	$	29,594	$	(251)	$	13,240	$	(208)	$	42,834	$	(459)
Securities Held to Maturity
U.S. Government agencies	$	—	$	—	$	9,988	$	(12)	$	9,988	$	(12)
State, county and municipal		31		—		622		(1)		653		(1)
Total	$	31	$	—	$	10,610	$	(13)	$	10,641	$	(13)

The unrealized losses (impairments) in the investment portfolio at June 30, 2020 and December 31, 2019 are generally a result of market fluctuations of interest rates that occur daily. The unrealized losses are from 46 securities at June 30, 2020. Of those, 28 are investment grade, have U.S. government agency guarantees, or are backed by the full faith and credit of local municipalities throughout the United States. Seventeen investment grade asset-backed securities comprised of student loan pools, which are 97% U.S. government guaranteed, included in corporate obligations and one corporate

bond make up the remaining securities with unrealized losses at June 30, 2020. The Company considers the reason for impairment, length of impairment, and ability and intent to hold until the full value is recovered in determining if the impairment is temporary in nature. Based on this analysis, the Company has determined these impairments to be temporary in nature. The Company does not intend to sell, and it is more likely than not that the Company will not be required to sell, these securities until they recover in value or reach maturity.

Market prices are affected by conditions beyond the control of the Company. Investment decisions are made by the management group of the Company and reflect the overall liquidity and strategic asset/liability objectives of the Company. Management analyzes the securities portfolio frequently and manages the portfolio to provide an overall positive impact to the Company’s income statement and balance sheet.

Securities with amortized costs of $45.1 million and $47.3 million at June 30, 2020 and December 31, 2019, respectively, were pledged to secure public deposits as required or permitted by law. Securities with amortized costs of $5.7 million and $5.8 million at June 30, 2020 and December 31, 2019, respectively, were pledged to secure lines of credit at the Federal Reserve discount window. At each of June 30, 2020 and December 31, 2019, there were no securities purchased from a single issuer, other than U.S. Treasury securities and other U.S. Government agencies that comprised more than 10% of the consolidated shareholders’ equity.