INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2020

INVESTMENT SECURITIES

INVESTMENT SECURITIES

NOTE 3 - INVESTMENT SECURITIES

The following presents the amortized cost and fair value of securities available-for-sale, with gross unrealized gains and losses recognized in accumulated other comprehensive income as of September 30, 2020 and December 31, 2019 (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
September 30, 2020	Cost		Gains		Losses		Value
Investment securities available-for-sale:
U.S. Treasury debt	$	250	$	6	$	—	$	256
Corporate bonds		2,000		48				2,048
Government National Mortgage Association ("GNMA") mortgage-backed securities – residential		28,844		944		—		29,788
Federal National Mortgage Association ("FNMA") mortgage-backed securities – residential		2,626		90		—		2,716
Corporate collateralized mortgage obligations ("CMO") and mortgage-backed securities ("MBS")		5,826		93		(73)		5,846
Total securities available-for-sale	$	39,546	$	1,181	$	(73)	$	40,654

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2019	Cost		Gains		Losses		Value
Investment securities available-for-sale:
U.S. Treasury debt	$	250	$	4	$	—	$	254
GNMA mortgage-backed securities – residential		45,490		157		(335)		45,312
FNMA mortgage-backed securities – residential		2,935		11		(29)		2,917
Corporate CMO and MBS		10,425		40		(45)		10,420
Total securities available-for-sale	$	59,100	$	212	$	(409)	$	58,903

At September 30, 2020, the amortized cost and estimated fair value of available-for-sale securities have contractual maturity dates shown in the table below (in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

	Amortized		Fair
September 30, 2020	Cost		Value
Due after one year through five years	$	250	$	256
Due after ten years		2,000		2,048
Securities (agency and CMO)		37,296		38,350
Total	$	39,546	$	40,654

In 2014, the Company began investing in a small business investment company (“SBIC”) fund administered by the Small Business Administration. During the nine months ended September 30, 2020 and the year ended December 31, 2019, the Company invested $0.5 million and $0.4 million, respectively, in SBIC. At September 30, 2020, the Company held a balance of $2.1 million with SBIC which is included in other assets in the accompanying consolidated balance sheets. The Company may be obligated to invest up to an additional $0.9 million in future SBIC investments.

At September 30, 2020 and December 31, 2019, securities with carrying values totaling $4.2 million and $5.5 million, respectively, were pledged to secure various public deposits and credit facilities of the Company.

At September 30, 2020 and December 31, 2019, there were no holdings of securities of any one issuer, other than the U.S. Government sponsored entities and agencies, in an amount greater than 10%of shareholders’ equity.

At September 30, 2020 and December 31, 2019, seven securities and twenty-six securities, respectively, were in an unrealized loss position, with unrealized losses totaling $0.1 million and $0.4 million, respectively. Two of the securities in an unrealized loss position at September 30, 2020 have been in a continuous unrealized loss position for more than twelve months, and the remaining securities in a loss position have been in a continuous unrealized loss position for less than twelve months. The unrealized loss positions were caused primarily by interest rate changes and market assumptions about prepayments of principal and interest on the underlying mortgages. Because the decline in market value is attributable to market conditions, not credit quality, and because the Company has the ability and intent to hold these investments until a recovery of fair value, which may be near or at maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2020.

The following table summarizes securities with unrealized losses at September 30, 2020 and December 31, 2019, aggregated by major security type and length of time in a continuous unrealized loss position (in thousands, before tax):

	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
September 30, 2020	Value		Losses		Value		Losses		Value		Losses
Corporate CMO and MBS		1,553		(54)		590		(19)		2,143		(73)
Total	$	1,553	$	(54)	$	590	$	(19)	$	2,143	$	(73)

	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2019	Value		Losses		Value		Losses		Value		Losses
GNMA mortgage-backed securities - residential	$	28,203	$	(193)	$	4,450	$	(142)	$	32,653	$	(335)
FNMA mortgage-backed securities - residential		—		—		2,347		(29)		2,347		(29)
Corporate CMO and MBS		7,780		(45)		—		—		7,780		(45)
Total	$	35,983	$	(238)	$	6,797	$	(171)	$	42,780	$	(409)

The Company did not sell any securities during the three and nine months ended September 30, 2020. The Company sold $7.5 million of securities and realized $0.1 million of gains, from the sale of securities using the specific identification method for the three and nine months ended September 30, 2019.