Note

– Securities –

The amortized cost and fair values of securities available for sale as of

December 31, 2017

and

2016

are summarized as follows:

	December 31, 2017
	(Dollars in thousands)
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Government Agencies	$	9,008	$	13	$	68	$	8,953
Corporate Securities		13,074		59		92		13,041
Mortgage-Backed Securities		81,763		2		1,824		79,941
Municipal Securities		76,553		353		427		76,479
Other Securities		831		-		97		734
Total Securities Available for Sale	$	181,229	$	427	$	2,508	$	179,148

	December 31, 2016
	(Dollars in thousands)
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Government Agencies	$	7,580	$	36	$	50	$	7,566
Corporate Securities		11,148		31		52		11,127
Mortgage-Backed Securities		101,766		20		2,414		99,372
Municipal Securities		80,559		210		1,133		79,636
Other Securities		820		-		179		641
Total Securities Available for Sale	$	201,873	$	297	$	3,828	$	198,342

The following table is a summary of securities with gross unrealized losses and fair values at

December 31, 2017

and

2016,

aggregated by investment category and length of time in a continued unrealized loss position. Due to the nature of these investments and current prevailing market prices, these unrealized losses are considered a temporary impairment of the securities.

	December 31, 2017
	Less Than 12 Months				12 Months or Greater				Total
	(Dollars in thousands)
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Government Agencies	$	4,136	$	56	$	2,004	$	12	$	6,140	$	68
Corporate Securities		4,448		69		2,007		23		6,455		92
Mortgage-Backed Securities		8,320		71		71,182		1,753		79,502		1,824
Municipal Securities		25,798		168		11,927		259		37,725		427
Other Securities		-		-		734		97		734		97
Total Securities Available for Sale	$	42,702	$	364	$	87,854	$	2,144	$	130,556	$	2,508

	December 31, 2016
	Less Than 12 Months				12 Months or Greater				Total
	(Dollars in thousands)
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
U.S. Government Agencies	$	4,535	$	50	$	-	$	-	$	4,535	$	50
Corporate Securities		2,010		31		4,515		21		6,525		52
Mortgage-Backed Securities		86,091		1,974		9,885		440		95,976		2,414
Municipal Securities		54,533		1,128		207		5		54,740		1,133
Other Securities		-		-		641		179		641		179
Total Securities Available for Sale	$	147,169	$	3,183	$	15,248	$	645	$	162,417	$	3,828

Management evaluates securities for other than temporary impairment when economic and market conditions warrant such evaluations. Consideration is given to the extent and length of time the fair value has been below cost, the reasons for the decline in value, and the Company’s intent to sell a security or whether it is more likely than

not

that the Company will be required to sell the security before the recovery of its amortized cost. The Company developed a process to identify securities that could potentially have a credit impairment that is other than temporary. This process involves evaluating each security for impairment by monitoring credit performance, collateral type, collateral geography, loan-to-value ratios, credit scores, loss severity levels, pricing levels, downgrades by rating agencies, cash flow projections and other factors as indicators of potential credit issues. When the Company determines that a security is deemed to be other than temporarily impaired, an impairment loss is recognized.

The amortized cost and fair values of secur

ities available for sale as of

December 31, 2017

by contractual maturity are shown below. Actual maturities

may

differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities

may

be called or repaid without any penalties.

	Amortized		Fair
	Cost		Value
	(Dollars in thousands)
Less Than One Year	$	8,671	$	8,667
One to Five Years		48,041		47,986
Over Five to Ten Years		71,636		70,463
Over Ten Years		52,881		52,032
Total Securities Available for Sale	$	181,229	$	179,148

Securities available for sale with a fair value of $

103.2

million and

$86.0

million, respectively, were pledged as collateral on public deposits and for other purposes as required or permitted by law as of

December 31, 2017

and

2016.

There

were

$31,000,

$260,000

and

$3,000

realized gross gains from sales or redemptions of securities for the years ended

December 31, 2017,

2016

and

2015,

respectively. There were

$28,000

and

$18,000

realized gross losses from sales or redemptions of securities for the years ended

December 31, 2016

and

2015,

respectively, and

realized gross losses from sales or redemptions of securities for the year ended

December 31, 2017.

The Bank has invested in the Federal Home Loan Bank of Dallas which is included in other equity securities and reflected at cost in these financial statements. The cost

of these securities was

$4.0

million and

$3.6

million, respectively, at

December 31, 2017

and

2016.

The Federal Home Loan Bank stock is pledged to secure advances from the Federal Home Loan Bank of Dallas at both

December 31, 2017

and

2016.

The Bank also has investments of

$100,000

and

$100,000

in The Independent Bankers Bank,

$1.8

million and

$1.6

million in McLarty Capital Partners SBIC, L.P.,

$654,000

and

$348,000

in Bluehenge Capital Secured Debt SBIC, L.P.,

$226,000

and

$234,000

in Bankers Insurance, LLC, and

$252,000

and

$252,000

in First National Bankers Bank at

December 31, 2017

and

2016,

respectively. At

December 31, 2017,

the Bank also had a

$1.6

million investment in McLarty Capital Partners SBIC II, L.P., and a

$13,000

investment in New Louisiana Angel Fund

LLC. These investments are carried at cost due to the lack of a quoted market price and a ready market for these types of investments.