Investment Securities

6 Months Ended

Jun. 30, 2017

Schedule of Investments [Abstract]

Investment Securities

NOTE 3

Investment Securities

Debt and equity securities have been classified in the consolidated balance sheets according to management’s intent. The amortized cost of securities as shown in the consolidated balance sheets and their estimated fair values at June 30, 2017, and December 31, 2016, were as follows:

Securities Available For Sale:

June 30, 2017	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
U.S. government treasury securities	$	978,965	$	0	$	3,885	$	975,080
U.S. government agency securities		47,073,914		827,215		657,991		47,243,138
State and municipal securities		7,526,788		142,798		33,930		7,635,656
Residential mortgage-backed securities		2,116,359		73,064		1,574		2,187,849
Total debt securities AFS		57,696,026		1,043,077		697,380		58,041,723
Equity securities		100,380		0		0		100,380
Total securities AFS	$	57,796,406	$	1,043,077	$	697,380	$	58,142,103

December 31, 2016	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
U.S. government treasury securities	$	977,967	$	0	$	15,817	$	962,150
U.S. government agency securities		41,117,402		697,811		830,316		40,984,897
State and municipal securities		6,537,093		25,170		109,666		6,452,597
Residential mortgage-backed securities		2,454,282		76,284		1,252		2,529,314
Corporate notes		2,497,016		27,944		795		2,524,165
Total debt securities AFS		53,583,760		827,209		957,846		53,453,123
Equity securities		112,380		0		0		112,380
Total securities AFS	$	53,696,140	$	827,209	$	957,846	$	53,565,503

Securities Held to Maturity:

June 30, 2017	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
State and municipal securities	$	46,587,501	$	808,000	$	23,752	$	47,371,749
Residential mortgage-backed securities		3,633,258		116,177		0		3,749,435
Total securities HTM	$	50,220,759	$	924,177	$	23,752	$	51,121,184

December 31, 2016	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
State and municipal securities	$	50,435,624	$	508,109	$	117,077	$	50,826,656
Residential mortgage-backed securities		4,166,911		129,506		0		4,296,417
Total securities HTM	$	54,602,535	$	637,615	$	117,077	$	55,123,073

The amortized cost and estimated fair value of securities at June 30, 2017, and December 31, 2016, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalties.

June 30, 2017
Available for Sale:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	0	$	0
After one through five years		17,518,226		17,814,180
After five through ten years		36,154,560		36,160,723
After ten years		4,023,240		4,066,820
Total debt securities AFS		57,696,026		58,041,723
Equity securities		100,380		100,380
Total securities AFS	$	57,796,406	$	58,142,103

Held to Maturity:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	7,569,874	$	7,579,025
After one through five years		25,448,964		25,823,017
After five through ten years		13,709,411		14,142,881
After ten years		3,492,510		3,576,261
Total securities HTM	$	50,220,759	$	51,121,184

December 31, 2016
Available for Sale:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	0	$	0
After one through five years		10,130,179		10,303,973
After five through ten years		39,818,677		39,507,820
After ten years		3,634,904		3,641,330
Total debt securities AFS		53,583,760		53,453,123
Equity securities		112,380		112,380
Total securities AFS	$	53,696,140	$	53,565,503

Held to Maturity:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	7,939,740	$	7,941,397
After one through five years		26,537,314		26,786,525
After five through ten years		15,178,560		15,493,803
After ten years		4,946,921		4,901,348
Total securities HTM	$	54,602,535	$	55,123,073

Information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in continuous loss position, follows:

June 30, 2017	Less Than Twelve Months				Twelve Months or More
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
Securities Available for Sale
Temporarily impaired debt securities:
U.S. government treasury securities	$	3,885	$	975,080	$	0	$	0
U.S. government agency securities		657,991		18,415,757		0		0
State and municipal securities		33,930		2,942,377		0		0
Residential mortgage-backed securities		1,574		246,472		0		0
Total debt securities available for sale	$	697,380	$	22,579,686	$	0	$	0
Securities Held to Maturity
Temporarily impaired debt securities:
State and municipal securities	$	23,752	$	6,018,598	$	0	$	0
Total securities held to maturity	$	23,752	$	6,018,598	$	0	$	0

December 31, 2016	Less Than Twelve Months				Twelve Months or More
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value
Securities Available for Sale
Temporarily impaired debt securities:
U.S. government treasury securities	$	15,817	$	962,150	$	0	$	0
U.S. government agency securities		830,316		19,330,575		0		0
State and municipal securities		109,666		4,676,685		0		0
Residential mortgage-backed securities		1,252		311,851		0		0
Corporate notes		0		0		795		499,205
Total debt securities available for sale	$	957,051	$	25,281,261	$	795	$	499,205
Securities Held to Maturity
Temporarily impaired debt securities:
State and municipal securities	$	117,077	$	16,162,203	$	0	$	0
Total securities held to maturity	$	117,077	$	16,162,203	$	0	$	0

During the three months ended June 30, 2017, two corporate notes were sold in the amount of $2,540,000 resulting in a realized gain of $42,604. During the first quarter of 2017, 2,400 shares of available for sale Federal Agricultural Mortgage Corporation equity securities were sold in the amount of $136,211 resulting in a realized gain of $124,211.

During the three months ended June 30, 2016, we sold available for sale U.S. Government Agencies in the amount of $5,082,150 which resulted in a realized gain of $83,961. During the first quarter of 2016, we sold mortgage-backed securities in the amount of $924,406 which resulted in a realized gain of $35,344 and U. S. government agency securities in the amount of $4,954,459 which resulted in a realized loss of $7,438 for a net realized gain of $27,906. Of the investment securities sold, $5,302,031 were available for sale and $576,834 were held to maturity. These transactions occurred in order to provide liquidity and remove small lots of mortgage-backed securities. The small lots of held to maturity mortgage-backed securities sold were paid down by over 85% of face value.

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At June 30, 2017, thirty-nine debt securities with unrealized losses have depreciated 2.5% from the Corporation’s amortized cost basis. These unrealized losses relate principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies, or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. Management has the ability to hold debt securities until maturity, or for the foreseeable future if classified as available-for-sale. Also, no declines in debt securities are deemed to be other-than-temporary.