Investment Securities

9 Months Ended

Sep. 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 September 30, 2017, and December 31, 2016, were as follows:

Securities Available For Sale:

September 30, 2017	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
U.S. government treasury securities	$	979,470	$	0	$	4,980	$	974,490
U.S. government agency securities		44,003,490		793,816		562,831		44,234,475
State and municipal securities		7,505,040		122,194		26,235		7,600,999
Residential mortgage-backed securities		1,967,371		70,265		864		2,036,772
Total debt securities AFS		54,455,371		986,275		594,910		54,846,736
Equity securities		100,380		0		0		100,380
Total securities AFS	$	54,555,751	$	986,275	$	594,910	$	54,947,116

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:

September 30, 2017	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
State and municipal securities	$	43,580,427	$	765,970	$	17,608	$	44,328,789
Residential mortgage-backed securities		3,374,173		108,884		0		3,483,057
Total securities HTM	$	46,954,600	$	874,854	$	17,608	$	47,811,846

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 September 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.

September 30, 2017
Available for Sale:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	0	$	0
After one through five years		14,464,631		14,727,470
After five through ten years		36,074,391		36,152,596
After ten years		3,916,349		3,966,670
Total debt securities AFS		54,455,371		54,846,736
Equity securities		100,380		100,380
Total securities AFS	$	54,555,751	$	54,947,116

Held to Maturity:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	8,334,947	$	8,354,920
After one through five years		21,995,877		22,330,418
After five through ten years		13,642,518		14,065,982
After ten years		2,981,258		3,060,526
Total securities HTM	$	46,954,600	$	47,811,846

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:

September 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	$	4,980	$	974,490	$	0	$	0
U.S. government agency securities		527,903		18,541,258		34,928		962,870
State and municipal securities		12,760		2,260,529		13,475		677,896
Residential mortgage-backed securities		864		216,393		0		0
Total debt securities available for sale	$	546,507	$	21,992,670	$	48,403	$	1,640,766
Securities Held to Maturity
Temporarily impaired debt securities:
State and municipal securities	$	15,430	$	2,895,378	$	2,178	$	1,613,290
Total securities held to maturity	$	15,430	$	2,895,378	$	2,178	$	1,613,290

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 September 30, 2017, two U.S. Government Agencies were sold in the amount of $3,065,000 resulting in a realized gain of $19,795. During the first half of 2017, two corporate notes were sold in the amount of $2,540,000 resulting in a realized gain of $42,604, and 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 September 30, 2016, one available for sale U.S. Government Agency security was sold in the amount of $1,549,453, resulting in a gain of $57,052. In the first half of 2016, we sold available for sale U.S. Government Agency securities in the amount of $10,036,609 resulting in a net realized gain of $76,524. Also, available for sale mortgage-backed securities in the amount of $347,572 and held to maturity mortgage-backed securities in the amount of $576,834 were sold in the first half of 2016 for net gains of $10,458 and $24,885, respectively. These transactions occurred in order to provide liquidity and remove small lots of mortgage-backed securities. These small lots of held to maturity mortgage-backed securities sold were paid down to 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 September 30, 2017, thirty-five debt securities with unrealized losses have depreciated 2.1% 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. No declines in debt securities are deemed to be other-than-temporary.