Investment Securities

12 Months Ended

Dec. 31, 2018

Schedule of Investments [Abstract]

Investment Securities

2. INVESTMENT SECURITIES

Investment securities have been classified in the consolidated balance sheets according to management’s intent. The amortized costs of securities as shown in the consolidated balance sheets and their estimated fair values at December 31 were as follows:

Securities Available For Sale:

December 31, 2018	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
U.S. government treasury securities	$	982,044	$	0	$	27,474	$	954,570
U.S. government agency securities		45,823,595		264,567		881,157		45,207,005
State and municipal securities		7,394,278		30,579		46,922		7,377,935
Residential mortgage-backed securities		4,769,668		21,579		17,180		4,774,067
Total debt securities AFS	$	58,969,585	$	316,725	$	972,733	$	58,313,577

December 31, 2017	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
U.S. government treasury securities	$	979,983	$	0	$	12,213	$	967,770
U.S. government agency securities		43,978,023		580,366		698,299		43,860,090
State and municipal securities		7,482,912		129,231		38,454		7,573,689
Residential mortgage-backed securities		1,812,905		51,651		2,844		1,861,712
Total debt securities AFS	$	54,253,823	$	761,248	$	751,810	$	54,263,261

Securities Held to Maturity:

December 31, 2018	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
State and municipal securities	$	30,582,785	$	208,480	$	67,434	$	30,723,831
Residential mortgage-backed securities		6,244,288		49,490		7,282		6,286,496
Total securities HTM	$	36,827,073	$	257,970	$	74,716	$	37,010,327

December 31, 2017	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
State and municipal securities	$	41,447,092	$	527,632	$	48,083	$	41,926,641
Residential mortgage-backed securities		3,143,749		77,542		132		3,221,159
Total securities HTM	$	44,590,841	$	605,174	$	48,215	$	45,147,800

At December 31, 2018, securities with a carrying value of $59,182,556 and a market value of $58,502,416 were pledged as collateral for public deposits and other purposes as required by law. Of these amounts, approximately $4,400,000 was over pledged and could be released if necessary for liquidity needs. At December 31, 2017, securities with a carrying value of $71,520,817 and a market value of $71,648,073 were pledged as collateral for public deposits and other purposes as required by law.

At December 31, 2018 and 2017, we had both 1 – 4 family and multifamily mortgage loans pledged to secure Federal Home Loan Bank (“FHLB”) advances. The FHLB requires the Bank to hold a minimum investment of stock, based on membership and the level of activity. As of December 31, 2018, this stock investment was $1,820,300.

There were no investments in obligations of any state or municipal subdivisions which exceeded 10% of the Corporation’s shareholders’ equity at December 31, 2018.

The amortized cost and estimated fair value of debt securities at December 31, 2018, 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.

December 31, 2018
Available for Sale:	Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	2,147,059	$	2,124,645
After one through five years		29,691,474		29,674,236
After five through ten years		21,585,776		20,968,318
After ten years		5,545,276		5,546,378
Total debt securities AFS	$	58,969,585	$	58,313,577
Held to Maturity:		Amortized Cost		Estimated Fair Value
Amounts maturing in:
One year or less	$	6,483,464	$	6,497,910
After one through five years		12,885,021		12,961,209
After five through ten years		11,035,146		11,097,382
After ten years		6,423,442		6,453,826
Total debt securities HTM	$	36,827,073	$	37,010,327

The following tables summarize the activity of security sales by intention and year for years ending 2018, 2017, and 2016.

Securities Available For Sale:

December 31,	2018			2017		2016
Proceeds of sales	$	2,879,000		$	5,741,211	$	11,933,634
Gross gains	$	0		$	186,610	$	152,102
Gross losses		(165,369	)		0		(8,068	)
Net gains (losses) on sales of  available for sale securities	$	(165,369	)	$	186,610	$	144,034

Securities Held to Maturity:

December 31,	2018		2017		2016
Amortized cost of securities sold	$	0	$	0	$	551,949
Proceeds from sales		0		0		576,834
Net gains on sales of  held to maturity securities	$	0	$	0	$	24,885

Sales of held to maturity securities during years ended December 31, 2016 included small lots of mortgage-backed securities which were paid down by over 85% of face value.

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:

December 31, 2018	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	$	0	$	0	$	27,474	$	954,570
U.S. government agency securities		33,077		6,073,337		848,080		20,015,052
State and municipal securities		3,209		306,792		43,713		1,813,173
Residential mortgage-backed securities		14,199		3,032,237		2,981		129,410
Total debt securities available for sale	$	50,485	$	9,412,366	$	922,248	$	22,912,205
Securities Held to Maturity
Temporarily impaired debt securities:
State and municipal securities	$	20,209	$	7,359,536	$	47,225	$	2,782,627
Residential mortgage-backed securities		5,671		879,487		1,611		89,464
Total securities held to maturity	$	25,880	$	8,239,023	$	48,836	$	2,872,091

December 31, 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	$	12,213	$	967,770	$	0	$	0
U.S. government agency securities		34,083		4,988,630		664,216		18,347,439
State and municipal securities		16,836		975,900		21,618		877,798
Residential mortgage-backed securities		0		0		2,844		188,081
Total debt securities available for sale	$	63,132	$	6,932,300	$	688,678	$	19,413,318
Securities Held to Maturity
Temporarily impaired debt securities:
State and municipal securities	$	15,954	$	5,521,443	$	32,129	$	1,281,797
Residential mortgage-backed securities		132		146,203		0		0
Total securities held to maturity	$	16,086	$	5,667,646	$	32,129	$	1,281,797

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 December 31, 2018, sixty-six debt securities had unrealized losses with aggregate depreciation of 2.35% from the Corporation’s amortized cost basis. At December 31, 2017, forty-eight debt securities had unrealized losses with aggregate depreciation of 2.35%. 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.