Investment Securities

12 Months Ended

Dec. 31, 2020

Investment Securities

Note 4. Investment Securities

Note 4. Investment Securities

Debt securities AFS consist of the following:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2020
U.S. GSE debt securities	$	8,007,142	$	165,934	$	3,245	$	8,169,831
Agency MBS		40,861,370		547,930		30,951		41,378,349
ABS and OAS		2,508,997		160,999		0		2,669,996
Other investments		8,169,000		318,002		0		8,487,002
Total	$	59,546,509	$	1,192,865	$	34,196	$	60,705,178
December 31, 2019
U.S. GSE debt securities	$	18,002,549	$	99,743	$	40,672	$	18,061,620
Agency MBS		16,169,819		86,874		51,318		16,205,375
ABS and OAS		2,799,657		55,418		2,166		2,852,909
Other investments		8,665,000		181,846		0		8,846,846
Total	$	45,637,025	$	423,881	$	94,156	$	45,966,750

Investments pledged as collateral for larger dollar repurchase agreement accounts and for other purposes as required or permitted by law consisted of U.S. GSE debt securities, Agency MBS, ABS and OAS, and CDs. These repurchase agreements mature daily. These investments as of the balance sheet dates were as follows:

	Amortized		Fair
	Cost		Value
December 31, 2020	$	59,546,509	$	60,705,178
December 31, 2019		45,637,025		45,966,750

Proceeds from sales of debt securities AFS were $884,137in 2020 and $6,553,118in 2019 with gains of $39,086and $1,570, respectively, and losses of $0 and $28,060, respectively.

The carrying amount and estimated fair value of securities by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties, pursuant to contractual terms. Because the actual maturities of Agency MBS usually differ from their contractual maturities due to the right of borrowers to prepay the underlying mortgage loans, usually without penalty, those securities are not presented in the following table by contractual maturity date.

The scheduled maturities of debt securities AFS at December 31, 2020 were as follows:

	Amortized		Fair
	Cost		Value
Due in one year or less	$	2,227,000	$	2,247,603
Due from one to five years		5,942,000		6,239,399
Due from five to ten years		9,511,476		9,801,921
Due after ten years		1,004,663		1,037,906
Agency MBS		40,861,370		41,378,349
Total	$	59,546,509	$	60,705,178

Debt securities with unrealized losses as of the balance sheet dates are presented in the tables below.

	Less than 12 months				12 months or more				Totals
	Fair		Unrealized		Fair		Unrealized		Number of		Fair		Unrealized
	Value		Loss		Value		Loss		Securities		Value		Loss
December 31, 2020
U.S. GSE debt securities	$	1,999,234	$	3,245	$	0	$	0		2	$	1,999,234	$	3,245
Agency MBS		2,076,167		19,845		520,546		11,106		6		2,596,713		30,951
ABS and OAS		0		0		0		0		0		0		0
Other investments		0		0		0		0		0		0		0
Total	$	4,075,401	$	23,090	$	520,546	$	11,106		8	$	4,595,947	$	34,196
December 31, 2019
U.S. GSE debt securities	$	7,964,192	$	40,672	$	0	$	0		7	$	7,964,192	$	40,672
Agency MBS		5,273,683		24,648		2,920,091		26,670		13		8,193,774		51,318
ABS and OAS		1,000,490		2,166		0		0		1		1,000,490		2,166
Other investments		0		0		0		0		0		0		0
Total	$	14,238,365	$	67,486	$	2,920,091	$	26,670		21	$	17,158,456	$	94,156

Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions, or adverse developments relating to the issuer, 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 Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.

As the Company has the ability to hold its debt securities until maturity, or for the foreseeable future if classified as AFS, and it is more likely than not that the Company will not have to sell such securities before recovery of their cost basis, no declines in such securities were deemed to be other-than-temporary as of the balance sheet dates presented.

The Bank is a member of the FHLBB. The FHLBB is a cooperatively owned wholesale bank for housing and finance in the six New England States. Its mission is to support the residential mortgage and community-development lending activities of its members, which include over 450 financial institutions across New England. The Company obtains much of its wholesale funding from the FHLBB. As a requirement of membership in the FHLBB, the Bank must own a minimum required amount of FHLBB stock, calculated periodically based primarily on the Bank’s level of borrowings from the FHLBB. As a result of the Bank’s level of borrowings during 2020 and 2019, the Bank was required to purchase additional FHLBB stock in aggregate totaling $537,100 and $176,000, respectively. As a member of the FHLBB, the Company is also subject to future capital calls by the FHLBB in order to maintain compliance with its capital plan. During 2020 and 2019, FHLBB exercised capital call options with redemptions totaling $522,400and $493,600, respectively, on the Company’s portfolio of FHLBB stock. As of December 31, 2020 and 2019, the Company’s investment in FHLBB stock was $768,400and $753,700, respectively.

The Company periodically evaluates its investment in FHLBB stock for impairment based on, among other factors, the capital adequacy of the FHLBB and its overall financial condition. No impairment losses have been recorded through December 31, 2020.

The Company’s investment in FRBB Stock was $588,150at December 31, 2020 and 2019.

In 2018, the Company purchased 20 shares of common stock in ACBI at a purchase price of $90,000, for the purpose of obtaining access to correspondent banking services from ABCI’s subsidiary, ACBB. These shares are subject to contractual resale restrictions and considered by management to be restricted and are recorded in the balance sheet at cost amounting to $90,000at December 31, 2020 and 2019.