INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

Note 2
INVESTMENT SECURITIES

Investment Portfolio Composition. The amortized cost and related market value of investment securities available-for-sale and
held-to-maturity were as follows:
	2019									2018
	Amortized		Unrealized		Unrealized		Market		Amortized		Unrealized		Unrealized		Market
(Dollars in Thousands)	Cost		Gains		Losses		Value		Cost		Gain		Losses		Value
Available for Sale
U.S. Government Treasury	$	231,996	$	849	$	67	$	232,778	$	264,298	$	167	$	2,616	$	261,849
U.S. Government Agency		155,706		697		325		156,078		133,201		520		515		133,206
States and Political Subdivisions		6,310		9		-		6,319		42,509		-		144		42,365
Mortgage-Backed Securities		693		80		-		773		903		40		-		943
Equity Securities⁽¹⁾		7,653		-		-		7,653		7,794		-		-		7,794
Total	$	402,358	$	1,635	$	392	$	403,601	$	448,705	$	727	$	3,275	$	446,157

Held to Maturity
U.S. Government Treasury	$	20,036	$	15	$	9	$	20,042	$	35,088	$	-	$	477	$	34,611
States and Political Subdivisions		1,376		-		-		1,376		6,512		-		26		6,486
Mortgage-Backed Securities		218,127		2,064		180		220,011		175,720		220		2,624		173,316
Total	$	239,539	$	2,079	$	189	$	241,429	$	217,320	$	220	$	3,127	$	214,413

Total Investment Securities	$	641,897	$	3,714	$	581	$	645,030	$	666,025	$	947	$	6,402	$	660,570

⁽¹⁾ Includes Federal Home Loan Bank and Federal Reserve Bank recorded at cost of $2.9 million and $4.8 million, respectively, at December 31, 2019 and Federal Home Loan Bank and Federal Reserve Bank recorded at cost of $3.0 million and $4.8 million, respectively, at December 31, 2018.

Securities with an amortized cost of $353.8 million and $319.6 million at December 31, 2019 and December 31, 2018, respectively, were pledged to secure public deposits and for other purposes.

The Bank, as a member of the Federal Home Loan Bank of Atlanta (“FHLB”), is required to own capital stock in the FHLB based generally upon the balances of residential and commercial real estate loans, and FHLB advances. FHLB stock which is included in other securities is pledged to secure FHLB advances. No ready market exists for this stock, and it has no quoted market value; however, redemption of this stock has historically been at par value.

As a member of the Federal Reserve Bank of Atlanta, the Bank is required to maintain stock in the Federal Reserve Bank of Atlanta based on a specified ratio relative to the Bank’s capital. Federal Reserve Bank stock is carried at cost and may be sold back to the Federal Reserve Bank at its carrying value.

Investment Sales. There were no sales of investment securities for each of the last three years.

Maturity Distribution. At December 31, 2019, the Company's investment securities had the following maturity distribution based on contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations. Mortgage-backed securities and certain amortizing U.S. government agency securities are shown separately since they are not due at a certain maturity date.

	Available for Sale				Held to Maturity
	Amortized		Market		Amortized		Market
(Dollars in Thousands)	Cost		Value		Cost		Value
Due in one year or less	$	134,339	$	134,331	$	16,406	$	16,397
Due after one through five years		103,967		104,766		5,006		5,021
Mortgage-Backed Securities		693		773		218,127		220,011
U.S. Government Agency		155,706		156,078		-		-
Equity Securities		7,653		7,653		-		-
Total	$	402,358	$	403,601	$	239,539	$	241,429

Unrealized Losses. The following table summarizes the investment securities with unrealized losses at December 31, aggregated by major security type and length of time in a continuous unrealized loss position:

	Less Than 12 Months				Greater Than 12 Months				Total
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in Thousands)	Value		Losses		Value		Losses		Value		Losses
December 31, 2019
Available for Sale
U.S. Government Treasury	$	9,955	$	-	$	93,310	$	67	$	103,265	$	67
U.S. Government Agency		36,361		244		17,364		81		53,725		325
States and Political Subdivisions		578		-		-		-		578		-
Mortgage-Backed Securities		8		-		-		-		8		-
Total		46,902		244		110,674		148		157,576		392

Held to Maturity
U.S. Government Treasury		-		-		15,022		9		15,022		9
States and Political Subdivisions		1,033		-		-		-		1,033		-
Mortgage-Backed Securities		22,581		42		16,027		138		38,608		180
Total	$	23,614	$	42	$	31,049	$	147	$	54,663	$	189

December 31, 2018
Available for Sale
U.S. Government Treasury	$	28,420	$	80	$	193,501	$	2,536	$	221,921	$	2,616
U.S. Government Agency		53,237		271		28,735		244		81,972		515
States and Political Subdivisions		8,243		12		31,417		132		39,660		144
Mortgage-Backed Securities		10		-		-		-		10		-
Total		89,910		363		253,653		2,912		343,563		3,275

Held to Maturity
U.S. Government Treasury		-		-		34,612		477		34,612		477
States and Political Subdivisions		204		-		6,281		26		6,485		26
Mortgage-Backed Securities		51,327		389		84,705		2,235		136,032		2,624
Total	$	51,531	$	389	$	125,598	$	2,738	$	177,129	$	3,127

Management evaluates securities for other than temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, the Company considers, (i) whether it has decided to sell the security, (ii) whether it is more likely than not that the Company will have to sell the security before its market value recovers, and (iii) whether the present value of expected cash flows is sufficient to recover the entire amortized cost basis. When assessing a security’s expected cash flows, the Company considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost and (ii) the financial condition and near-term prospects of the issuer. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by rating agencies have occurred, regulatory issues, and analysts’ reports.

At December 31, 2019, there were 189 positions (combined AFS and HTM) with unrealized losses totaling $0.6 million. 24 of these positions were U.S. government treasury securities guaranteed by the U.S. government. 64 of these positions were U.S. government agency and mortgage-backed securities issued by U.S. government sponsored entities. The remaining 101 securities are direct obligations of the U.S. government (95) and municipal bonds (6). Municipal bonds are relatively short-term in nature (less than 5 years), and hold a minimum rating of A+, with over 80% of our municipal bond portfolio pre-refunded or escrowed to maturity with U.S. government securities. Because the declines in the market value of these securities are attributable to changes in interest rates and not credit quality and because the Company has the present ability and intent to hold these investments until there is a recovery in fair value, which may be at maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2019.