INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2020

Investments, Debt and Equity Securities [Abstract]

NOTE 2 – INVESTMENT SECURITIES

Investment Portfolio Composition. The following table summarizes the amortized cost and related market value of investment securities
available-for-sale and securities held-to-maturity and the corresponding amounts of gross unrealized gains and losses.


	March 31, 2020									December 31, 2019
	Amortized		Unrealized		Unrealized		Market		Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value		Cost		Gain		Losses		Value
Available for Sale
U.S. Government Treasury	$	198,640	$	2,874	$	-	$	201,514	$	231,996	$	849	$	67	$	232,778
U.S. Government Agency		164,070		1,955		131		165,894		155,706		697		325		156,078
States and Political Subdivisions		6,664		8		-		6,672		6,310		9		-		6,319
Mortgage-Backed Securities		581		75		-		656		693		80		-		773
Equity Securities⁽¹⁾		7,778		-		-		7,778		7,653		-		-		7,653
Total	$	377,733	$	4,912	$	131	$	382,514	$	402,358	$	1,635	$	392	$	403,601

Held to Maturity
U.S. Government Treasury	$	20,027	$	184	$	-	$	20,211	$	20,036	$	15	$	9	$	20,042
States and Political Subdivisions		340		-		-		340		1,376		-		-		1,376
Mortgage-Backed Securities		231,425		5,953		-		237,378		218,127		2,064		180		220,011
Total	$	251,792	$	6,137	$	-	$	257,929	$	239,539	$	2,079	$	189	$	241,429

Total Investment Securities	$	629,525	$	11,049	$	131	$	640,443	$	641,897	$	3,714	$	581	$	645,030

⁽¹⁾ Includes Federal Home Loan Bank and Federal Reserve Bank stock, recorded at cost of $3.0 million, $4.8 million, respectively, at March 31, 2020 and includes Federal Home Loan Bank and Federal Reserve Bank stock recorded at cost of $2.9 million and $4.8 million, respectively, at December 31, 2019.

Securities with an amortized cost of $295.5 million and $353.8 million at March 31, 2020 and December 31, 2019, 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 equity 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.

Maturity Distribution. At March 31, 2020, 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 because they are not due at a certain maturity date.

	Available for Sale				Held to Maturity
(Dollars in Thousands)	Amortized Cost		Market Value		Amortized Cost		Market Value
Due in one year or less	$	131,848	$	132,886	$	20,367	$	20,551
Due after one year through five years		73,456		75,300		-		-
Mortgage-Backed Securities		581		656		231,425		237,378
U.S. Government Agency		164,070		165,894		-		-
Equity Securities		7,778		7,778		-		-
Total	$	377,733	$	382,514	$	251,792	$	257,929

Unrealized Losses on Investment Securities. The following table summarizes the available for sale investment securities with unrealized losses aggregated by major security type and length of time in a continuous unrealized loss position:

	Less Than				Greater Than
	12 Months				12 Months				Total
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in Thousands)	Value		Losses		Value		Losses		Value		Losses
March 31, 2020
Available for Sale
U.S. Government Agency		22,589		108		6,736		23		29,325		131
Total		22,589		108		6,736		23		29,325		131

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

At March 31, 2020, there were 42 positions (combined AFS and HTM) with unrealized losses totaling $0.1 million. 41 of these positions were U.S. government agency and mortgage-backed securities issued by U.S. government sponsored entities. The remaining position was one municipal security. Because the declines in the market value of these securities were attributable to changes in interest rates and not credit quality, and because the Company had the ability and intent to hold these investments until there is a recovery in fair value, which may be at maturity, the Company did not record any allowance for credit losses on any investment securities at March 31, 2020. Additionally, none of the AFS or HTM securities held by the Company were past due or in nonaccrual status at March 31, 2020.

Credit Quality Indicators

The Company monitors the credit quality of its investment securities through various risk management procedures, including the monitoring of credit ratings. A majority of the debt securities in the Company’s investment portfolio were issued by a U.S. government entity or agency and are either explicitly or implicitly guaranteed by the U.S. government. The Company considers the long history of no credit losses on these securities indicates that the expectation of nonpayment of the amortized cost basis is zero, even if the U.S. government were to technically default. Further, certain municipal securities held by the Company have been pre-refunded and secured by government guaranteed treasuries. Therefore, for the aforementioned securities, the Company does not assess or record expected credit losses due to the zero loss assumption. The Company monitors the credit quality of its municipal securities portfolio via credit ratings which are updated on a quarterly basis. On a quarterly basis, municipal securities in an unrealized loss position are evaluated to determine if the loss is attributable to credit related factors and if an allowance for credit loss is needed.