Note 4 - Securities

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

(

4

) Securities

All of Bancorp’s securities are available for sale. Amortized cost, unrealized gains and losses, and fair value of these securities follow:

(In thousands)	Amortized		Unrealized					Fair
December 31, 201 8	cost		Gains		Losses			value
Government sponsored enterprise obligations	$	264,234	$	156	$	(3,351	)	$	261,039
Mortgage-backed securities - government agencies		149,748		282		(3,753	)		146,277
Obligations of states and political subdivisions		29,760		107		(188	)		29,679
Total securities available for sale	$	443,742	$	545	$	(7,292	)	$	436,995

(In thousands)	Amortized		Unrealized					Fair
December 31, 201 7	cost		Gains		Losses			value
U.S. Treasury and other U.S. government obligations	$	149,996	$	–	$	(12	)	$	149,984
Government sponsored enterprise obligations		214,852		474		(1,482	)		213,844
Mortgage-backed securities - government agencies		163,571		383		(2,447	)		161,507
Obligations of states and political subdivisions		48,987		365		(163	)		49,189
Total securities available for sale	$	577,406	$	1,222	$	(4,104	)	$	574,524

In

2018

Bancorp did

not

sell any securities. Bancorp sold a corporate equity security in

2017

for a loss of

$263

thousand. One security was called prior to maturity in the

third

quarter of

2017

resulting in the receipt of a

$31

thousand pre-payment penalty. The penalty income was classified as a realized gain on the call of available for sale securities. In

2016,

Bancorp did

not

sell any securities. Management has the intent and ability to hold all remaining investment securities available for sale for the foreseeable future.

A summary of the securities available for sale by maturity as of

December 31, 2018

is shown below.

(In thousands)
Securities available for sale	Amortized cost		Fair value
Due within 1 year	$	120,523	$	120,239
Due after 1 but within 5 years		64,141		63,260
Due after 5 but within 10 years		8,059		7,899
Due after 10 years		101,271		99,320
Mortgage-backed securities - government agencies		149,748		146,277
Total securities available for sale	$	443,742	$	436,995

Actual maturities

may

differ from contractual maturities because some issuers have the right to call or prepay obligations with or without call or prepayment penalties. The investment portfolio includes agency mortgage-backed securities, which are guaranteed by agencies such as the FHLMC, FNMA, and GNMA. These securities differ from traditional debt securities primarily in that they

may

have uncertain principal payment dates and are priced based on estimated prepayment rates on the underlying collateral.

Securities with a carrying value of

$355.1

million and

$384.7

million were pledged at

December 31, 2018

and

2017,

respectively, to secure accounts of commercial depositors in cash management accounts, public deposits, and uninsured cash balances for WM&T accounts.

At

December 31, 2018

and

2017,

there were

no

holdings of securities of any

one

issuer, other than the U.S. Government and its agencies, in an amount greater than

10%

of stockholders’ equity.

Securities with unrealized losses

not

recognized in the statements of income are as follows:

(In thousands)	Less than 12 months					12 months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 201 8	value		losses			value		losses			value		losses
Government sponsored enterprise obligations	$	96,740	$	(38	)	$	149,320	$	(3,313	)	$	246,060	$	(3,351	)
Mortgage-backed securities - government agencies		3,108		(5	)		120,848		(3,748	)		123,956		(3,753	)
Obligations of states and political subdivisions		814		(1	)		17,639		(187	)		18,453		(188	)
Total temporarily impaired securities	$	100,662	$	(44	)	$	287,807	$	(7,248	)	$	388,469	$	(7,292	)
December 31, 201 7
U.S. Treasury and U.S. obligations	$	149,984	$	(12	)	$	–	$	–		$	149,984	$	(12	)
Government sponsored enterprise obligations		95,139		(586	)		49,870		(896	)		145,009		(1,482	)
Mortgage-backed securities - government agencies		69,290		(440	)		67,047		(2,007	)		136,337		(2,447	)
Obligations of states and political subdivisions		22,366		(107	)		5,064		(56	)		27,430		(163	)
Total temporarily impaired securities	$	336,779	$	(1,145	)	$	121,981	$	(2,959	)	$	458,760	$	(4,104	)

Applicable dates for determining when securities are in an unrealized loss position are

December 31, 2018

and

2017.

As such, it is possible that a security had a market value lower than its amortized cost on other days during the past

twelve

months, but is

not

in the “Securities with an unrealized loss of less than

12

months” category above.

Unrealized losses on Bancorp’s investment securities portfolio have

not

been recognized as expense because the securities are of high credit quality, and the decline in fair values is due to changes in the prevailing interest rate environment since the purchase date. Fair value is expected to recover as securities reach their maturity date and/or the interest rate environment returns to conditions similar to when these securities were purchased. Because management does

not

intend to sell the investments, and it is

not

likely that Bancorp will be required to sell the investments before recovery of their amortized cost bases, which

may

be maturity, Bancorp does

not

consider these securities to be other-than-temporarily impaired at

December 31, 2018.

FHLB stock and other securities are investments held by Bancorp which are

not

readily marketable and are carried at cost. This category consists of holdings of Federal Home Loan Bank of Cincinnati (“FHLB”) stock which are required for access to FHLB borrowing, and are classified as restricted securities.