XML 21 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
Securities
 9 Months Ended
Sep. 30, 2016
Securities [Abstract]  
Securities

2. SECURITIES

The amortized cost of securities and their approximate fair value at September 30, 2016 and December 31, 2015 were as follows:





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

September 30, 2016



 

(in thousands)



 

 

 

 

 

 

 

 



 

Amortized

 

Unrealized

 

Fair



 

Cost

 

Gains

 

Losses

 

Value



 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

 15,097 

 

$

 226 

 

$

 -

 

$

 15,323 

States and political subdivisions

 

 

 36,212 

 

 

 949 

 

 

 (17)

 

 

 37,144 

Total debt securities

 

$

 51,309 

 

$

 1,175 

 

$

 (17)

 

$

 52,467 



 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

FNMA

 

$

 15,532 

 

$

 308 

 

$

 (16)

 

$

 15,824 

FHLMC

 

 

 3,840 

 

 

 71 

 

 

 (26)

 

 

 3,885 

GNMA

 

 

 2,652 

 

 

 36 

 

 

 (5)

 

 

 2,683 

CMO

 

 

 28,425 

 

 

 252 

 

 

 (151)

 

 

 28,526 

Total mortgage-backed securities

 

$

 50,449 

 

$

 667 

 

$

 (198)

 

$

 50,918 



 

 

 

 

 

 

 

 

 

 

 

 

Total securities designated as available for sale

 

$

 101,758 

 

$

 1,842 

 

$

 (215)

 

$

 103,385 



 

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities

 

 

 

 

 

 

 

 

 

 

 

 

States and political subdivisions

 

$

 1,474 

 

$

 16 

 

$

 (15)

 

$

 1,475 



 

 

 

 

 

 

 

 

 

 

 

 

Total securities designated as held to maturity

 

$

 1,474 

 

$

 16 

 

$

 (15)

 

$

 1,475 







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

December 31, 2015



 

(in thousands)



 

 

 

 

 

 

 

 



 

Amortized

 

Unrealized

 

Fair



 

Cost

 

Gains

 

Losses

 

Value



 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

 21,914 

 

$

 166 

 

$

 (234)

 

$

 21,846 

States and political subdivisions

 

 

 36,838 

 

 

 874 

 

 

 (29)

 

 

 37,683 

Total debt securities

 

$

 58,752 

 

$

 1,040 

 

$

 (263)

 

$

 59,529 



 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

FNMA

 

$

 10,314 

 

$

 160 

 

$

 (25)

 

$

 10,449 

FHLMC

 

 

 4,629 

 

 

 61 

 

 

 (56)

 

 

 4,634 

GNMA

 

 

 3,215 

 

 

 48 

 

 

 (27)

 

 

 3,236 

CMO

 

 

 19,464 

 

 

 66 

 

 

 (237)

 

 

 19,293 

Total mortgage-backed securities

 

$

 37,622 

 

$

 335 

 

$

 (345)

 

$

 37,612 



 

 

 

 

 

 

 

 

 

 

 

 

Total securities designated as available for sale

 

$

 96,374 

 

$

 1,375 

 

$

 (608)

 

$

 97,141 



 

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities

 

 

 

 

 

 

 

 

 

 

 

 

States and political subdivisions

 

$

 1,617 

 

$

 6 

 

$

 (39)

 

$

 1,584 



 

 

 

 

 

 

 

 

 

 

 

 

Total securities designated as held to maturity

 

$

 1,617 

 

$

 6 

 

$

 (39)

 

$

 1,584 





Available for sale securities with a total fair value of $88 million and $86 million at September 30, 2016 and December 31, 2015, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.



The Company uses the Federal Home Loan Bank of New York (“FHLBNY”) as its primary source of overnight funds and also has several long-term advances with FHLBNY.  The Company had $51 million and $10 million in borrowed funds at FHLBNY at September 30, 2016 and December 31, 2015, respectively.  The Company has pledged sufficient collateral in the form of residential and commercial real estate loans at FHLBNY that meets FHLB collateral requirements.  As a member of the Federal Home Loan Bank (“FHLB”) System, the Bank is required to hold stock in FHLBNY.  The Bank held $3 million and $1 million in FHLBNY stock at September 30, 2016 and December 31, 2015, respectively.  The Company regularly evaluates investments in FHLBNY for impairment, considering liquidity, operating performance, capital position, stock repurchase and dividend history.  As of September 30, 2016, the Bank’s investment in FHLBNY stock was not impaired.



The Bank, as a member of the Federal Reserve Bank (“FRB”) system, is currently required to purchase and hold shares of capital stock in the FRB in an amount equal to 6% of its capital and surplus.  The Bank’s investment in FRB capital stock totaled $1.5 million at each of September 30, 2016 and December 31, 2015.  Based on the current capital adequacy and liquidity position of the FRB, management believes there is no impairment in the Company’s investment at September 30, 2016 and the cost of the investment approximates fair value.



The scheduled maturities of debt and mortgage-backed securities at September 30, 2016 and December 31, 2015 are summarized below.  All maturity amounts are contractual maturities.  Actual maturities may differ from contractual maturities because certain issuers have the right to call or prepay obligations with or without call premiums.









 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

September 30, 2016

 

December 31, 2015



 

Amortized

 

Estimated

 

Amortized

 

Estimated



 

cost

 

fair value

 

cost

 

fair value



 

 

(in thousands)

 

 

(in thousands)



 

 

 

 

 

 

 

 

 

 

 

 

Debt securities available for sale:

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Due in one year or less

 

$

 5,201 

 

$

 5,218 

 

$

 4,082 

 

$

 4,142 

Due after one year through five years

 

 

 30,792 

 

 

 31,385 

 

 

 29,113 

 

 

 29,448 

Due after five years through ten years

 

 

 12,479 

 

 

 12,875 

 

 

 19,356 

 

 

 19,615 

Due after ten years

 

 

 2,837 

 

 

 2,989 

 

 

 6,201 

 

 

 6,324 



 

 

 51,309 

 

 

 52,467 

 

 

 58,752 

 

 

 59,529 



 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities

 

 

 

 

 

 

 

 

 

 

 

 

available for sale

 

 

 50,449 

 

 

 50,918 

 

 

 37,622 

 

 

 37,612 



 

 

 

 

 

 

 

 

 

 

 

 

Total available for sale securities

 

$

 101,758 

 

$

 103,385 

 

$

 96,374 

 

$

 97,141 



 

 

 

 

 

 

 

 

 

 

 

 

Debt securities held to maturity:

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

Due in one year or less

 

$

 219 

 

$

 219 

 

$

 309 

 

$

 308 

Due after one year through five years

 

 

 328 

 

 

 324 

 

 

 374 

 

 

 365 

Due after five years through ten years

 

 

 827 

 

 

 834 

 

 

 828 

 

 

 815 

Due after ten years

 

 

 100 

 

 

 98 

 

 

 106 

 

 

 96 



 

 

 1,474 

 

 

 1,475 

 

 

 1,617 

 

 

 1,584 



 

 

 

 

 

 

 

 

 

 

 

 

Total held to maturity securities

 

$

 1,474 

 

$

 1,475 

 

$

 1,617 

 

$

 1,584 





While the contractual maturities of our mortgage-backed securities generally exceed ten years, the Company expects the effective lives to be significantly shorter due to prepayments of the underlying loans and the nature of these securities.  The duration of the investment securities portfolio decreased from 4.0 years at December 31, 2015 to 3.9 years at September 30, 2016.



Information regarding unrealized losses within the Company’s available for sale securities at September 30, 2016 and December 31, 2015 is summarized below.  The securities are primarily U.S. government-guaranteed agency securities or municipal securities.  All unrealized losses are considered temporary and are related to market interest rate fluctuations.





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

September 30, 2016



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

Less than 12 months

 

 

12 months or longer

 

 

Total



 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized



 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses



 

 

(in thousands)

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

 

 

$

 -

 

$

 -

 

$

 -

 

$

 -

 

$

 -

States and political subdivisions

 

 

 2,391 

 

 

 (5)

 

 

 740 

 

 

 (12)

 

 

 3,131 

 

 

 (17)

Total debt securities

 

$

 2,391 

 

$

 (5)

 

$

 740 

 

$

 (12)

 

$

 3,131 

 

$

 (17)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FNMA

 

$

 1,634 

 

$

 (16)

 

$

 -

 

$

 -

 

$

 1,634 

 

$

 (16)

FHLMC

 

 

 281 

 

 

 (5)

 

 

 1,098 

 

 

 (21)

 

 

 1,379 

 

 

 (26)

GNMA

 

 

 -

 

 

 -

 

 

 338 

 

 

 (5)

 

 

 338 

 

 

 (5)

CMO

 

 

 12,660 

 

 

 (142)

 

 

 1,300 

 

 

 (9)

 

 

 13,960 

 

 

 (151)

Total mortgage-backed securities

 

$

 14,575 

 

$

 (163)

 

$

 2,736 

 

$

 (35)

 

$

 17,311 

 

$

 (198)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

States and political subdivisions

 

$

 390 

 

$

 (3)

 

$

 495 

 

$

 (12)

 

$

 885 

 

$

 (15)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total temporarily impaired

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

securities

 

$

 17,356 

 

$

 (171)

 

$

 3,971 

 

$

 (59)

 

$

 21,327 

 

$

 (230)













 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

December 31, 2015



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

Less than 12 months

 

 

12 months or longer

 

 

Total



 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized

 

 

Fair

 

 

Unrealized



 

 

Value

 

 

Losses

 

 

Value

 

 

Losses

 

 

Value

 

 

Losses



 

 

(in thousands)

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$

 4,531 

 

$

 (89)

 

$

 5,855 

 

$

 (145)

 

$

 10,386 

 

$

 (234)

States and political subdivisions

 

 

 3,133 

 

 

 (6)

 

 

 1,117 

 

 

 (23)

 

 

 4,250 

 

 

 (29)

Total debt securities

 

$

 7,664 

 

$

 (95)

 

$

 6,972 

 

$

 (168)

 

$

 14,636 

 

$

 (263)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FNMA

 

$

 3,856 

 

$

 (25)

 

$

 -

 

$

 -

 

$

 3,856 

 

$

 (25)

FHLMC

 

 

 -

 

 

 -

 

 

 1,234 

 

 

 (56)

 

 

 1,234 

 

 

 (56)

GNMA

 

 

 1,161 

 

 

 (21)

 

 

 471 

 

 

 (6)

 

 

 1,632 

 

 

 (27)

CMO

 

 

 8,996 

 

 

 (123)

 

 

 3,661 

 

 

 (114)

 

 

 12,657 

 

 

 (237)

Total mortgage-backed securities

 

$

 14,013 

 

$

 (169)

 

$

 5,366 

 

$

 (176)

 

$

 19,379 

 

$

 (345)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

States and political subdivisions

 

$

 626 

 

$

 (11)

 

$

 495 

 

$

 (28)

 

$

 1,121 

 

$

 (39)



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total temporarily impaired

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

securities

 

$

 22,303 

 

$

 (275)

 

$

 12,833 

 

$

 (372)

 

$

 35,136 

 

$

 (647)







Management has assessed the securities available for sale in an unrealized loss position at September 30, 2016 and December 31, 2015 and determined the decline in fair value below amortized cost to be temporary.  In making this determination, management considered the period of time the securities were in a loss position, the percentage decline in comparison to the securities’ amortized cost, and the financial condition of the issuer (primarily government or government-sponsored enterprises).  In addition, management does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost.  Management believes the decline in fair value is primarily related to market interest rate fluctuations and not to the credit deterioration of the individual issuers.



The Company has not recorded any other-than-temporary impairment (“OTTI”) charges as of September 30, 2016 and did not record any OTTI charges during 2015.  Nevertheless, it remains possible that there could be deterioration in the asset quality of the securities portfolio in the future.  The credit worthiness of the Company’s portfolio is largely reliant on the ability of U.S. government sponsored agencies such as FHLB, Federal National Mortgage Association (“FNMA”), Government National Mortgage Association (“GNMA”), and Federal Home Loan Mortgage Corporation (“FHLMC”), and municipalities throughout New York State to meet their obligations.  In addition, dysfunctional markets could materially alter the liquidity, interest rate, and pricing risk of the portfolio.  The relatively stable past performance is not a guarantee for similar performance of the Company’s securities portfolio in future periods.