2. SECURITIES

The amortized cost of securities and their approximate fair value at June 30, 2019 and December 31, 2018 were as follows:



	June 30, 2019
	(in thousands)

	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value

Available for Sale:
Debt securities:
U.S. government agencies	$	35,144	$	363	$	(23)	$	35,484
States and political subdivisions		3,726		67		(8)		3,785
Total debt securities	$	38,870	$	430	$	(31)	$	39,269

Mortgage-backed securities:
FNMA	$	34,788	$	244	$	(142)	$	34,890
FHLMC		17,533		76		(62)		17,547
GNMA		1,538		15		(14)		1,539
SBA		13,063		149		(15)		13,197
CMO		29,209		198		(273)		29,134
Total mortgage-backed securities	$	96,131	$	682	$	(506)	$	96,307

Total securities designated as available for sale	$	135,001	$	1,112	$	(537)	$	135,576

Held to Maturity:
Debt securities
States and political subdivisions	$	1,862	$	25	$	(2)	$	1,885

Total securities designated as held to maturity	$	1,862	$	25	$	(2)	$	1,885



	December 31, 2018
	(in thousands)

	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value

Available for Sale:
Debt securities:
U.S. government agencies	$	34,597	$	2	$	(671)	$	33,928
States and political subdivisions		22,168		69		(64)		22,173
Total debt securities	$	56,765	$	71	$	(735)	$	56,101

Mortgage-backed securities:
FNMA	$	27,747	$	21	$	(729)	$	27,039
FHLMC		14,645		11		(431)		14,225
GNMA		1,660		6		(36)		1,630
SBA		9,432		-		(299)		9,133
CMO		25,025		6		(1,055)		23,976
Total mortgage-backed securities	$	78,509	$	44	$	(2,550)	$	76,003

Total securities designated as available for sale	$	135,274	$	115	$	(3,285)	$	132,104

Held to Maturity:
Debt securities
States and political subdivisions	$	1,685	$	11	$	(22)	$	1,674

Total securities designated as held to maturity	$	1,685	$	11	$	(22)	$	1,674

Available for sale securities with a total fair value of $109 million and $94 million at June 30, 2019 and December 31, 2018, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

The scheduled maturities of debt and mortgage-backed securities at June 30, 2019 and December 31, 2018 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.




	June 30, 2019				December 31, 2018
	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	$	2,000	$	1,989	$	5,074	$	5,075
Due after one year through five years		8,460		8,480		22,637		22,448
Due after five years through ten years		28,261		28,650		28,870		28,391
Due after ten years		149		150		184		187
		38,870		39,269		56,765		56,101

Mortgage-backed securities
available for sale		96,131		96,307		78,509		76,003

Total	$	135,001	$	135,576	$	135,274	$	132,104

Debt securities held to maturity:

Due in one year or less	$	733	$	735	$	693	$	693
Due after one year through five years		978		999		811		811
Due after five years through ten years		63		62		93		89
Due after ten years		88		89		88		81
Total	$	1,862	$	1,885	$	1,685	$	1,674

Contractual maturities of the Company’s mortgage-backed securities generally exceed ten years; however, the effective lives may be significantly shorter due to prepayments of the underlying loans and due to the nature of these securities.

Information regarding unrealized losses within the Company’s available for sale and held to maturity securities at June 30, 2019 and December 31, 2018 is summarized below. The securities are primarily U.S. government-guaranteed agency securities or municipal securities.



	June 30, 2019

		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	$	-	$	-	$	5,971	$	(23)	$	5,971	$	(23)
States and political subdivisions		-		-		181		(8)		181		(8)
Total debt securities	$	-	$	-	$	6,152	$	(31)	$	6,152	$	(31)

Mortgage-backed securities:
FNMA	$	2,001	$	(4)	$	14,080	$	(138)	$	16,081	$	(142)
FHLMC		-		-		7,273		(62)		7,273		(62)
GNMA		-		-		772		(14)		772		(14)
SBA		-		-		1,592		(15)		1,592		(15)
CMO		-		-		16,008		(273)		16,008		(273)
Total mortgage-backed securities	$	2,001	$	(4)	$	39,725	$	(502)	$	41,726	$	(506)

Held to Maturity:
Debt securities:
States and political subdivisions	$	-	$	-	$	507	$	(2)	$	507	$	(2)

Total temporarily impaired
securities	$	2,001	$	(4)	$	46,384	$	(535)	$	48,385	$	(539)


	December 31, 2018

		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	$	9,931	$	(49)	$	21,144	$	(622)	$	31,075	$	(671)
States and political subdivisions		5,218		(15)		6,893		(49)		12,111		(64)
Total debt securities	$	15,149	$	(64)	$	28,037	$	(671)	$	43,186	$	(735)

Mortgage-backed securities:
FNMA	$	2,637	$	(21)	$	23,667	$	(708)	$	26,304	$	(729)
FHLMC		1,895		(25)		11,899		(406)		13,794		(431)
GNMA		-		-		926		(36)		926		(36)
SBA		-		-		9,133		(299)		9,133		(299)
CMO		-		-		23,127		(1,055)		23,127		(1,055)
Total mortgage-backed securities	$	4,532	$	(46)	$	68,752	$	(2,504)	$	73,284	$	(2,550)

Held to Maturity:
Debt securities:
States and political subdivisions	$	156	$	-	$	722	$	(22)	$	878	$	(22)

Total temporarily impaired
securities	$	19,837	$	(110)	$	97,511	$	(3,197)	$	117,348	$	(3,307)

Management has assessed the securities available for sale in an unrealized loss position at June 30, 2019 and December 31, 2018 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 June 30, 2019 and did not record any OTTI charges during 2018. The credit worthiness of the Company’s securities portfolio is largely reliant on the ability of U.S. government sponsored agencies such as Federal Home Loan Bank (“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 stable past performance is not a guarantee for similar performance of the Company’s securities portfolio in future periods.