Securities

This table provides the major components of debt securities available for sale (“AFS”), held to maturity (“HTM”) and equity securities with readily determinable fair values ("equity securities") at amortized cost and estimated fair value at December 31, 2019 and December 31, 2018:



	December 31, 2019									December 31, 2018
(In thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Available for sale:
U.S. Government sponsored entities	$	5,751	$	4	$	(2	)	$	5,753	$	5,758	$	—	$	(116	)	$	5,642
State and political subdivisions	4,992		174		(12		)	5,154		4,614		4		(120		)	4,498
Residential mortgage-backed securities	27,698		372		(106		)	27,964		27,159		74		(620		)	26,613
Corporate and other securities	25,442		230		(268		)	25,404		10,231		123		(394		)	9,960
Total debt securities available for sale	$	63,883	$	780	$	(388	)	$	64,275	$	47,762	$	201	$	(1,250	)	$	46,713
Held to maturity:
U.S. Government sponsored entities	$	—	$	—	$	—		$	—	$	2,527	$	—	$	(94	)	$	2,433
State and political subdivisions	—		—		—			—		951		110		—			1,061
Residential mortgage-backed securities	—		—		—			—		3,312		17		(52		)	3,277
Commercial mortgage-backed securities	—		—		—			—		3,570		—		(138		)	3,432
Corporate and other securities	—		—		—			—		4,515		84		—			4,599
Total securities held to maturity	$	—	$	—	$	—		$	—	$	14,875	$	211	$	(284	)	$	14,802
Equity securities:
Total equity securities	$	2,218	$	142	$	(71	)	$	2,289	$	2,394	$	—	$	(250	)	$	2,144

This table provides the remaining contractual maturities and yields of securities within the investment portfolios. The carrying value of securities at December 31, 2019 is distributed by contractual maturity. Mortgage-backed securities and other securities, which may have principal prepayment provisions, are distributed based on contractual maturity. Expected maturities will differ materially from contractual maturities as a result of early prepayments and calls.



	Within one year				After one through five years				After five through ten years				After ten years				Total carrying value
(In thousands, except percentages)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Available for sale at fair value:
U.S. Government sponsored entities	$	1,752	1.75	%	$	4,001	1.83	%	$	—	—	%	$	—	—	%	$	5,753	1.81	%
State and political subdivisions	195		3.80		601		3.92		3,345		3.41		1,013		2.74		5,154		3.35
Residential mortgage-backed securities	3		4.79		375		2.33		2,475		2.47		25,111		2.75		27,964		2.72
Corporate and other securities	—		—		3,816		3.34		16,354		4.84		5,234		5.07		25,404		4.66
Total debt securities available for sale	$	1,950	1.96	%	$	8,793	2.65	%	$	22,174	4.36	%	$	31,358	3.13	%	$	64,275	3.46	%
Equity securities at fair value:
Total equity securities	$	—	—	%	$	—	—	%	$	—	—	%	$	2,289	2.21	%	$	2,289	2.21	%

The fair value of securities with unrealized losses by length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2019 and December 31, 2018 are as follows:



	December 31, 2019
		Less than 12 months					12 months and greater					Total
(In thousands, except number in a loss position)	Total number in a loss position	Estimated fair value		Unrealized loss			Estimated fair value		Unrealized loss			Estimated fair value		Unrealized loss
Available for sale:
U.S. Government sponsored entities	1	$	—	$	—		$	1,995	$	(2	)	$	1,995	$	(2	)
State and political subdivisions	1	—		—			1,013		(12		)	1,013		(12		)
Residential mortgage-backed securities	10	3,707		(27		)	4,996		(79		)	8,703		(106		)
Corporate and other securities	6	3,366		(13		)	3,735		(255		)	7,101		(268		)
Total temporarily impaired securities	18	$	7,073	$	(40	)	$	11,739	$	(348	)	$	18,812	$	(388	)



	December 31, 2018
		Less than 12 months					12 months and greater					Total
(In thousands, except number in a loss position)	Total number in a loss position	Estimated fair value		Unrealized loss			Estimated fair value		Unrealized loss			Estimated fair value		Unrealized loss
Available for sale:
U.S. Government sponsored entities	5	$	—	$	—		$	5,642	$	(116	)	$	5,642	$	(116	)
State and political subdivisions	4	—		—			3,129		(120		)	3,129		(120		)
Residential mortgage-backed securities	31	4,445		(23		)	20,480		(597		)	24,925		(620		)
Corporate and other securities	5	971		(30		)	5,787		(364		)	6,758		(394		)
Total temporarily impaired securities	45	$	5,416	$	(53	)	$	35,038	$	(1,197	)	$	40,454	$	(1,250	)
Held to maturity:
U.S. Government sponsored entities	2	$	—	$	—		$	2,434	$	(94	)	$	2,434	$	(94	)
Residential mortgage-backed securities	5	1,277		(15		)	821		(37		)	2,098		(52		)
Commercial mortgage-backed securities	2	—		—			3,432		(138		)	3,432		(138		)
Total temporarily impaired securities	9	$	1,277	$	(15	)	$	6,687	$	(269	)	$	7,964	$	(284	)

Unrealized Losses

The unrealized losses in each of the categories presented in the tables above are discussed in the paragraphs that follow:

U.S. government sponsored entities and state and political subdivision securities: The unrealized losses on investments in these types of securities were caused by the increase in interest rate spreads or the increase in interest rates at the long end of the Treasury curve. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than temporarily impaired as of December 31, 2019. There was no other-than-temporary impairment on these securities at December 31, 2018.

Residential and commercial mortgage-backed securities: The unrealized losses on investments in mortgage-backed securities were caused by increases in interest rate spreads or the increase in interest rates at the long end of the Treasury curve. The majority of contractual cash flows of these securities are guaranteed by the Federal National Mortgage Association (FNMA), the Government National Mortgage Association (GNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). It is expected that the securities would not be settled at a price significantly less than the par value of the investment. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired as of December 31, 2019 or December 31, 2018.

Corporate and other securities: Included in this category are corporate and other debt securities. The unrealized losses on corporate and other debt securities were due to widening credit spreads. The Company evaluated the prospects of the issuers and forecasted a recovery period; and as a result determined it did not consider these investments to be other-than-temporarily impaired as of December 31, 2019 or December 31, 2018. The contractual terms do not allow the securities to be settled at a price less than the par value. Because the Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the securities before recovery of its amortized cost basis, which may be at maturity, the Company did not consider these securities to be other-than-temporarily impaired as of December 31, 2019 or December 31, 2018.

Realized Gains and Losses

Gross realized gains and losses on securities for the past three years are detailed in the table below:



	For the years ended December 31,
(In thousands)	2019		2018			2017
Available for sale:
Realized gains	$	35	$	—		$	89
Realized losses	—		(4		)	(61		)
Total debt securities available for sale	35		(4		)	28
Held to maturity:
Realized gains	—		—			38
Realized losses	—		—			(4		)
Total securities held to maturity	—		—			34
Net gains (losses) on sales of securities	$	35	$	(4	)	$	62

The net realized gains are included in noninterest income in the Consolidated Statements of Income as net security gains. There were$35 thousand of gross realized gains in 2019, compared to no gross realized gains in 2018 and gross realized gains of $127 thousand in 2017. There were no gross realized losses in 2019, compared to gross realized losses of $4 thousand in 2018 and $65 thousand in 2017.


•	The net gain during 2019 is attributed to the sale of two commercial mortgage-backed securities with a total book value of $3.5 million and resulting gains of $64 thousand offset by the sale of two agency securities with a total book value of $2.1 million and resulting losses of $29 thousand.


•	The net loss during 2018 is attributed to the partial call of one tax-exempt municipal security with a book value of $174 thousand which resulted in a loss of $4 thousand.

•

The net gains during 2017 are attributed to the sale of three mortgage-backed securities with a total book value of $1.2 million and resulting gains of $71 thousand, the sale of one taxable security with a book value of $529 thousand and resulting gains of $38 thousand, the call of two asset-backed securities totaling $3.5 million in book value, resulting in gains of $3 thousand, and the call of four municipal tax-exempt securities with a total book value of $500 thousand and resulting gains of $15 thousand, partially offset by the sale of two mortgage-backed securities with book values of $1.6 million which resulted in a loss of $58 thousand, and the call of two corporate bonds with a book value of $3.0 million and resulting losses of $7 thousand.

Equity Securities

Included in this category are Community Reinvestment Act ("CRA") investments and the equity holdings of financial institutions. Equity securities are defined to include (a) preferred, common and other ownership interests in entities including partnerships, joint ventures and limited liability companies and (b) rights to acquire or dispose of ownership interest in entities at fixed or determinable prices.

The company follows ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10) - Recognition and Measurement of Financial Assets and Financial Liabilities," which aims to simplify accounting for financial instruments and to converge the guidance between U.S. GAAP and IFRS. ASU 2016-01 also includes guidance on how entities account for equity investments, present and disclose financial instruments, and measure the valuation allowance on deferred tax assets related to available-for-sale debt securities. The guidance in ASU 2016-01 requires an entity to disaggregate the net gains and losses on the equity investments recognized in the income statement during a reporting period into realized and unrealized gains and losses. As a result, equity securities are no longer carried at fair value through other comprehensive income ("OCI") or by applying the cost method to those equity securities that do not have readily determinable values. Equity securities are generally required to be measured at fair value with market value adjustments being reflected in net income. The Company adopted this standard as of January 1, 2018.

The following is a summary of the gains and losses recognized in net income on equity securities for the past two years:



	For the year ended December 31,
(In thousands)	2019		2018
Net gains (losses) recognized during the period on equity securities	$	321	$	(195	)
Net gains recognized on equity securities sold during the period	17		—
Net gains (losses) recognized during the reporting period on equity securities still held at the reporting date	$	338	$	(195	)

Pledged Securities

Securities with a carrying value of $4.0 million and $4.3 million at December 31, 2019 and December 31, 2018, respectively, were pledged to secure Government deposits, secure other borrowings and for other purposes required or permitted by law.