Edgar Filing: 1ST CONSTITUTION BANCORP

Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2018



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission file Number: 000-32891

1ST CONSTITUTION BANCORP

(Exact Name of Registrant as Specified in Its Charter)



New Jersey		22-3665653
(State of Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)



2650 Route 130, P.O. Box 634, Cranbury, NJ		08512
(Address of Principal Executive Offices)		(Zip Code)

(609) 655-4500

(Issuer’s Telephone Number, Including Area Code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large accelerated filer	o	Accelerated filer	ý
Non-accelerated filer	o	Smaller reporting company	o
(Do not check if a smaller reporting company)		Emerging growth company	o
If an emerging growth company, indicated by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No ý

As of May 1, 2018, there were 8,363,466 shares of the registrant’s common stock, no par value, outstanding.

1ST CONSTITUTION BANCORP

FORM 10-Q

INDEX



		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Consolidated Balance Sheets at March 31, 2018 and December 31, 2017 (unaudited)	1

	Consolidated Statements of Income for the Three Months Ended March 31, 2018 and March 31, 2017 (unaudited)	2

	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2018 and March 31, 2017 (unaudited)	3

	Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended March 31, 2018 and March 31, 2017 (unaudited)	4

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and March 31, 2017 (unaudited)	5

	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	51

Item 4.	Controls and Procedures	52

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	52

Item 1A.	Risk Factors	52

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 3.	Defaults Upon Senior Securities	53



Item 4.	Mine Safety Disclosures	53

Item 5.	Other Information	53

Item 6.	Exhibits	54

SIGNATURES		55

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

1^ST Constitution Bancorp

Consolidated Balance Sheets

(Dollars in thousands)

(Unaudited)



	March 31, 2018			December 31, 2017
Assets
Cash and due from banks	$	6,929		$	5,037
Interest-earning deposits	9,066			13,717
Total cash and cash equivalents	15,995			18,754
Investment securities:
Available for sale, at fair value	112,495			105,458
Held to maturity (fair value of $103,351 and $111,865 at March 31, 2018 and December 31, 2017, respectively)	102,756			110,267
Total investment securities	215,251			215,725

Loans held for sale	1,919			4,254
Loans	776,661			789,906
Less: allowance for loan losses	(8,297		)	(8,013		)
Net loans	768,364			781,893
Premises and equipment, net	10,591			10,705
Accrued interest receivable	3,202			3,478
Bank-owned life insurance	24,272			25,051
Goodwill and intangible assets	12,404			12,496
Other assets	8,412			6,918
Total assets	$	1,060,410		$	1,079,274
Liabilities and Shareholders' Equity
Liabilities
Deposits
Non-interest bearing	$	192,771		$	196,509
Interest bearing	698,315			725,497
Total deposits	891,086			922,006

Overnight borrowings	29,825			20,500
Redeemable subordinated debentures	18,557			18,557
Accrued interest payable	775			804
Accrued expenses and other liabilities	6,933			5,754
Total liabilities	947,176			967,621
Shareholders' Equity
Preferred stock, no par value; 5,000,000 shares authorized; none issued	—			—
Common stock, no par value; 30,000,000 shares authorized; 8,145,590 and 8,116,201 shares issued and 8,112,292 and 8,082,903 shares outstanding as of March 31, 2018 and December 31, 2017, respectively	73,192			72,935
Retained earnings	42,190			39,822
Treasury stock, 33,298 shares at March 31, 2018 and December 31, 2017	(368		)	(368		)
Accumulated other comprehensive loss	(1,780		)	(736		)
Total shareholders' equity	113,234			111,653
Total liabilities and shareholders' equity	$	1,060,410		$	1,079,274

The accompanying notes are an integral part of these consolidated financial statements.

1^ST Constitution Bancorp

Consolidated Statements of Income

(Dollars in thousands, except per share data)

(Unaudited)



	Three Months Ended March 31,
	2018		2017
Interest income
Loans, including fees	$	9,536	$	8,043
Securities:
Taxable	866		815
Tax-exempt	515		553
Federal funds sold and short-term investments	138		72
Total interest income	11,055		9,483
Interest expense
Deposits	1,219		1,043
Borrowings	7		127
Redeemable subordinated debentures	150		119
Total interest expense	1,376		1,289
Net interest income	9,679		8,194
Provision for loan losses	225		150
Net interest income after provision for loan losses	9,454		8,044
Non-interest income
Service charges on deposit accounts	150		154
Gain on sales of loans	1,149		1,589
Income on Bank-owned life insurance	114		130
Gain on sales of securities	6		106
Other income	466		434
Total non-interest income	1,885		2,413
Non-interest expense
Salaries and employee benefits	4,738		4,501
Occupancy expense	812		838
Data processing expenses	309		318
FDIC insurance expense	130		80
Merger-related expenses	164		—
Other operating expenses	1,492		1,919
Total non-interest expenses	7,645		7,656
Income before income taxes	3,694		2,801
Income taxes	841		852
Net income	$	2,853	$	1,949

Net income per common share
Basic	$	0.35	$	0.24
Diluted	$	0.34	$	0.23
Weighted average shares outstanding
Basic	8,111,490		8,026,037
Diluted	8,386,751		8,304,589

The accompanying notes are an integral part of these consolidated financial statements.

1^ST Constitution Bancorp

Consolidated Statements of Comprehensive Income

(Dollars in thousands)

(Unaudited)



	Three Months Ended March 31,
	2018			2017

Net income	$	2,853		$	1,949
Other comprehensive income (loss):
Unrealized holding (losses) gains on securities available for sale	(1,351		)	181
Tax effect	322			(69		)
Net of tax amount	(1,029		)	112

Reclassification adjustment for gains on securities available for sale ⁽¹⁾	(6		)	(82		)
Tax effect ⁽²⁾	2			33
Net of tax amount	(4		)	(49		)

Reclassification adjustment for actuarial gains for unfunded pension liability
Income ⁽³⁾	(15		)	(19		)
Tax effect ⁽²⁾	4			7
Net of tax amount	(11		)	(12		)

Total other comprehensive (loss) income	(1,044		)	51

Comprehensive income	$	1,809		$	2,000

⁽¹⁾Included in gain on sale of securities on the consolidated statements of income

⁽²⁾Included in income taxes on the consolidated statements of income

⁽³⁾ Included in salaries and employee benefits expense on the consolidated statements of income

The accompanying notes are an integral part of these consolidated financial statements.

1^ST Constitution Bancorp

Consolidated Statements of Changes in Shareholders’ Equity

For the Three Months Ended March 31, 2018 and 2017

(Dollars in thousands)

(Unaudited)



	Common Stock		Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance, January 1, 2017	$	71,695	$	34,074		$	(368	)	$	(600	)	$	104,801
Net income	—		1,949			—			—			1,949
Exercise of stock options (5,438 shares)	36		—			—			—			36
Share-based compensation	199		—			—			—			199
Cash dividends declared ($0.05 per share)	—		(401		)	—			—			(401		)
Other comprehensive income	—		—			—			51			51
Balance, March 31, 2017	$	71,930	$	35,622		$	(368	)	$	(549	)	$	106,635

Balance, January 1, 2018	$	72,935	$	39,822		$	(368	)	$	(736	)	$	111,653
Net income	—		2,853			—			—			2,853
Exercise of stock options (2,989 shares)	20		—			—			—			20
Share-based compensation	237		—			—			—			237
Cash dividends declared ($0.06 per share)	—		(485		)	—			—			(485		)
Other comprehensive loss	—		—			—			(1,044		)	(1,044		)
Balance, March 31, 2018	$	73,192	$	42,190		$	(368	)	$	(1,780	)	$	113,234

The accompanying notes are an integral part of these consolidated financial statements.

1^ST Constitution Bancorp

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)



	Three Months Ended March 31,
	2018			2017
Operating Activities:
Net income	$	2,853		$	1,949
Adjustments to reconcile net income to net cash provided by operating activities-
Provision for loan losses	225			150
Depreciation and amortization	332			350
Net amortization of premiums and discounts on securities	152			254
SBA discount accretion	(73		)	(52		)
Gains on sales and calls of securities available for sale	(6		)	(106		)
Gains on sales of loans held for sale	(1,149		)	(1,589		)
Originations of loans held for sale	(25,471		)	(26,933		)
Proceeds from sales of loans held for sale	28,955			39,991
Income on Bank–owned life insurance	(128		)	(130		)
Loss on cash surrender value on Bank-owned life insurance	14			—
Share-based compensation expense	237			199
Increase in deferred tax asset	(36		)	—
Decrease in accrued interest receivable	276			306
Increase in other assets	(991		)	(508		)
Decrease in accrued interest payable	(29		)	(34		)
Increase (decrease) in accrued expenses and other liabilities	1,164			(1,403		)
Net cash provided by operating activities	6,325			12,444
Investing Activities:
Purchases of securities:
Available for sale	(12,057		)	(9,186		)
Held to maturity	(1,200		)	(13,975		)
Proceeds from maturities and payments of securities:
Available for sale	3,584			5,867
Held to maturity	8,645			14,208
Proceeds from sales of securities:
Available for sale	—			1,449
Held to maturity	—			582
Proceeds from Bank-owned life insurance	893			—
Net (purchase) redemption of restricted stock	(195		)	2,837
Net decrease in loans	13,377			48,090
Capital expenditures	(71		)	(177		)
Net cash provided by investing activities	12,976			49,695
Financing Activities:
Exercise of stock options	20			36
Cash dividends paid to shareholders	(485		)	(401		)
Net (decrease) increase in deposits	(30,920		)	34,304
Increase (decrease) in overnight borrowings	9,325			(63,050		)
Net cash used in financing activities	(22,060		)	(29,111		)
(Decrease) increase in cash and cash equivalents	(2,759		)	33,028
Cash and Cash Equivalents at Beginning of Period	18,754			14,886
Cash and Cash Equivalents at End of Period	$	15,995		$	47,914
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for -
Interest	$	1,405		$	1,323
Income taxes	62			1,527
Transfer of loans to other real estate owned	—			265

The accompanying notes are an integral part of these consolidated financial statements.

1^ST Constitution Bancorp

Notes To Consolidated Financial Statements

March 31, 2018

(Unaudited)

(1) Summary of Significant Accounting Policies

The accompanying unaudited consolidated financial statements include 1^ST Constitution Bancorp (the “Company”), its wholly-owned subsidiary, 1^ST Constitution Bank (the “Bank”), and the Bank’s wholly-owned subsidiaries, 1^ST Constitution Investment Company of New Jersey, Inc., FCB Assets Holdings, Inc., 204 South Newman Street Corp. and 249 New York Avenue, LLC. 1^ST Constitution Capital Trust II, a subsidiary of the Company, is not included in the Company’s consolidated financial statements, as it is a variable interest entity and the Company is not the primary beneficiary. All significant intercompany accounts and transactions have been eliminated in consolidation and certain prior period amounts have been reclassified to conform to current year presentation. The accounting and reporting policies of the Company and its subsidiaries conform to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2017, filed with the SEC on March 19, 2018.

In the opinion of the Company, all adjustments (consisting only of normal recurring accruals) that are necessary for a fair presentation of the operating results for the interim periods have been included. The results of operations for periods of less than a year are not necessarily indicative of results for the full year.

The Company has evaluated events and transactions occurring subsequent to the balance sheet date of March 31, 2018 for items that should potentially be recognized or disclosed in these financial statements. The evaluation was conducted through the date these financial statements were issued.

Adoption of New Accounting Standards

ASU 2014-09 - Revenue from Contracts with Customers (Topic 606)

On January 1, 2018, the Company adopted Accounting Standards Update ("ASU") 2014-09 Revenue from Contracts with Customers and all subsequent amendments to the ASU (collectively, "Topic 606"), which (i) creates a single framework for recognizing revenue from contracts with customers that fall within its scope and (ii) revises when it is appropriate to recognize a gain or loss from the transfer of nonfinancial assets, such as other real estate owned ("OREO"). The majority of the Company's revenues come from interest income, other services to customers and other sources, including loans, leases and securities that are outside the scope of Topic 606. The Company's services that fall within the scope of Topic 606 are presented within non-interest income and are recognized as revenue as the Company satisfies its obligation to the customer. Services within the scope of Topic 606 include service charges on deposits, interchange income, other services and the sale of OREO. Refer to Note 5 - Revenue from Contracts with Customers - for further discussion on the Company's accounting policies for revenue sources within the scope of Topic 606.

The Company adopted Topic 606 using the modified retrospective method for reporting periods beginning after January 1, 2018. The Company did not have any contracts that were not completed as of January 1, 2018. The adoption of Topic 606 did not result in a change to the accounting for any of the in-scope revenue streams; therefore, no cumulative effect adjustment was recorded.

ASU Update 2017-07 - Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost

In March 2017, the FASB issued ASU 2017-07, "Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost," which requires that an employer disaggregate the service cost component from the other components of net benefit costs as follows: (1) service cost must be presented in the same line item(s) as other employee compensation costs. These costs are generally included within income from continuing operations but in some cases, may be eligible for capitalization if certain criteria are met; and (2) all other components of net benefit cost must be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. These generally include interest cost, actual return on plan assets, amortization of prior service cost included in accumulated other comprehensive income and gains or losses from changes in the value of the projected benefit obligation or plan assets.

For the Company, the provisions of this ASU are effective for fiscal years beginning after December 15, 2017, including interim periods within those years. The adoption of this guidance in 2018 did not have a material impact on the Company's consolidated financial statements.

ASU Update 2017-01 - Business Combinations (Topic 805): Clarifying the Definition of a Business

In January 2017, the FASB issued ASU 2017-01 "Business Combinations (Topic 805): Clarifying the Definition of a Business," which clarifies the definition of a business with the objective of adding guidance to assist companies and other reporting organizations with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendments in this ASU provide a more robust framework to use in determining when a set of assets and activities is a business. The current definition of a business is interpreted broadly and can be difficult to apply. Stakeholders indicated that analyzing transactions is inefficient and costly and the definition does not permit the use of reasonable judgment.

Under current implementation guidance, there are three elements of a business: inputs, processes and outputs. While an integrated set of assets and activities (collectively referred to as a "set") that is a business usually has outputs, outputs are not required to be present. Additionally, all the inputs and processes that a seller uses in operating a set are not required if market participants can acquire the set and continue to produce outputs, for example, by integrating the acquired set with their own inputs and processes.

The ASU introduces a "screen" to assist entities in determining when a set should not be considered a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets, the set is not considered a business. If the screen is not met, the ASU requires that to be considered a business, a set must include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output. Further, the ASU removes the evaluation of whether a market participant could replace missing elements (as required under current U.S. GAAP).

For the Company, the ASU is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. The amendments in this ASU should be applied prospectively on or after the effective date. No disclosures are required at transition. The adoption of this guidance in 2018 did not have a material impact on the Company's consolidated financial statements.

ASU Update 2016-15 - Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.

In August 2016, the FASB issued ASU 2016-15 "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments," which clarifies whether the following items should be categorized as operating, investing or financing in the statement of cash flows: (1) debt prepayment and extinguishment costs, (2) settlement of zero-coupon debt, (3) settlement of contingent consideration, (4) insurance proceeds, (5) settlement of corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) policies, (6) distributions from equity method investees, (7) beneficial interests in securitization transactions and (8) receipts and payments with aspects of more than one class of cash flows.

For the Company, the provisions of this ASU are effective for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. The Company currently classifies cash flows related to BOLI in accordance with the guidance, and the adoption of this guidance in 2018 did not have a material impact on its consolidated financial statements.

ASU Update 2016-01 - Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities

In January 2016, the FASB issued ASU 2016-01 "Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities." The guidance in the ASU, among other things, requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income; simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment; eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet; requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes; requires an entity to present separately in other comprehensive income, the portion of the change in fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements; and clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale securities.

For the Company, the guidance in this ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this guidance in 2018 did not have a material impact on the Company's consolidated financial statements.

(2) Net Income Per Common Share

Basic net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per common share is calculated by dividing net income by the weighted average number of common shares outstanding, as adjusted for the assumed exercise of dilutive common stock warrants and common stock options using the treasury stock method.

Awards of restricted shares are included in outstanding shares when granted. Unvested restricted shares are entitled to non-forfeitable dividends and participate in undistributed earnings with common shares. Awards of this nature are considered participating securities and basic and diluted earnings per share are computed under the two-class method.

Dilutive securities in the tables below exclude common stock options and warrants with exercise prices that exceed the average market price of the Company’s common stock during the periods presented. Inclusion of these common stock options and warrants would be anti-dilutive to the diluted earnings per common share calculation. For the quarters ended March 31, 2018 and 2017, 19,350 and 9,900 options, respectively, were anti-dilutive and were not included in the computation of diluted earnings per common share.

The following table illustrates the calculation of both basic and diluted earnings per share for the three months ended March 31, 2018 and 2017:



	March 31,
(Dollars in thousands, except per share data)	2018		2017

Net income	$	2,853	$	1,949

Basic weighted average shares outstanding	8,111,490		8,026,037
Plus: common stock equivalents	275,261		278,552
Diluted weighted average shares outstanding	8,386,751		8,304,589
Earnings per share:
Basic	$	0.35	$	0.24
Diluted	$	0.34	$	0.23

(3) Investment Securities

A summary of amortized cost and approximate fair value of investment securities available for sale follows:



	March 31, 2018
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. Government sponsored entities (“GSE”) and agencies	$	1,997	$	—	$	(55	)	$	1,942
Residential collateralized mortgage obligations - GSE	25,959		10		(726		)	25,243
Residential mortgage backed securities - GSE	13,238		67		(168		)	13,137
Obligations of state and political subdivisions	19,243		90		(392		)	18,941
Trust preferred debt securities - single issuer	2,482		—		(144		)	2,338
Corporate debt securities	27,892		10		(520		)	27,382
Other debt securities	23,611		8		(107		)	23,512
Total	$	114,422	$	185	$	(2,112	)	$	112,495



	December 31, 2017
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities and obligations of U.S. Government sponsored entities ("GSE") and agencies	$	1,997	$	—	$	(30	)	$	1,967
Residential collateralized mortgage obligations - GSE	27,688		18		(381		)	27,325
Residential mortgage backed securities - GSE	14,231		129		(72		)	14,288
Obligations of state and political subdivisions	19,575		227		(82		)	19,720
Trust preferred debt securities - single issuer	2,481		—		(132		)	2,349
Corporate debt securities	27,917		14		(248		)	27,683
Other debt securities	12,140		12		(26		)	12,126
Total	$	106,029	$	400	$	(971	)	$	105,458

A summary of amortized cost, carrying value and approximate fair value of investment securities held to maturity follows:



	March 31, 2018
(Dollars in thousands)	Amortized Cost		Other-Than- Temporary Impairment Recognized In Accumulated Other Comprehensive Loss			Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. treasury securities and obligations of U.S. government-sponsored entities ("GSE") and agencies	$	3,233	$	—		$	3,233	$	—	$	(89	)	$	3,144
Residential collateralized mortgage obligations - GSE	8,138		—			8,138		37		(173		)	8,002
Residential mortgage backed securities - GSE	33,359		—			33,359		126		(502		)	32,983
Obligations of state and political subdivisions	57,597		—			57,597		876		(147		)	58,326
Trust preferred debt securities - pooled	657		(501		)	156		467		—			623
Other debt securities	273		—			273		—		—			273
Total	$	103,257	$	(501	)	$	102,756	$	1,506	$	(911	)	$	103,351



	December 31, 2017
(Dollars in thousands)	Amortized Cost		Other-Than- Temporary Impairment Recognized In Accumulated Other Comprehensive Loss			Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. treasury securities and obligations of U.S. government-sponsored entities ("GSE") and agencies	$	3,234	$	—		$	3,234	$	—	$	(84	)	$	3,150
Residential collateralized mortgage obligations - GSE	8,701		—			8,701		94		(123		)	8,672
Residential mortgage backed securities - GSE	34,072		—			34,072		231		(127		)	34,176
Obligations of state and political subdivisions	63,797		—			63,797		1,224		(35		)	64,986
Trust preferred debt securities - pooled	657		(501		)	156		418		—			574
Other debt securities	307		—			307		—		—			307
Total	$	110,768	$	(501	)	$	110,267	$	1,967	$	(369	)	$	111,865

Restricted stock was included in other assets at March 31, 2018 and December 31, 2017 and totaled $1.7 million and $1.6 million, respectively. Restricted stock consisted of $1.7 million of Federal Home Loan Bank of New York stock and $65,000 of Atlantic Community Bankers Bank stock at March 31, 2018 and $1.5 million of Federal Home Loan Bank of New York stock and $65,000 of Atlantic Community Bankers Bank stock at December 31, 2017.

The following table sets forth certain information regarding the amortized cost, carrying value, fair value, weighted average yields and contractual maturities of the Company’s investment portfolio as of March 31, 2018. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	March 31, 2018
(Dollars in thousands)	Amortized Cost		Fair Value		Yield
Available for sale
Due in one year or less	$	1,189	$	1,188	1.76	%
Due after one year through five years	30,644		30,215		2.60
Due after five years through ten years	25,346		24,938		2.67
Due after ten years	57,243		56,154		2.62
Total	$	114,422	$	112,495	2.62	%

	Carrying Value		Fair Value		Yield
Held to maturity
Due in one year or less	$	25,444	$	25,506	2.11	%
Due after one year through five years	15,964		16,444		4.03
Due after five years through ten years	16,942		17,087		3.22
Due after ten years	44,406		44,314		2.96
Total	$	102,756	$	103,351	2.96	%

Gross unrealized losses on available for sale and held to maturity securities and the fair value of the related securities aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2018 and December 31, 2017 were as follows:



	March 31, 2018
		Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government sponsored entities (GSE) and agencies	2	$	1,942	$	(55	)	$	3,144	$	(89	)	$	5,086	$	(144	)
Residential collateralized mortgage obligations - GSE	20	19,881		(490		)	8,256		(409		)	$	28,137	$	(899	)
Residential mortgage backed securities - GSE	53	35,284		(560		)	2,939		(110		)	$	38,223	$	(670	)
Obligations of state and political subdivisions	68	21,414		(489		)	2,540		(50		)	$	23,954	$	(539	)
Trust preferred debt securities - single issuer	4	—		—			2,338		(144		)	$	2,338	$	(144	)
Corporate debt securities	8	18,784		(305		)	7,581		(215		)	$	26,365	$	(520	)
Other debt securities	8	20,916		(106		)	19		(1		)	$	20,935	$	(107	)
Total temporarily impaired securities	163	$	118,221	$	(2,005	)	$	26,817	$	(1,018	)	$	145,038	$	(3,023	)

December 31, 2017