NOTE 3. INVESTMENT SECURITIES

The following table provides information on the amortized cost and estimated fair values of investment securities.


			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Available-for-sale securities:
December 31, 2017
U.S. Government agencies	$	45,806	$	23	$	497	$	45,332
Mortgage-backed		152,198		157		1,390		150,965
Equity		666		-		8		658
Total	$	198,670	$	180	$	1,895	$	196,955

December 31, 2016
U.S. Government agencies	$	34,320	$	56	$	58	$	34,318
Mortgage-backed		130,490		263		1,809		128,944
Equity		652		-		12		640
Total	$	165,462	$	319	$	1,879	$	163,902

Held-to-maturity securities:
December 31, 2017
U.S. Government agencies	$	1,844	$	21	$	-	$	1,865
States and political subdivisions		1,403		47		-		1,450
Other Debt Securities (1)		3,000		76		-		3,076
Total	$	6,247	$	144	$	-	$	6,391

December 31, 2016
U.S. Government agencies	$	2,089	$	26	$	-	$	2,115
States and political subdivisions		1,615		76		-		1,691
Other Debt Securities (1)		3,000		-		-		3,000
Total	$	6,704	$	102	$	-	$	6,806

(1)

On December 15, 2016 the Company bought $3.0 million in subordinated notes from a local regional bank which it intends to hold to maturity of December 30, 2026.

The following table provides information about gross unrealized losses and fair value by length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2017.


	Less than				More than
	12 Months				12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
December 31, 2017
Available-for-sale securities:
U.S. Government agencies	$	37,550	$	453	$	5,956	$	44	$	43,506	$	497
Mortgage-backed		96,622		700		28,215		690		124,837		1,390
Equity securities		-		-		666		8		666		8
Total	$	134,172	$	1,153	$	34,837	$	742	$	169,009	$	1,895

	Less than				More than
	12 Months				12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
December 31, 2016
Available-for-sale securities:
U.S. Government agencies	$	11,926	$	58	$	-	$	104	$	11,926	$	162
Mortgage-backed		100,237		1,546		9,208		263		109,445		1,809
Equity securities		640		12		-		-		640		12
Total	$	112,803	$	1,616	$	9,208	$	367	$	122,011	$	1,983

Held-to-maturity securities:
U.S. Government agencies	$	2,115	$	78	$	-	$	-	$	2,115	$	78

All of the securities with unrealized losses in the portfolio have modest duration risk, low credit risk, and minimal losses when compared to total amortized cost. The unrealized losses on debt securities that exist are the result of market changes in interest rates since original purchase and are not related to credit concerns. Because the Company 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 bases, which may be at maturity for debt securities, the Company considers the unrealized losses to be temporary. There were seventy-two securities in an unrealized loss position at December 31, 2017.

The following table provides information on the amortized cost and estimated fair values of investment securities by maturity date at December 31, 2017.


	Available for sale				Held to maturity
	Amortized				Amortized
(Dollars in thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	11,002	$	10,969	$	-	$	-
Due after one year through five years		34,964		34,475		902		935
Due after five years through ten years		39,573		39,252		501		515
Due after ten years		112,465		111,601		4,844		4,941
		198,004		196,297		6,247		6,391
Equity securities		666		658		-		-
Total	$	198,670	$	196,955	$	6,247	$	6,391

The maturity dates for debt securities are determined using contractual maturity dates.

The following table sets forth the amortized cost and estimated fair values of securities which have been pledged as collateral for obligations to federal, state and local government agencies, and other purposes as required or permitted by law, or sold under agreements to repurchase. All pledged securities are in the available-for-sale investment portfolio.


	December 31, 2017				December 31, 2016
	Amortized				Amortized
(Dollars in thousands)	Cost		Fair Value		Cost		Fair Value
Pledged available-for-sale securities	$	131,035	$	129,880	$	140,042	$	138,875

There were no obligations of states or political subdivisions with carrying values, as to any issuer, exceeding 10% of stockholders’ equity at December 31, 2017 or 2016.

Proceeds from sales of investment securities were $0, $4.0 million, and $0 for the years ended December 31, 2017, 2016, and 2015, respectively. Gross gains from sales and calls of investment securities were $5 thousand, $30 thousand and $0 for the years ended December 31, 2017, 2016, and 2015, respectively. There were no gross losses in 2017, 2016 and 2015.