Note 4. Investments

Available for Sale (AFS) Securities

The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at December 31, 2019 and 2018 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses.

The amortized cost and estimated fair value of investment securities available for sale as of December 31, 2019 and 2018 is as follows:



(Dollars in thousands)			Gross		Gross
	Amortized		unrealized		unrealized		Fair
December 31, 2019	cost		gains		losses		value
U.S. Government and Agency securities	$	8,418	$	30	$	(20)	$	8,428
Municipal securities		90,865		1,418		(997)		91,286
Trust preferred securities		4,097		—		(130)		3,967
Agency mortgage-backed securities		58,503		435		(234)		58,704
Private-label mortgage-backed securities		398		31		—		429
Asset-backed securities		24,918		6		(305)		24,619
Total	$	187,199	$	1,920	$	(1,686)	$	187,433



(Dollars in thousands)			Gross		Gross
	Amortized		unrealized		unrealized		Fair
December 31, 2018	cost		gains		losses		value
U.S. Government and Agency securities	$	9,120	$	21	$	(65)	$	9,076
Municipal securities		67,811		320		(484)		67,647
Trust preferred securities		4,074		—		(316)		3,758
Agency mortgage-backed securities		45,241		65		(648)		44,658
Private-label mortgage-backed securities		457		31		—		488
Asset-backed securities		5,869		—		(24)		5,845
Total	$	132,572	$	437	$	(1,537)	$	131,472

At December 31, 2019 and 2018, the fair value of investment securities pledged to secure public funds and trust deposits totaled $107.1 million and $84.6 million, respectively. The Bank has no investments in a single issuer that exceeds 10% of shareholders equity.

The amortized cost and estimated fair value of debt securities at December 31, 2019, by contractual maturity are shown below. Actual maturities may differ from contractual maturities because of prepayment or call options embedded in the securities. Mortgage-backed securities without defined maturity dates are reported on a separate line.



(Dollars in thousands)	Amortized cost		Fair value
Due in one year or less	$	16,599	$	16,660
Due after one year through five years		29,643		29,723
Due after five years through ten years		51,454		52,026
Due after ten years		30,602		29,891
		128,298		128,300
Mortgage-backed securities		58,901		59,133
Total	$	187,199	$	187,433

The composition of the net realized securities gains for the years ended December 31 is as follows:


(Dollars in thousands)	2019		2018
Proceeds	$	18,781	$	4,115

Gross gains realized		285		67
Gross losses realized		(29)		(11)
Net gains realized	$	256	$	56

Tax (provision) benefit on net gains (losses) realized	$	54	$	12

The 2019 and 2018 gains were generated by the sale of and calls on bonds.

Impairment:

The following table reflects the temporary impairment in the investment portfolio, aggregated by investment category, length of time that individual securities have been in a continuous unrealized loss position and the number of securities in each category as of December 31, 2019 and 2018. For securities with an unrealized loss, Management applies a systematic methodology in order to perform an assessment of the potential for other-than-temporary impairment. In the case of debt securities, investments considered for other-than-temporary impairment: (1) had a specified maturity or repricing date; (2) were generally expected to be redeemed at par, and (3) were expected to achieve a recovery in market value within a reasonable period of time. In addition, the Bank considers whether it intends to sell these securities or whether it will be forced to sell these securities before the earlier of amortized cost recovery or maturity. The impairment identified on debt securities and subject to assessment at December 31, 2019, was deemed to be temporary and required no further adjustments to the financial statements, unless otherwise noted.



	December 31, 2019
	Less than 12 months					12 months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses		Count	Value		Losses		Count	Value		Losses		Count

U.S. Government and Agency securities	$	2,559	$	(12)	6	$	1,335	$	(8)	7	$	3,894	$	(20)	13
Municipal securities		38,874		(966)	40		2,655		(31)	4		41,529		(997)	44
Trust preferred securities		—		—	—		3,967		(130)	5		3,967		(130)	5
Agency mortgage-backed securities		21,185		(185)	32		6,555		(49)	22		27,740		(234)	54
Asset-backed securities		17,644		(128)	19		5,669		(177)	9		23,313		(305)	28
Total temporarily impaired securities	$	80,262	$	(1,291)	97	$	20,181	$	(395)	47	$	100,443	$	(1,686)	144



	December 31, 2018
	Less than 12 months					12 months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses		Count	Value		Losses		Count	Value		Losses		Count

U.S. Government and Agency securities	$	2,071	$	(6)	2	$	5,175	$	(59)	14	$	7,246	$	(65)	16
Municipal securities		5,832		(12)	10		25,091		(472)	42		30,923		(484)	52
Trust preferred securities		2,008		(159)	3		1,750		(157)	2		3,758		(316)	5
Agency mortgage-backed securities		7,687		(46)	16		30,511		(602)	74		38,198		(648)	90
Asset-backed securities		5,826		(22)	6		19		(2)	2		5,845		(24)	8
Total temporarily impaired securities	$	23,424	$	(245)	37	$	62,546	$	(1,292)	134	$	85,970	$	(1,537)	171

The following table represents the cumulative credit losses on debt securities recognized in earnings as of December 31, 2019



(Dollars in thousands)	Twelve Months Ended
	2019		2018
Balance of cumulative credit-related OTTI at January 1	$	272	$	595
Additions for credit-related OTTI not previously recognized		—		—
Additional increases for credit-related OTTI previously recognized when there is
no intent to sell and no requirement to sell before recovery of amortized cost basis		—		—
Decreases for previously recognized credit-related OTTI because there was an intent to sell		—		(323)
Reduction for increases in cash flows expected to be collected		—		—
Balance of credit-related OTTI at December 31	$	272	$	272

Equity Securities at fair value

The Corporation owns one equity investment with a readily determinable fair value. At December 31, 2019, this investment was reported at fair value ($440 thousand) with changes in value reported through income.