NOTE 2: Securities

The Corporation’s debt securities, all of which are classified as available for sale, are summarized as follows:


	September 30, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	17,011	$	—	$	(822)	$	16,189
Mortgage-backed securities		106,940		29		(3,239)		103,730
Obligations of states and political subdivisions		96,802		831		(438)		97,195
	$	220,753	$	860	$	(4,499)	$	217,114


	December 31, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	16,514	$	—	$	(341)	$	16,173
Mortgage-backed securities		97,677		142		(761)		97,058
Obligations of states and political subdivisions		103,977		2,022		(254)		105,745
	$	218,168	$	2,164	$	(1,356)	$	218,976

The amortized cost and estimated fair value of securities at September 30, 2018, by the earlier of contractual maturity or expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.


	September 30, 2018
	Amortized
(Dollars in thousands)	Cost		Fair Value
Due in one year or less	$	53,133	$	52,987
Due after one year through five years		150,514		147,076
Due after five years through ten years		11,769		11,711
Due after ten years		5,337		5,340
	$	220,753	$	217,114

The following table presents the gross realized gains and losses on and the proceeds from maturities, calls and paydowns of securities. There were no sales of securities during the periods presented.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2018		2017		2018		2017
Realized gains and losses from calls of securities:
Gross realized gains	$	5	$	2	$	10	$	14
Gross realized losses		—		—		(1)		(4)
Net realized gains	$	5	$	2	$	9	$	10
Proceeds from maturities, calls and paydowns of securities	$	12,865	$	12,472	$	35,267	$	33,960

The Corporation pledges securities primarily to secure public deposits and repurchase agreements. Securities with an aggregate amortized cost of $93.24 million and aggregate fair value of $91.90 million were pledged at September 30, 2018. Securities with an aggregate amortized cost of $118.70 million and an aggregate fair value of $119.26 million were pledged at December 31, 2017.

Securities in an unrealized loss position at September 30, 2018, by duration of the period of the unrealized loss, are shown below.


	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. government agencies and corporations	$	749	$	1	$	15,440	$	821	$	16,189	$	822
Mortgage-backed securities		53,707		1,290		44,876		1,949		98,583		3,239
Obligations of states and political subdivisions		27,814		182		12,944		256		40,758		438
Total temporarily impaired securities	$	82,270	$	1,473	$	73,260	$	3,026	$	155,530	$	4,499

There were 270 debt securities totaling $155.53 million considered temporarily impaired at September 30, 2018. The primary cause of the temporary impairments in the Corporation's investments in debt securities was fluctuations in interest rates. Interest rates have increased consistently across the United States Treasury security yield curve during 2018, thereby increasing unrealized losses on the Corporation’s debt securities. The Corporation’s mortgage-backed securities are entirely issued by either U.S. government agencies or U.S. government-sponsored enterprises. Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. government, that investors in such mortgage-backed securities will receive timely principal and interest payments. At September 30, 2018, approximately 97 percent of the Corporation's obligations of states and political subdivisions, as measured by market value, were rated “A” or better by Standard & Poor's (S&P) or Moody's Investors Service (Moody’s). Of those in a net unrealized loss position, approximately 99 percent were rated “A” or better by S&P or Moody’s, as measured by market value, at September 30, 2018. For the approximately one percent not rated “A” or better, as measured by market value at September 30, 2018, the Corporation considers these to meet regulatory credit quality standards, meaning that the securities have low risk of default by the obligor and the full and timely repayment of principal and interest is expected over the expected life of the investment. Because the Corporation intends to hold these investments in debt securities to maturity and it is more-likely-than-not that the Corporation will not be required to sell these investments before a recovery of unrealized losses, the Corporation does not consider these investments to be other-than-temporarily impaired at September 30, 2018 and no other-than-temporary impairment loss has been recognized in net income.

Securities in an unrealized loss position at December 31, 2017, by duration of the period of the unrealized loss, are shown below.


	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. government agencies and corporations	$	2,972	$	31	$	13,201	$	310	$	16,173	$	341
Mortgage-backed securities		57,116		341		22,545		420		79,661		761
Obligations of states and political subdivisions		18,644		117		9,363		137		28,007		254
Total temporarily impaired securities	$	78,732	$	489	$	45,109	$	867	$	123,841	$	1,356

The Corporation’s investment in restricted stock totaled $3.25 million at September 30, 2018 and consisted of Federal Home Loan Bank (FHLB) stock. Restricted stock is generally viewed as a long-term investment, which is carried at cost because there is no market for the stock other than the FHLBs. Therefore, when evaluating restricted stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing any temporary decline in value. The Corporation does not consider its investment in restricted stock to be other-than-temporarily impaired at September 30, 2018 and no impairment has been recognized.