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Investment Securities | 6 Months Ended
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Jun. 30, 2020
Investment Securities |
Investment Securities | NOTE 3 Investment Securities The following tables present amortized cost, gross unrealized gain and losses, and fair value of the available-for-sale investment securities as of June 30, 2020 and December 31, 2019:
|  | June 30, 2020
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair
(dollars in thousands) |  | Cost |  | Gains |  | Losses |  | Value
U.S. Treasury and agencies |  | $ | 16,202 |  | $ | 66 |  | $ | (16) |  | $ | 16,252
Obligations of state and political agencies |  |  | 110,676 |  |  | 3,477 |  |  | — |  |  | 114,153
Mortgage backed securities |  |  |  |  |  |  |  |  |  |  |  |
Residential agency |  |  | 206,146 |  |  | 8,595 |  |  | (34) |  |  | 214,707
Commercial |  |  | 27,007 |  |  | 940 |  |  | (21) |  |  | 27,926
Asset backed securities |  |  | 127 |  |  | 8 |  |  | — |  |  | 135
Corporate bonds |  |  | 20,524 |  |  | 79 |  |  | (49) |  |  | 20,554
Total available-for-sale investment securities |  | $ | 380,682 |  | $ | 13,165 |  | $ | (120) |  | $ | 393,727
|  | December 31, 2019
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair
(dollars in thousands) |  | Cost |  | Gains |  | Losses |  | Value
U.S. Treasury and agencies |  | $ | 21,246 |  | $ | 9 |  | $ | (15) |  | $ | 21,240
Obligations of state and political agencies |  |  | 68,162 |  |  | 647 |  |  | (161) |  |  | 68,648
Mortgage backed securities |  |  |  |  |  |  |  |  |  |  |  |
Residential agency |  |  | 180,411 |  |  | 2,258 |  |  | (131) |  |  | 182,538
Commercial |  |  | 30,752 |  |  | 101 |  |  | (168) |  |  | 30,685
Asset backed securities |  |  | 139 |  |  | 5 |  |  | — |  |  | 144
Corporate bonds |  |  | 7,054 |  |  | 41 |  |  | — |  |  | 7,095
Total available-for-sale investment securities |  | $ | 307,764 |  | $ | 3,061 |  | $ | (475) |  | $ | 310,350
The following tables present unrealized losses and fair values for available-for-sale investment securities as of June 30, 2020 and December 31, 2019, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:
|  | June 30, 2020
|  | Less than 12 Months |  | Over 12 Months |  | Total
|  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair
(dollars in thousands) |  | Losses |  | Value |  | Losses |  | Value |  | Losses |  | Value
U.S. Treasury and agencies |  | $ | (8) |  | $ | 4,803 |  | $ | (8) |  | $ | 1,324 |  | $ | (16) |  | $ | 6,127
Obligations of state and political agencies |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Mortgage backed securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential agency |  |  | (34) |  |  | 11,903 |  |  | — |  |  | — |  |  | (34) |  |  | 11,903
Commercial |  |  | — |  |  | — |  |  | (21) |  |  | 6,640 |  |  | (21) |  |  | 6,640
Asset backed securities |  |  | — |  |  | — |  |  | — |  |  | 2 |  |  | — |  |  | 2
Corporate bonds |  |  | (49) |  |  | 9,451 |  |  | — |  |  | — |  |  | (49) |  |  | 9,451
Total available-for-sale investment securities |  | $ | (91) |  | $ | 26,157 |  | $ | (29) |  | $ | 7,966 |  | $ | (120) |  | $ | 34,123
|  | December 31, 2019
|  | Less than 12 Months |  | Over 12 Months |  | Total
|  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair
(dollars in thousands) |  | Losses |  | Value |  | Losses |  | Value |  | Losses |  | Value
U.S. Treasury and agencies |  | $ | (5) |  | $ | 1,740 |  | $ | (10) |  | $ | 9,990 |  | $ | (15) |  | $ | 11,730
Obligations of state and political agencies |  |  | (140) |  |  | 11,959 |  |  | (21) |  |  | 5,798 |  |  | (161) |  |  | 17,757
Mortgage backed securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential agency |  |  | (52) |  |  | 17,131 |  |  | (79) |  |  | 14,036 |  |  | (131) |  |  | 31,167
Commercial |  |  | (116) |  |  | 15,235 |  |  | (52) |  |  | 6,195 |  |  | (168) |  |  | 21,430
Asset backed securities |  |  | — |  |  | 2 |  |  | — |  |  | — |  |  | — |  |  | 2
Corporate bonds |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | —
Total available-for-sale investment securities |  | $ | (313) |  | $ | 46,067 |  | $ | (162) |  | $ | 36,019 |  | $ | (475) |  | $ | 82,086
For all of the above investment securities, the unrealized losses were generally due to changes in interest rates and unrealized losses were considered to be temporary as the fair value is expected to recover as the securities approach their maturity dates. The Company evaluates securities for other-than-temporary impairment, or OTTI, on a quarterly basis, at a minimum, and more frequently when economic or market concerns warrant such evaluation. In estimating OTTI losses, consideration is given to the severity and duration of the impairment; the financial condition and near-term prospects of the issuer, which for debt securities, considers external credit ratings and recent downgrades; and the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value. For the three and six months ended June 30, 2020 and 2019, the Company did not recognize OTTI losses on its investment securities. The following table presents amortized cost and estimated fair value of the available-for-sale investment securities as of June 30, 2020, by contractual maturity:
|  | Amortized |  | Fair
(dollars in thousands) |  | Cost |  | Value
Due within one year or less |  | $ | 18,105 |  | $ | 18,235
Due after one year through five years |  |  | 26,685 |  |  | 27,323
Due after five years through ten years |  |  | 114,717 |  |  | 118,244
Due after 10 years |  |  | 221,175 |  |  | 229,925
Total available-for-sale investment securities |  | $ | 380,682 |  | $ | 393,727
Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Investment securities with a total carrying value of $121.3 million and $136.2 million were pledged as of June 30, 2020 and December 31, 2019, respectively, to secure public deposits and for other purposes required or permitted by law. Proceeds from the sale or call of available‑for‑sale investment securities, for the three and six months ended June 30, 2020 and 2019, are displayed in the table below:
|  | Three months ended |  | Six months ended
|  | June 30, |  | June 30,
(dollars in thousands) |  | 2020 |  | 2019 |  | 2020 |  | 2019
Proceeds |  | $ | 35,505 |  | $ | 16,868 |  | $ | 39,505 |  | $ | 21,631
Realized gains |  |  | 1,294 |  |  | 179 |  |  | 1,294 |  |  | 298
Realized losses |  |  | — |  |  | (5) |  |  | — |  |  | (11)
As of June 30, 2020 and December 31, 2019, the carrying value of the Company’s Federal Reserve stock and Federal Home Loan Bank of Des Moines, or FHLB, stock was as follows:
|  | June 30, |  | December 31,
(dollars in thousands) |  | 2020 |  | 2019
Federal Reserve |  | $ | 2,675 |  | $ | 2,675
FHLB |  |  | 3,236 |  |  | 3,080
These securities can only be redeemed or sold at their par value and only to the respective issuing institution or to another member institution. The Company records these non-marketable equity securities as a component of other assets and periodically evaluates these securities for impairment. Management considers these non-marketable equity securities to be long-term investments. Accordingly, when evaluating these securities for impairment, management considers the ultimate recoverability of the par value rather than recognizing temporary declines in value. Visa Class B Restricted Shares In 2008, the Company received Visa Class B restricted shares as part of Visa’s initial public offering. These shares are transferable only under limited circumstances until they can be converted into the publicly traded Class A common shares. This conversion will not occur until the settlement of certain litigation which will be indemnified by Visa members, including the Company. Visa funded an escrow account from its initial public offering to settle these litigation claims. Should this escrow account be insufficient to cover these litigation claims, Visa is entitled to fund additional amounts to the escrow account by reducing each member bank’s Class B conversion ratio to unrestricted Class A shares. As of June 30, 2020, the conversion ratio was 1.6228. Based on the existing transfer restriction and the uncertainty of the outcome of the Visa litigation mentioned above, the 6,924 Class B shares (11,236 Class A equivalents) that the Company owned as of June 30, 2020 and December 31, 2019, are carried at a zero cost basis.

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