NOTE 2 – Investment Securities

The amortized costs and fair value of investment securities are as follows:


				September 30, 2017
	Amortized		Gross Unrealized		Fair
(dollars in thousands)	Cost		Gains	Losses	Value
Available for sale
US government agencies	$	8,754	14	58	8,710
SBA securities		4,357	-	18	4,339
State and political subdivisions		20,088	329	60	20,357
Mortgage-backed securities		45,381	15	362	45,034
Total investment securities available for sale	$	78,580	358	498	78,440

				December 31, 2016
	Amortized		Gross Unrealized		Fair
	Cost		Gains	Losses	Value
Available for sale
US government agencies	$	6,271	1	113	6,159
SBA securities		1,453	-	16	1,437
State and political subdivisions		20,625	141	292	20,474
Mortgage-backed securities		36,895	21	506	36,410
Total investment securities available for sale	$	65,244	163	927	64,480

During the first nine months of 2017, there were $915,000 of investment securities either sold or called, resulting in a gain on sale of $2,000. During the first nine months of 2016, approximately $33.5 million of investment securities were either sold or called, subsequently resulting in a gain on sale of $431,000.

Contractual maturities and yields on the Company’s investment securities at September 30, 2017 and December 31, 2016 are shown in the following table. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	September 30, 2017
	Less than one year				One to five years			Five to ten years			Over ten years			Total
(dollars in thousands)	Amount		Yield		Amount	Yield		Amount	Yield		Amount	Yield		Amount	Yield
Available for sale
US government agencies	$	997	1.15	%	1,517	2.04	%	6,196	2.39	%	-	-		8,710	2.19	%
SBA securities		-	-		-	-		-	-		4,339	2.48	%	4,339	2.48	%
State and political subdivisions		-	-		3,668	1.64	%	11,730	2.44	%	4,959	2.88	%	20,357	2.40	%
Mortgage-backed securities		790	1.30	%	-	-		12,005	1.80	%	32,239	2.04	%	45,034	1.97	%
Total	$	1,787	1.21	%	5,185	1.59	%	29,931	2.18	%	41,537	2.23	%	78,440	2.13	%

	December 31, 2016
	Less than one year				One to five years			Five to ten years			Over ten years			Total
	Amount		Yield		Amount	Yield		Amount	Yield		Amount	Yield		Amount	Yield
Available for sale
US government agencies	$	-	-		997	1.15	%	5,162	2.23	%	-	-		6,159	2.06	%
SBA securities		-	-		-	-		-	-		1,437	1.32	%	1,437	1.32	%
State and political subdivisions		-	-		2,271	1.73	%	12,287	2.35	%	5,916	2.77	%	20,474	2.40	%
Mortgage-backed securities		-	-		-	-		8,527	1.64	%	27,883	1.68	%	36,410	1.67	%
Total	$	-	-		3,268	1.55	%	25,976	2.10	%	35,236	1.85	%	64,480	1.93	%

The tables below summarize gross unrealized losses on investment securities and the fair market value of the related securities at September 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	September 30, 2017
	Less than 12 months					12 months or longer					Total
		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(dollars in thousands)	#	value		losses		#	value		losses		#	value		losses
Available for sale
US government agencies	6	$	5,250	$	40	1	$	740	$	18	7	$	5,990	$	58
SBA securities	1		2,937		12	1		1,402		6	2		4,339		18
State and political subdivisions	8		3,652		12	6		2,910		48	14		6,562		60
Mortgage-backed securities	25		29,392		230	8		9,839		132	33		39,231		362
Total	40	$	41,231	$	294	16	$	14,891	$	204	56	$	56,122	$	498

	December 31, 2016
	Less than 12 months					12 months or longer					Total
		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	#	value		losses		#	value		losses		#	value		losses
Available for sale
US government agencies	5	$	5,144	$	113	-	$	-	$	-	5	$	5,144	$	113
SBA securities	1		1,437		16	-		-		-	1		1,437		16
State and political subdivisions	32		13,936		292	-		-		-	32		13,936		292
Mortgage-backed securities	25		27,292		476	2		3,991		30	27		31,283		506
Total	63	$	47,809	$	897	2	$	3,991	$	30	65	$	51,800	$	927

At September 30, 2017, the Company had 40 individual investments with a fair market value of $41.2 million that were in an unrealized loss position for less than 12 months and 16 individual investments with a fair market value of $14.9 million that were in an unrealized loss position for 12 months or longer. The unrealized losses were primarily attributable to changes in interest rates, rather than deterioration in credit quality. The individual securities are each investment grade securities. The Company considers the length of time and extent to which the fair value of available-for-sale debt securities have been less than cost to conclude that such securities are not other-than-temporarily impaired. The Company also considers other factors such as the financial condition of the issuer, including credit ratings and specific events affecting the operations of the issuer, volatility of the security, underlying assets that collateralize the debt security, and other industry and macroeconomic conditions. As the Company has no intent to sell securities with unrealized losses and it is not more-likely-than-not that the Company will be required to sell these securities before recovery of amortized cost, the Company has concluded that these securities are not impaired on an other-than-temporary basis.

Other investments are comprised of the following and are recorded at cost which approximates fair value.


(dollars in thousands)	September 30, 2017		December 31, 2016
Federal Home Loan Bank stock	$	2,479	5,173
Investment in Trust Preferred securities		403	403
Other investments		182	166
Total other investments	$	3,064	5,742

The Company has evaluated the Federal Home Loan Bank (“FHLB”) stock for impairment and determined that the investment in the FHLB stock is not other than temporarily impaired as of September 30, 2017 and ultimate recoverability of the par value of this investment is probable. All of the FHLB stock is used to collateralize advances with the FHLB.

At September 30, 2017, $9.8 million of securities were pledged as collateral for repurchase agreements from brokers and no securities were pledged to secure client deposits. At December 31, 2016, $21.0 million of securities were pledged as collateral for repurchase agreements from brokers, and approximately $21.1 million of securities were pledged to secure client deposits.