4. INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses, and fair value of investment securities at December 31, 2018 and 2017 were as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2018	Cost		Gains		Losses			Value
Available-for-sale securities:
U.S. Agency securities	$	106,516	$	509	$	(640	)	$	106,385
U.S. Treasuries		33,813		-		(455	)		33,358
Obligations of state and
political subdivisions		52,074		150		(177	)		52,047
Corporate obligations		3,000		34		-			3,034
Mortgage-backed securities in
government sponsored entities		46,839		59		(712	)		46,186
Total available-for-sale securities	$	242,242	$	752	$	(1,984	)	$	241,010

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
2017	Cost		Gains		Losses			Value
Available-for-sale securities:
U.S. Agency securities	$	99,454	$	26	$	(593	)	$	98,887
U.S. Treasuries		28,782		-		(178	)		28,604
Obligations of state and
political subdivisions		78,409		820		(139	)		79,090
Corporate obligations		3,000		83		-			3,083
Mortgage-backed securities in
government sponsored entities		45,385		19		(377	)		45,027
Equity securities in financial institutions		92		-		(1	)		91
Total available-for-sale securities	$	255,122	$	948	$	(1,288	)	$	254,782

The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time, that the individual securities have been in a continuous unrealized loss position, at December 31, 2018 and 2017 (in thousands). As of December 31, 2018, the Company owned 110 securities each of whose fair value was less than its cost basis.

	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
2018	Value		Losses			Value		Losses			Value		Losses
U.S. agency securities	$	5,981	$	(5	)	$	52,673	$	(635	)	$	58,654	$	(640	)
U.S. Treasuries		4,948		(31	)		28,410		(424	)		33,358		(455	)
Obligations of states and
political subdivisions		8,979		(22	)		12,441		(155	)		21,420		(177	)
Mortgage-backed securities in
government sponsored entities		5,272		(18	)		32,570		(694	)		37,842		(712	)
Total securities	$	25,180	$	(76	)	$	126,094	$	(1,908	)	$	151,274	$	(1,984	)

2017
U.S. agency securities	$	74,952	$	(421	)	$	16,928	$	(172	)	$	91,880	$	(593	)
U.S. Treasuries		28,604		(178	)		-		-			28,604		(178	)
Obligations of states and
political subdivisions		14,885		(85	)		5,958		(54	)		20,843		(139	)
Mortgage-backed securities in
government sponsored entities		27,154		(190	)		13,822		(187	)		40,976		(377	)
Equity securities in financial institutions		91		(1	)		-		-			91		(1	)
Total securities	$	145,686	$	(875	)	$	36,708	$	(413	)	$	182,394	$	(1,288	)

As of December 31, 2018, the Company’s investment securities portfolio contained unrealized losses on agency securities issued or backed by the full faith and credit of the United States government or are generally viewed as having the implied guarantee of the U.S. government, U.S Treasury securities, obligations of states and political subdivisions and mortgage backed securities in government sponsored entities. For fixed maturity available for sale investments management considers whether the present value of cash flows expected to be collected are less than the security’s amortized cost basis (the difference defined as the credit loss), the magnitude and duration of the decline, the reasons underlying the decline and the Company’s intent to sell the security or whether it is more likely than not that the Company would be required to sell the security before its anticipated recovery in market value, to determine whether the loss in value is other than temporary. Once a decline in value is determined to be other than temporary, if the Company does not intend to sell the security, and it is more-likely-than-not that it will not be required to sell the security, before recovery of the security’s amortized cost basis, the charge to earnings is limited to the amount of credit loss. Any remaining difference between fair value and amortized cost (the difference defined as the non-credit portion) is recognized in other comprehensive income, net of applicable taxes. Otherwise, the entire difference between fair value and amortized cost is charged to earnings. As of December 31, 2018 and 2017, the Company had concluded that any impairment of its investment securities portfolio outlined in the above table is not other than temporary and is the result of interest rate changes, sector credit rating changes, or company-specific rating changes that are not expected to result in the non-collection of principal and interest during the period.

Proceeds from sales of securities available-for-sale during 2018, 2017 and 2016 were $27,149,000, $58,177,000, and $22,372,000, respectively. The gross gains realized during 2018 consisted of $160,000 from the sale of fourteen municipal securities. The gross losses realized during 2018 consisted of $179,000 from the sale of seven agency securities. The gross gains realized during 2017 consisted of $23,000, $20,000, $13,000 and $1,149,000 from the sales of ten agency securities, one mortgage backed security, thirteen interest bearing time deposits with other banks and five equity security positions. The gross losses realized during 2017 consisted of $170,000 from the sale of fourteen agency securities. The gross gains realized during 2016 consisted of $72,000, $27,000, $80,000 and $133,000 from the sales of four agency securities, two US treasury notes, four municipal securities and portions of three equity security positions, respectively. The gross losses realized during 2016 consisted of $22,000 and $35,000 from the sales of four agency securities and six corporate securities. Gross gains and gross losses were realized as follows on available for sale securities (in thousands):

	2018			2017			2016
Gross gains	$	160		$	1,205		$	312
Gross losses		(179	)		(170	)		(57	)
Net (losses) gains	$	(19	)	$	1,035		$	255

The Company’s portfolio of equity securities experienced no net gain or loss during the year.

Investment securities with an approximate carrying value of $221,191,000 and $243,382,000 at December 31, 2018 and 2017, respectively, were pledged to secure public funds and certain other deposits as provided by law and certain borrowing arrangements of the Company.

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The amortized cost and fair value of debt securities at December 31, 2018, by contractual maturity are shown below (in thousands). Municipal securities that have been refunded and will therefore pay-off on the call date are reflected in the table below utilizing the call date as the date of repayment as payment is guaranteed on that day:

	Amortized
	Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	23,212	$	23,138
Due after one year through five years		111,439		110,666
Due after five years through ten years		55,904		55,838
Due after ten years		51,687		51,368
Total	$	242,242	$	241,010