NOTE 4. Securities

Amortized costs and fair values of securities available for sale at September 30, 2018 and December 31, 2017 were as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	September 30, 2018
	(in thousands)
Obligations of U.S. government corporations and agencies	$	22,184	$	9	$	(868	)	$	21,325
Mortgage-backed securities	76,110		—		(3,161		)	72,949
Obligations of states and political subdivisions	46,994		227		(1,095		)	46,126
	$	145,288	$	236	$	(5,124	)	$	140,400
	December 31, 2017
	(in thousands)
Obligations of U.S. government corporations and agencies	$	21,565	$	213	$	(258	)	$	21,520
Mortgage-backed securities	61,464		126		(346		)	61,244
Obligations of states and political subdivisions	49,199		789		(186		)	49,802
	$	132,228	$	1,128	$	(790	)	$	132,566

During the nine months ended September 30, 2018, the Company received proceeds of $5.4 million on sales of available for sale securities for gross gains of $62 thousand and gross losses of $45 thousand. During the nine months ended September 30, 2017, the Company sold $10.6 million of available for sale securities for gross gains of $94 thousand. There were $17 thousand in gross losses on the sale of available for sale securities during the nine months ended September 30, 2017.

The fair value and gross unrealized losses for securities available for sale, totaled by the length of time that individual securities have been in a continuous gross unrealized loss position, at September 30, 2018 and December 31, 2017 were as follows:



	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	September 30, 2018
	(in thousands)
Obligations of U.S. government corporations and agencies	$	4,682	$	185	$	10,616	$	683	$	15,298	$	868
Mortgage-backed securities	48,710		1,839		22,195		1,322		70,905		3,161
Obligations of states and political subdivisions	21,233		667		6,127		428		27,360		1,095
	$	74,625	$	2,691	$	38,938	$	2,433	$	113,563	$	5,124
	December 31, 2017
	(in thousands)
Obligations of U.S. government corporations and agencies	$	4,455	$	58	$	7,810	$	200	$	12,265	$	258
Mortgage-backed securities	11,885		59		17,931		287		29,816		346
Obligations of states and political subdivisions	4,071		27		4,692		159		8,763		186
	$	20,411	$	144	$	30,433	$	646	$	50,844	$	790

Gross unrealized losses on available for sale securities included one hundred twenty-seven (127) and fifty-four (54) debt securities at September 30, 2018 and December 31, 2017, respectively. The Company evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and the amount of an unrealized loss, the financial condition of the issuer, and the intent and ability of the Company to retain its investment in the issuer long enough to allow for an anticipated recovery in fair value. The fair value of a security reflects its liquidity as compared to similar instruments, current market rates on similar instruments, and the creditworthiness of the issuer. Absent any change in the liquidity of a security or the creditworthiness of the issuer, prices will decline as market rates rise and vice-versa. The primary cause of the unrealized losses at September 30, 2018 and December 31, 2017 was changes in market interest rates and not credit concerns of the issuers. Since the losses can be primarily attributed to changes in market interest rates and not expected cash flows or an issuer’s financial condition and management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, the unrealized losses were deemed to be temporary. The Company’s mortgage-backed securities are issued by U.S. government agencies, which guarantee payments to investors regardless of the status of the underlying mortgages. The Company monitors the financial condition of these issuers continuously and will record other-than-temporary impairment if the recovery of value is unlikely.

The Company’s securities are exposed to various risks, such as interest rate, market, currency and credit risks. Due to the level of risk associated with certain securities and the level of uncertainty related to changes in the value of securities, it is at least reasonably possible that changes in risks in the near term would materially affect securities reported in the financial statements.

Securities having a carrying value of $2.8 million at September 30, 2018 were pledged for various purposes required by law.

The composition of restricted investments at September 30, 2018 and December 31, 2017 was as follows:



	September 30, 2018		December 31, 2017
	(in thousands)
Federal Reserve Bank Stock	$	344	$	344
Federal Home Loan Bank Stock	682		623
Community Bankers’ Bank Stock	140		140
	$	1,166	$	1,107