2.	Investment Securities

Debt securities have been classified in the consolidated balance sheets according to management’s intent. Investment securities at

September 30, 2018

and

December 31, 2017

are summarized as follows:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

September 30, 2018
Securities available for sale:
Agency mortgage-backed securities	$	99,581	$	1	$	5,220	$	94,362
Agency CMO		32,486		-		744		31,742
Other debt securities:
Agency notes and bonds		69,460		-		1,504		67,956
Municipal obligations		59,969		323		1,139		59,153

Total securities available for sale	$	261,496	$	324	$	8,607	$	253,213

December 31, 2017
Securities available for sale:
Agency mortgage-backed securities	$	114,902	$	-	$	2,253	$	112,649
Agency CMO		15,660		1		338		15,323
Other debt securities:
Agency notes and bonds		70,013		-		985		69,028
Municipal obligations		73,303		1,274		405		74,172

Total securities available for sale	$	273,878	$	1,275	$	3,981	$	271,172

Securities held to maturity:
Agency mortgage-backed securities	$	1	$	-	$	-	$	1

Total securities held to maturity	$	1	$	-	$	-	$	1

Agency notes and bonds, agency mortgage-backed securities and agency collateralized mortgage obligations (“CMO”) include securities issued by the Government National Mortgage Association (“GNMA”), a U.S. government agency, and the Federal National Mortgage Association (“FNMA”), the Federal Home Loan Mortgage Corporation (“FHLMC”) and the Federal Home Loan Bank (“FHLB”), which are government-sponsored enterprises.

The amortized cost and fair value of debt securities as of

September 30, 2018,

by contractual maturity, are shown below. Expected maturities of mortgage-backed securities and CMO

may

differ from contractual maturities because the mortgages underlying the obligations

may

be prepaid without penalty.

	Securities Available for Sale
	Amortized Cost		Fair Value
(In thousands)

Due in one year or less	$	21,718	$	21,608
Due after one year through five years		58,618		57,178
Due after five years through ten years		31,003		30,385
Due after ten years		18,090		17,938
		129,429		127,109
Mortgage-backed securities and CMO		132,067		126,104

	$	261,496	$	253,213

Information pertaining to investment securities available for sale with gross unrealized losses at

September 30, 2018,

aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows.

	Number of Investment Positions		Fair Value		Gross Unrealized Losses
(Dollars in thousands)

Continuous loss position less than twelve months:
Agency mortgage-backed securities		6	$	3,034	$	86
Agency CMO		16		19,019		187
Agency notes and bonds		2		1,078		22
Muncipal obligations		37		17,808		323

Total less than twelve months		61		40,939		618

Continuous loss position more than twelve months:
Agency mortgage-backed securities		93		91,314		5,134
Agency CMO		22		11,613		557
Agency notes and bonds		21		66,878		1,482
Muncipal obligations		36		18,537		816

Total more than twelve months		172		188,342		7,989

Total securities available for sale		233	$	229,281	$	8,607

Information pertaining to investment securities available for sale with gross unrealized losses at

December 31, 2017,

aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows. At

December 31, 2017,

the Company did

not

have any securities held to maturity with an unrealized loss.

	Number of Investment Positions		Fair Value		Gross Unrealized Losses
(Dollars in thousands)

Continuous loss position less than twelve months:
Agency mortgage-backed securities		37	$	37,570	$	400
Agency CMO		6		3,036		38
Agency notes and bonds		4		11,119		69
Muncipal obligations		20		10,955		83

Total less than twelve months		67		62,680		590

Continuous loss position more than twelve months:
Agency mortgage-backed securities		60		74,960		1,853
Agency CMO		18		11,801		300
Agency notes and bonds		19		57,909		916
Muncipal obligations		29		14,667		322

Total more than twelve months		126		159,337		3,391

Total securities available for sale		193	$	222,017	$	3,981

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (

) the length of time and the extent to which the fair value has been less than cost, (

) the financial condition and near-term prospects of the issuer, and (

) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recover in fair value.

September 30, 2018,

the U.S. government agency debt securities, including agency notes and bonds, mortgage-backed securities and CMO, and municipal obligations in a loss position had depreciated approximately

3.6%

from the amortized cost basis. All of the U.S. government agency securities and municipal obligations are issued by U.S. government agencies, government-sponsored enterprises and municipal governments, or are secured by

first

mortgage loans and municipal project revenues. These unrealized losses related principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As the Company has the ability to hold the debt securities until maturity, or the foreseeable future if classified as available for sale,

declines are deemed to be other-than-temporary.

While management does

not

anticipate any credit-related impairment losses at

September 30, 2018,

additional deterioration in market and economic conditions

may

have an adverse impact on credit quality in the future.

During the

three

months ended

September 30, 2018,

the Company did

not

have any security sales. During the

nine

months ended

September 30, 2018,

the Company realized gross gains of

$218,000

and gross losses of

$307,000

on sales of available for sale municipal securities and gross losses of

$6,000

on sales of U.S. government agency mortgage-backed CMO’s. During the

three

months ended

September 30, 2017,

the Company realized gross losses on sales of available for sale municipal securities of

$7,000.

During the

nine

months ended

September 30, 2017,

the Company realized gross gains on sales of available for sale agency mortgage backed securities and CMO’s of

$58,000

and

$3,000,

respectively, and gross losses on sales of available for sale municipal securities of

$7,000.

Certain available for sale debt securities were pledged to secure public fund deposits at

September 30, 2018

and

December 31, 2017.

Equity Security Investment

September 2018,

the Company acquired

90,000

shares of common stock in another bank holding company, representing approximately

of the outstanding common stock of the entity, for a total investment of

$1.9

million. The equity investment is included in other assets on the consolidated balance sheet.