6. Investment Securities

The cost basis and fair values of investment securities are summarized as follows (in thousands):

Investment securities available for sale (AFS):


	March 31, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	1,900	$	2	$	(1	)	$	1,901
US Agency mortgage-backed securities		92,053		2,514		(59	)		94,508
Corporate bonds		19,506		101		(274	)		19,333
Total	$	113,459	$	2,617	$	(334	)	$	115,742

Investment securities held to maturity (HTM):


	March 31, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	12,672	$	408	$	—		$	13,080
Taxable municipal		5,586		175		(2	)		5,759
Corporate bonds and other securities		5,000		27		(66	)		4,961
Total	$	23,258	$	610	$	(68	)	$	23,800

Investment securities available for sale (AFS):


	December 31, 2015
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	2,900	$	—	$	(19	)	$	2,881
US Agency mortgage – backed securities		96,801		1,975		(442	)		98,334
Corporate bonds		18,541		18		(307	)		18,252
Total	$	118,242	$	1,993	$	(768	)	$	119,467

Investment securities held to maturity (HTM):


	December 31, 2015
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	10,827	$	247	$	(53	)	$	11,021
Taxable municipal		5,592		67		(65	)		5,594
Corporate bonds and other securities		5,000		3		(85	)		4,918
Total	$	21,419	$	317	$	(203	)	$	21,533

Maintaining investment quality is a primary objective of the Company’s investment policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s Investor’s Service or Standard & Poor’s rating of “A.” At March 31, 2016, 78.0% of the portfolio was rated “AAA” as compared to 79.1% at December 31, 2015. Approximately 5.8% of the portfolio was either rated below “A” or unrated at March 31, 2016 as compared to 5.7% at December 31, 2015.

The Company sold $4.2 million AFS securities in the first quarter of 2016 resulting in $63,000 of gross investment security gains and $6,000 of gross investment security losses. The Company had no investment security sales for the first three months of 2015.

The book value of securities, both available for sale and held to maturity, pledged to secure public and trust deposits, and certain Federal Home Loan Bank borrowings was $99,376,000 at March 31, 2016 and $87,096,000 at December 31, 2015.

The following tables present information concerning investments with unrealized losses as of March 31, 2016 and December 31, 2015 (in thousands):

Total investment securities:


	March 31, 2016
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
US Agency	$	—	$	—		$	399	$	(1	)	$	399	$	(1	)
Taxable municipal		832		(2	)		—		—			832		(2	)
US Agency mortgage-backed securities		1,795		(13	)		7,166		(46	)		8,961		(59	)
Corporate bonds and other securities		6,869		(130	)		6,789		(210	)		13,658		(340	)
Total	$	9,496	$	(145	)	$	14,354	$	(257	)	$	23,850	$	(402	)

Total investment securities:


	December 31, 2015
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
US Agency	$	1,486	$	(14	)	$	395	$	(5	)	$	1,881	$	(19	)
US Agency mortgage-backed securities		33,359		(245	)		9,088		(250	)		42,447		(495	)
Taxable municipal		3,617		(65	)		—		—			3,617		(65	)
Corporate bonds and other securities		8,884		(160	)		7,766		(232	)		16,650		(392	)
Total	$	47,346	$	(484	)	$	17,249	$	(487	)	$	64,595	$	(971	)

The unrealized losses are primarily a result of increases in market yields from the time of purchase. In general, as market yields rise, the value of securities will decrease; as market yields fall, the fair value of securities will increase. There are 24 positions that are considered temporarily impaired at March 31, 2016. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired. Management has also concluded that based on current information we expect to continue to receive scheduled interest payments as well as the entire principal balance. Furthermore, management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value.

Contractual maturities of securities at March 31, 2016 are shown below (in thousands). Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. The duration of the total investment securities portfolio at March 31, 2016 is 29.8 months and is lower than the duration at December 31, 2015 which was 34.2 months. The duration remains within our internal established guideline range of 24 to 42 months which we believe is appropriate to maintain proper levels of liquidity, interest rate risk, market valuation sensitivity and profitability.

Total investment securities:


	March 31, 2016
	Available for sale				Held to maturity
	Cost Basis		Fair Value		Cost Basis		Fair Value
Within 1 year	$	1,999	$	1,987	$	1,000	$	997
After 1 year but within 5 years		9,453		9,471		2,000		1,957
After 5 years but within 10 years		31,662		32,454		7,600		7,763
After 10 years but within 15 years		35,830		36,652		2,110		2,124
Over 15 years		34,515		35,178		10,548		10,959
Total	$	113,459	$	115,742	$	23,258	$	23,800