6. Investment Securities

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

Investment securities available for sale (AFS):


	June 30, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	1,900	$	2	$	—		$	1,902
US Agency mortgage-backed securities		89,109		2,639		(25	)		91,723
Corporate bonds		26,600		343		(243	)		26,700
Total	$	117,609	$	2,984	$	(268	)	$	120,325

Investment securities held to maturity (HTM):


	June 30, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	12,248	$	520	$	—		$	12,768
Taxable municipal		7,131		268		—			7,399
Corporate bonds and other securities		6,049		48		(36	)		6,061
Total	$	25,428	$	836	$	(36	)	$	26,228

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 June 30, 2016, 79.3% of the portfolio was rated “AAA” as compared to 79.1% at December 31, 2015. Approximately 8.1% of the portfolio was either rated below “A” or unrated at June 30, 2016 as compared to 5.7% at December 31, 2015.

The Company sold $3.2 million AFS securities in the second quarter of 2016 resulting in $60,000 of gross investment security gains and sold $7.4 million AFS securities in the first half of 2016 resulting in $123,000 of gross investment security gains and $6,000 of gross investment security losses. The Company sold a $519,000 AFS security for both the second quarter and first six months of 2015 resulting in a $28,000 gross investment security gain.

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 $100,488,000 at June 30, 2016 and $87,096,000 at December 31, 2015.

The following tables present information concerning investments with unrealized losses as of June 30, 2016 and December 31, 2015 (in thousands):

Total investment securities:


	June 30, 2016
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
US Agency mortgage-backed securities	$	1,612	$	(4	)	$	1,131	$	(21	)	$	2,743	$	(25	)
Corporate bonds and other securities		6,445		(55	)		7,775		(224	)		14,220		(279	)
Total	$	8,057	$	(59	)	$	8,906	$	(245	)	$	16,963	$	(304	)

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 18 positions that are considered temporarily impaired at June 30, 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 June 30, 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 June 30, 2016 is 27.0 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:


	June 30, 2016
	Available for sale				Held to maturity
	Cost Basis		Fair Value		Cost Basis		Fair Value
Within 1 year	$	2,999	$	3,012	$	1,000	$	999
After 1 year but within 5 years		9,800		9,847		2,400		2,392
After 5 years but within 10 years		34,007		34,998		8,234		8,490
After 10 years but within 15 years		36,719		37,704		4,356		4,475
Over 15 years		34,084		34,764		9,438		9,872
Total	$	117,609	$	120,325	$	25,428	$	26,228