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, 2017
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	1,397	$	—	$	(6	)	$	1,391
US Agency mortgage-backed securities		88,508		1,023		(641	)		88,890
Taxable municipal		5,450		13		(176	)		5,287
Corporate bonds		33,881		196		(601	)		33,476
Total	$	129,236	$	1,232	$	(1,424	)	$	129,044

Investment securities held to maturity (HTM):


	March 31, 2017
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	10,784	$	186	$	(67	)	$	10,903
Taxable municipal		19,907		144		(341	)		19,710
Corporate bonds and other securities		6,046		17		(82	)		5,981
Total	$	36,737	$	347	$	(490	)	$	36,594

Investment securities available for sale (AFS):


	December 31, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency	$	400	$	—	$	(2	)	$	398
US Agency mortgage-backed securities		88,738		1,132		(686	)		89,184
Taxable municipal		3,793		3		(174	)		3,622
Corporate bonds		34,403		194		(724	)		33,873
Total	$	127,334	$	1,329	$	(1,586	)	$	127,077

Investment securities held to maturity (HTM):


	December 31, 2016
	Cost Basis		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Agency mortgage-backed securities	$	11,177	$	180	$	(79	)	$	11,278
Taxable municipal		13,441		70		(348	)		13,163
Corporate bonds and other securities		6,047		15		(83	)		5,979
Total	$	30,665	$	265	$	(510	)	$	30,420

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, 2017, 61.3% of the portfolio was rated “AAA” as compared to 79.1% at December 31, 2016. Approximately 10.7% of the portfolio was either rated below “A” or unrated at March 31, 2017 as compared to 5.7% at December 31, 2016.

The Company sold $5.7 million AFS securities in the first quarter of 2017 resulting in $27,000 of gross investment security gains and sold $4.2 million AFS securities in the first three months of 2016 resulting in $63,000 of gross investment security gains and $6,000 of gross investment security losses.

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 $111,529,000 at March 31, 2017 and $104,953,000 at December 31, 2016.

The following tables present information concerning investments with unrealized losses as of March 31, 2017 and December 31, 2016 (in thousands):

Total investment securities:


	March 31, 2017
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
US Agency	$	1,391	$	(6	)	$	—	$	—		$	1,391	$	(6	)
US Agency mortgage-backed securities		52,169		(645	)		1,478		(63	)		53,647		(708	)
Taxable municipal		14,830		(517	)		—		—			14,830		(517	)
Corporate bonds and other securities		17,979		(450	)		7,766		(233	)		25,745		(683	)
Total	$	86,369	$	(1,618	)	$	9,244	$	(296	)	$	95,613	$	(1,914	)

Total investment securities:


	December 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	$	398	$	(2	)	$	—	$	—		$	398	$	(2	)
US Agency mortgage-backed securities		49,918		(703	)		1,576		(62	)		51,494		(765	)
Taxable municipal		13,301		(522	)		—		—			13,301		(522	)
Corporate bonds and other securities		20,380		(570	)		6,762		(237	)		27,142		(807	)
Total	$	83,997	$	(1,797	)	$	8,338	$	(299	)	$	92,335	$	(2,096	)

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 111 positions that are considered temporarily impaired at March 31, 2017. 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, 2017 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, 2017 is 45.2 months and is higher than the duration at December 31, 2016 which was 41.2 months. The duration remains within our internal established guideline range of 24 to 60 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, 2017
	Available for sale				Held to maturity
	Cost Basis		Fair Value		Cost Basis		Fair Value
Within 1 year	$	3,000	$	2,993	$	—	$	—
After 1 year but within 5 years		8,881		8,843		3,400		3,349
After 5 years but within 10 years		44,213		44,313		12,105		12,069
After 10 years but within 15 years		32,673		32,399		13,578		13,431
Over 15 years		40,469		40,496		7,654		7,745
Total	$	129,236	$	129,044	$	36,737	$	36,594