2.SECURITIES

SECURITIES AVAILABLE FOR SALE

Period-end securities are as follows:

(in thousands)


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for Sale
September 30, 2018
U.S. treasury notes	$	4,036	$	—	$	(96)	$	3,940
U. S. government agencies		32,443		369		(891)		31,921
States and political subdivisions		71,790		416		(1,251)		70,955
Mortgage-backed - residential		132,966		8		(6,268)		126,706
Mortgage-backed - commercial		45,784		—		(1,012)		44,772
Equity securities		270		11		—		281
Total	$	287,289	$	804	$	(9,518)	$	278,575

December 31, 2017
U.S. treasury notes	$	4,046	$	—	$	(22)	$	4,024
U. S. government agencies		41,658		405		(358)		41,705
States and political subdivisions		88,485		1,783		(133)		90,135
Mortgage-backed - residential		132,664		43		(2,330)		130,377
Mortgage-backed - commercial		52,267		18		(689)		51,596
Equity securities		320		20		—		340
Total	$	319,440	$	2,269	$	(3,532)	$	318,177

The amortized cost and fair value of securities as of September 30, 2018 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity are shown separately. Further discussion concerning Fair Value Measurements can be found in Note 9.


	Amortized		Fair
	Cost		Value
Due in one year or less	$	—	$	—
Due after one year through five years		32,945		32,734
Due after five years through ten years		23,297		22,868
Due after ten years		52,027		51,214
		108,269		106,816
Mortgage-backed - residential		132,966		126,706
Mortgage-backed - commercial		45,784		44,772
Equity		270		281
Total	$	287,289	$	278,575

Proceeds from sales of securities during the first nine months of 2018 and 2017 were $16.7 million and $14.6 million. Gross gains of $138 thousand and $105 thousand and gross losses of $146 thousand and $2 thousand were realized on those sales, respectively. The tax provision related to these realized net gains or losses was $(2) thousand and $35 thousand, respectively.

Proceeds from sales of securities during the three months ended September 30, 2018 and September 30, 2017 were $2.0 million and $10.5 million. Gross gains of $72 thousand and $60 thousand and gross losses of $6 thousand and $0 were realized on those sales, respectively. The tax provision related to these realized net gains or losses was $(1) thousand and $20 thousand, respectively.

Securities with unrealized losses at September 30, 2018 and at December 31, 2017 not recognized in income are as follows:

September 30, 2018


	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
U.S. treasury notes	$	3,940	$	(96)	$	—	$	—	$	3,940	$	(96)
U.S. government agencies		17,730		(362)		14,191		(529)		31,921		(891)
States and municipals		62,866		(924)		8,089		(327)		70,955		(1,251)
Mortgage-backed - residential		52,283		(2,342)		74,423		(3,926)		126,706		(6,268)
Mortgage-backed - commercial		21,483		(72)		23,289		(940)		44,772		(1,012)
Total temporarily impaired	$	158,302	$	(3,796)	$	119,992	$	(5,722)	$	278,294	$	(9,518)

December 31, 2017


	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
U.S. treasury notes	$	4,024	$	(22)	$	—	$	—	$	4,024	$	(22)
U.S. government agencies		18,405		(130)		12,692		(228)		31,097		(358)
States and municipals		15,442		(97)		2,769		(36)		18,211		(133)
Mortgage-backed - residential		70,646		(817)		54,760		(1,513)		125,406		(2,330)
Mortgage-backed - commercial		39,394		(409)		7,371		(280)		46,765		(689)
Total temporarily impaired	$	147,911	$	(1,475)	$	77,592	$	(2,057)	$	225,503	$	(3,532)

The Company evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. In analyzing an issuer’s financial condition, we may consider many factors including, (1) whether the securities are issued by the federal government or its agencies, (2) whether downgrades by bond rating agencies have occurred, (3) the results of reviews of the issuer’s financial condition and near-term prospects, (4) the length of time and the extent to which the fair value has been less than cost, and (5) whether we intend to sell the investment security or more likely than not will be required to sell the investment security before its anticipated recovery.

Unrealized losses on securities included in the tables above have not been recognized into income because (1) all rated securities are investment grade and are of high credit quality, (2) management does not intend to sell and it is more likely than not that management would not be required to sell the securities prior to their anticipated recovery, (3) management believes the decline in fair value is largely due to changes in interest rates and (4) management believes the declines in fair value are temporary. The Company believes the fair value will recover as the securities approach maturity.