4.	INVESTMENT SECURITIES

Investment securities consisted of the following at

December

(in thousands):

	2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale
U.S. Treasuries and government agencies	$	3,000	$	--	$	(37	)	$	2,963
Municipal securities		92,057		1,013		(125	)		92,945
Residential mortgage-backed securities		96,453		338		(1,113	)		95,678
Corporate debt securities		5,000		220		--			5,220

Total available for sale	$	196,510	$	1,571	$	(1,275	)	$	196,806

Held to maturity
Municipal securities	$	42,775	$	388	$	(314	)	$	42,849

Total held to maturity	$	42,775	$	388	$	(314	)	$	42,849

	2016
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for sale
U.S. Treasuries and government agencies	$	5,657	$	5	$	(31	)	$	5,631
Municipal securities		88,276		343		(1,569	)		87,050
Residential mortgage-backed securities		96,870		348		(1,423	)		95,795

Total available for sale	$	190,803	$	696	$	(3,023	)	$	188,476

Held to maturity
Municipal securities	$	26,977	$	16	$	(1,903	)	$	25,090

Total held to maturity	$	26,977	$	16	$	(1,903	)	$	25,090

The mortgage-backed portfolios at

December 31,

201

and

2016

were composed entirely of residential mortgage-backed securities issued or guaranteed by GNMA, FNMA or FHLMC.

The following tables summarize the gross unrealized losses and fair value of the Company's investments classified as available for sale and held to maturity with unrealized losses that are

not

deemed to be other-than-temporarily impaired (“OTTI”), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at

December

(in thousands):

	2017
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses

U.S. Treasuries and government agencies	$	494	$	6	$	1,969	$	31	$	2,463	$	37
Municipal securities		14,335		55		20,633		384		34,968		439
Residential mortgage-backed securities		31,115		167		40,947		946		72,062		1,113

Total	$	45,944	$	228	$	63,549	$	1,361	$	109,493	$	1,589

	2016
	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses

U.S. Treasuries and government agencies	$	1,969	$	31	$	--	$	--	$	1,969	$	31
Municipal securities		73,194		3,472		--		--		73,194		3,472
Residential mortgage-backed securities		78,725		1,423		--		--		78,725		1,423

Total	$	153,888	$	4,926	$	--	$	--	$	153,888	$	4,926

On a quarterly basis, management conducts a formal review of securities for the presence of OTTI.

Management assesses whether an OTTI is present when the fair value of a security is less than its amortized cost basis at the balance sheet date. For such securities, OTTI is considered to have occurred if the Company intends to sell the security, if it is more likely than

not

the Company will be required to sell the security before recovery of its amortized cost basis or if the present values of expected cash flows is

not

sufficient to recover the entire amortized cost.

The unrealized losses are primarily a result of increases in market yields from the time of purchase.

In general, as market yields rise, the fair value of securities will decrease; as market yields fall, the fair value of securities will increase. 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. Additionally, the unrealized losses are also considered temporary because scheduled coupon payments have been made, it is anticipated that the entire principal balance will be collected as scheduled, and management neither intends to sell the securities nor is it more likely than

not

that the Company will be required to sell the securities before the recovery of the remaining amortized cost amount.

The Company has pledged investment securities with

fair values of approximately

$122.7

million at

December 31, 2017

and

$140.6

million at

December 31, 2016,

as collateral for certain deposits in excess of

$250,000

and for other purposes, including investment securities with fair values of approximately

$13.4

million at

December 31, 2017

and

$19.1

million at

December 31, 2016,

for securities sold under agreements to repurchase.

The following table sets forth the amount (dollars in thousands) of investment securities that contractually mature during each of the periods indicated and the weighted average yields for each range of maturities at

December 31,

201

Weighted average yields for municipal obligations have

not

been adjusted to a tax-equivalent basis. Expected maturities

may

differ from contractual maturities because issuers

may

have the right to call or prepay the obligation without prepayment penalties.

	December 31, 201 7
	Available for Sale							Held to Maturity
					Weighted							Weighted
	Amortized Cost		Fair Value		Average Rate			Amortized Cost		Fair Value		Average Rate

Within one year	$	4,371	$	4,372		2.04	%	$	--	$	--		--
Due from one year to five years		15,925		15,911		2.23	%		--		--		--
Due from five years to ten years		19,145		19,517		3.51	%		6,506		6,548		2.20	%
Due after ten years		60,616		61,328		2.91	%		36,269		36,301		2.80	%
		100,057		101,128		2.88	%		42,775		42,849		2.71	%
Residential mortgage-backed securities		96,453		95,678		2.41	%		--		--		--
Total	$	196,510	$	196,806		2.65	%	$	42,775	$	42,849		2.71	%

As of

December

31,

2017

and

2016,

investment securities with an amortized cost totaling approximately

$133.8

million and

$93.8

million, respectively, have call options held by the issuer, of which approximately

$24.9

million and

$27.4

million, respectively, are or were callable within

one

year.

Information regarding sales of the Company

’s investment securities available for sale for the years ended

December 31

is summarized below (in thousands):

	201 7		2016			2015

Sales proceeds	$	2,069	$	30,386		$	21,099

Gross realized gains	$	48	$	195		$	92
Gross realized losses		--		(176	)		(72	)
Net gains on sales of investment securities	$	48	$	19		$	20

December 31,

201

and

2016,

the Company included the following securities in other investments, at cost, in the accompanying consolidated balance sheets (in thousands):

	201 7		201 6


FHLB Stock	$	19,136	$	5,927
FRB Stock		7,610		7,501
Other investments		331		331
Total	$	27,077	$	13,759