Note 2. Securities

The amortized cost and fair value of securities available for sale, with unrealized gains and losses follows:

	March 31, 2018
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Obligations of U.S. Government corporations and agencies	$	53,313	$	26	$	(1,315	)	$	52,024
Obligations of states and political subdivisions		14,754		60		(208	)		14,606
Corporate bonds		2,362		313	–				2,675
Mutual funds		388	–			(10	)		378
	$	70,817	$	399	$	(1,533	)	$	69,683

	December 31, 2017
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Obligations of U.S. Government corporations and agencies	$	52,872	$	113	$	(608	)	$	52,377
Obligations of states and political subdivisions		15,124		191		(60	)		15,255
Corporate bonds		3,816		476		(153	)		4,139
Mutual funds		386	–			(4	)		382
	$	72,198	$	780	$	(825	)	$	72,153

The amortized cost and fair value of securities available for sale, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.

	March 31, 2018
(In thousands)	Amortized Cost		Fair Value
Due in one year or less	$	2,007	$	2,001
Due after one year through five years		4,358		4,259
Due after five years through ten years		24,239		23,712
Due after ten years		39,825		39,333
Mutual funds		388		378
	$	70,817	$	69,683

During the three months ended March 31, 2018, no securities were sold, proceeds from calls and principal repayments were $3.8 million and securities totaling $2.0 million were purchased. During the three months ended March 31, 2017, no securities were sold, proceeds from calls and principal repayments were $4.1 million and securities totaling $10.0 million were purchased. There were no impairment losses on securities during the three months ended March 31, 2018 and 2017, respectively.

The following table shows the Company’s securities with gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2018 and December 31, 2017, respectively.

(In thousands)	Less than 12 Months					12 Months or More					Total
March 31, 2018	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)
Obligations of U.S. Government corporations and agencies	$	39,016	$	(897	)	$	9,590	$	(418	)	$	48,606	$	(1,315	)
Obligations of states and political subdivisions		9,013		(208	)		-		-			9,013		(208	)
Corporate bonds		-		-			-		-			-		-
Mutual funds		378		(10	)		-		-			378		(10	)
Total temporary impaired securities	$	48,407	$	(1,115	)	$	9,590	$	(418	)	$	57,997	$	(1,533	)

(In thousands)	Less than 12 Months					12 Months or More					Total
December 31, 2017	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)
Obligations of U.S. Government corporations and agencies	$	32,512	$	(330	)	$	10,008	$	(278	)	$	42,520	$	(608	)
Obligations of states and political subdivisions		4,172		(60	)	–		–				4,172		(60	)
Corporate bonds	–		–				1,540		(153	)		1,540		(153	)
Mutual funds		382		(4	)	–		–				382		(4	)
Total temporary impaired securities	$	37,066	$	(394	)	$	11,548	$	(431	)	$	48,614	$	(825	)

At March 31, 2018 there were approximately 80 securities that were in a loss position due to market conditions, primarily interest rates, and not due to credit concerns.

The nature of securities which were temporarily impaired at March 31, 2018 included two corporate bonds with a cost basis net of other-than-temporary impairment (“OTTI”) totaling $2.4 million. The value of these corporate bonds is based on quoted market prices for similar assets. They are “Class B” or subordinated “mezzanine” tranche of pooled trust preferred securities. The trust preferred securities are collateralized by the interest and principal payments made on trust preferred capital offerings by a geographically diversified pool of approximately 55 different financial institutions per bond. They have an estimated maturity of 16 years. These bonds could have been called by the Company at par on the five year anniversary date of issuance, which has already passed for all the bonds. The bonds reprice every three months at a fixed rate index above the three-month London Interbank Offered Rate (“LIBOR”). These bonds have sufficient collateralization and cash flow projections to satisfy their valuation based on the cash flow as of March 31, 2018. These bonds are projected to repay the full outstanding interest and principal and are classified as performing corporate bond investments. During the three months ended March 31, 2018, one corporate bond went to auction and was settled at its face value of $2.0 million, resulting in a gain of $535,000. During the three months ended March 31, 2018 and 2017, $50,000 and $32,000 of interest income was recorded, respectively.

Additional information regarding each of the pooled trust preferred securities as of March 31, 2018 follows:

(Dollars in thousands)

Cost, net of OTTI		Fair Value ⁽¹⁾		Percent of Underlying Collateral Performing			Percent of Underlying Collateral in Deferral			Percent of Underlying Collateral in Default			Cumulative Amount of OTTI		Cumulative Other Comprehensive Income, net of tax
$	1,698	$	1,850		81.0	%		2.9	%		16.1	%	$	321	$	(101	)
	664		825		88.8	%		4.4	%		6.8	%		336		(106	)
$	2,362	$	2,675										$	657	$	(207	)

⁽¹⁾	Current Moody’s Ratings is B2.

The following roll forward reflects the amount related to credit losses recognized in earnings :

(In thousands)
Beginning balance as of December 31, 2017	$	1,201
Increases in cash flows expected to be collected that are recognized over the remaining life of the securities		(9	)
Reduction for security called during the period		(535	)
Ending balance as of March 31, 2018	$	657

The carrying value of securities pledged to secure deposits and for other purposes amounted to $51.8 million and $47.6 million at March 31, 2018 and December 31, 2017, respectively.