2. Investment Securities

The amortized cost, fair values, and unrealized gains and losses of the securities available-for-sale are as follows

(in thousands):

	Amortized		Gross Unrealized				Fair/Book
March 31, 2018	Cost		Gains		Losses		Value
Government Agency & Government-Sponsored Entities	$	3,068	$	27	$	-	$	3,095
US Treasury Notes		144,147		3		741		143,409
US Govt SBA		27,786		12		261		27,537
Mortgage Backed Securities⁽¹⁾		324,251		393		5,881		318,763
Other		3,010		-		-		3,010
Total	$	502,262	$	435	$	6,883	$	495,814

	Amortized		Gross Unrealized				Fair/Book
December 31, 2017	Cost		Gains		Losses		Value
Government Agency & Government-Sponsored Entities	$	3,080	$	48	$	-	$	3,128
US Treasury Notes		144,606		-		442		144,164
US Govt SBA		29,559		29		208		29,380
Mortgage Backed Securities⁽¹⁾		302,502		939		1,527		301,914
Other		3,010		-		-		3,010
Total	$	482,757	$	1,016	$	2,177	$	481,596

	Amortized		Gross Unrealized				Fair/Book
March 31, 2017	Cost		Gains		Losses		Value
Government Agency & Government-Sponsored Entities	$	3,115	$	102	$	-	$	3,217
US Treasury Notes		104,717		2		300		104,419
US Govt SBA		34,947		34		247		34,734
Mortgage Backed Securities⁽¹⁾		309,187		1,820		1,545		309,462
Other		1,010		-		-		1,010
Total	$	452,976	$	1,958	$	2,092	$	452,842

⁽¹⁾All Mortgage Backed Securities consist of securities collateralized by residential real estate and were issued by an agency or government sponsored entity of the U.S. government.

The book values, estimated fair values and unrealized gains and losses of investments classified as held-to-maturity are as follows (in thousands):

	Book		Gross Unrealized				Fair
March 31, 2018	Value		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	53,527	$	274	$	56	$	53,745
Total	$	53,527	$	274	$	56	$	53,745

	Book		Gross Unrealized				Fair
December 31, 2017	Value		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	54,460	$	776	$	-	$	55,236
Total	$	54,460	$	776	$	-	$	55,236

	Book		Gross Unrealized				Fair
March 31, 2017	Value		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	57,281	$	414	$	22	$	57,673
Total	$	57,281	$	414	$	22	$	57,673

Fair values are based on quoted market prices or dealer quotes. If a quoted market price or dealer quote is not available, fair value is estimated using quoted market prices for similar securities.

The amortized cost and estimated fair values of investment securities at March 31, 2018 by contractual maturity are shown in the following table (in thousands):

	Available-for-Sale				Held-to-Maturity
March 31, 2018	Amortized Cost		Fair/Book Value		Book Value		Fair Value
Within one year	$	123,199	$	122,897	$	2,907	$	2,915
After one year through five years		14,798		14,762		6,711		6,714
After five years through ten years		17,877		17,482		17,707		17,795
After ten years		22,137		21,910		26,202		26,321
		178,011		177,051		53,527		53,745

Investment securities not due at a single maturity date:
Mortgage-backed securities		324,251		318,763		-		-

Total	$	502,262	$	495,814	$	53,527	$	53,745

Expected maturities of mortgage-backed securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The following tables show those investments with gross unrealized losses and their market value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at the dates indicated (in thousands):

	Less Than 12 Months				12 Months or More				Total
March 31, 2018	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss

Securities Available-for-Sale
US Treasury Notes	$	23,551	$	436	$	59,866	$	305	$	83,417	$	741
US Govt SBA		10,848		82		11,737		179		22,585		261
Mortgage Backed Securities		259,314		4,606		41,230		1,275		300,544		5,881
Total	$	293,713	$	5,124	$	112,833	$	1,759	$	406,546	$	6,883

Securities Held-to-Maturity
Obligations of States and Political Subdivisions	$	7,654	$	56	$	-	$	-	$	7,654	$	56
Total	$	7,654	$	56	$	-	$	-	$	7,654	$	56

	Less Than 12 Months				12 Months or More				Total
December 31, 2017	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss

Securities Available-for-Sale
US Treasury Notes	$	94,281	$	144	$	49,883	$	298	$	144,164	$	442
US Govt SBA		8,379		51		12,900		157		21,279		208
Mortgage Backed Securities		126,863		932		43,208		595		170,071		1,527
Total	$	229,523	$	1,127	$	105,991	$	1,050	$	335,514	$	2,177

There were no HTM investments with gross unrealized losses at December 31, 2017

	Less Than 12 Months				12 Months or More				Total
March 31, 2017	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss

Securities Available-for-Sale
US Treasury Notes	$	69,433	$	300	$	-	$	-	$	69,433	$	300
US Govt SBA		26,412		247		-		-		26,412		247
Mortgage Backed Securities		168,546		1,545		-		-		168,546		1,545
Total	$	264,391	$	2,092	$	-	$	-	$	264,391	$	2,092

Securities Held-to-Maturity
Obligations of States and Political Subdivisions	$	4,278	$	22	$	-	$	-	$	4,278	$	22
Total	$	4,278	$	22	$	-	$	-	$	4,278	$	22

As of March 31, 2018, the Company held 491 investment securities of which 164 were in an unrealized loss position for less than twelve months. 95 securities were in an unrealized position for twelve months or more. Management periodically evaluates each investment security for other-than-temporary impairment relying primarily on industry analyst reports and observations of market conditions and interest rate fluctuations. Management believes it will be able to collect all amounts due according to the contractual terms of the underlying investment securities.

Securities of Government Agency and Government Sponsored Entities – At March 31, 2018, no securities of government agency and government sponsored entities were in an unrealized loss position for less than 12 months. No securities were in an unrealized loss position for 12 months or more. The unrealized losses on the Company's investments in securities of government agency and government sponsored entities were $0 at March 31, 2018, December 31, 2017 and at March 31, 2017.

U.S. Treasury Notes – At March 31, 2018, four U.S. Treasury Note security investments were in an unrealized loss position for less than 12 months and four were in an unrealized loss position for 12 months or more. The unrealized losses on the Company's investment in U.S. Treasury Notes were $741,000 at March 31, 2018 and $442,000 at December 31, 2017, and $300,000 at March 31, 2017. The unrealized losses were caused by interest rate fluctuations. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the securities and it is more likely than not that the Company will not have to sell the securities before recovery of their cost basis, the Company did not consider these investments to be other-than-temporarily impaired at March 31, 2018, December 31, 2017, and March 31, 2017.

U.S. Government SBA – At March 31, 2018, 66 U.S. Government SBA security investments were in an unrealized loss position for less than 12 months and 66 were in an unrealized loss position for 12 months or more. The unrealized losses on the Company's investment in U.S. Government SBA securities were $261,000 at March 31, 2018 and $208,000 at December 31, 2017, and $247,000 at March 31, 2017. The unrealized losses were caused by interest rate fluctuations. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the securities and it is more likely than not that the Company will not have to sell the securities before recovery of their cost basis, the Company did not consider these investments to be other-than-temporarily impaired at March 31, 2018, December 31, 2017, and March 31, 2017.

Mortgage Backed Securities – At March 31, 2018, 75 mortgage backed security investments were in an unrealized loss position for less than 12 months and 25 were in an unrealized loss position for 12 months or more. The unrealized losses on the Company's investment in mortgage backed securities were $5.9 million, $1.5 million, and $1.5 million at March 31, 2018, December 31, 2017, and March 31, 2017, respectively. The unrealized losses on the Company’s investment in mortgage backed securities were caused by interest rate fluctuations. The contractual cash flows of these investments are guaranteed by an agency or government sponsored entity of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company's investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the securities and it is more likely than not that the Company will not have to sell the securities before recovery of their cost basis, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2018, December 31, 2017, and March 31, 2017.

Obligations of States and Political Subdivisions - At March 31, 2018, 19 obligations of states and political subdivisions were in an unrealized loss position for less than 12 months. None were in an unrealized loss position for 12 months or more. As of March 31, 2018, over ninety-eight percent of the Company’s bank-qualified municipal bond portfolio is rated at either the issue or issuer level, and all of these ratings are “investment grade.” The Company monitors the status of the two percent of the portfolio that is not rated and at the current time does not believe any of them to be exhibiting financial problems that could result in a loss in any individual security.

The unrealized losses on the Company’s investment in obligations of states and political subdivisions were $56,000, $0 and $22,000 at March 31, 2018, December 31, 2017 and March 31, 2017, respectively. Management believes that any unrealized losses on the Company's investments in obligations of states and political subdivisions were primarily caused by interest rate fluctuations. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the Company does not intend to sell the securities and it is more likely than not that the Company will not have to sell the securities before recovery of their cost basis, the Company does not consider these investments to be other-than-temporarily impaired at March 31, 2018, December 31, 2017, and March 31, 2017.

There were no proceeds from sales and calls of securities for the period ending March 31, 2018 and March 31, 2017.

Pledged Securities

As of March 31, 2018, securities carried at $245.4 million were pledged to secure public deposits, Federal Home Loan Bank (“FHLB”) borrowings, and other government agency deposits as required by law. This amount was $214.5 million at December 31, 2017, and $203.8 million at March 31, 2017.