3. Investment Securities

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

(in thousands)

December 31, 2018	Amortized Cost		Gross Unrealized				Fair/Book Value
December 31, 2018	Amortized Cost		Gains		Losses		Fair/Book Value
Government Agency & Government-Sponsored Entities	$	3,033	$	6	$	-	$	3,039
US Treasury Notes		164,672		-		158		164,514
US Govt SBA		15,601		6		160		15,447
Mortgage Backed Securities⁽¹⁾		310,982		1,196		5,133		307,045
Other		5,351		-		-		5,351
Total	$	499,639	$	1,208	$	5,451	$	495,396

December 31, 2017	Amortized Cost		Gross Unrealized				Fair/Book Value
December 31, 2017	Amortized Cost		Gains		Losses		Fair/Book 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

⁽¹⁾	All Mortgage Backed Securities 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)

December 31, 2018	Book Value		Gross Unrealized				Fair Value
December 31, 2018	Book Value		Gains		Losses		Fair Value
Obligations of States and Political Subdivisions	$	53,566	$	211	$	39	$	53,738
Total	$	53,566	$	211	$	39	$	53,738

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

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 December 31, 2018 by contractual maturity are shown in the following tables. (in thousands)

	Available-for-Sale				Held-to-Maturity
December 31, 2018	Amortized Cost		Fair/Book Value		Book Value		Fair Value
Within One Year	$	156,840	$	156,751	$	2,340	$	2,342
After One Year Through Five Years		17,097		17,032		2,161		2,162
After Five Years Through Ten Years		1,474		1,472		21,167		21,292
After Ten Years		13,247		13,096		27,898		27,942
		188,658		188,351		53,566		53,738

Investment Securities Not Due at a Single Maturity Date:
Mortgage Backed Securities		310,981		307,045		-		-
Total	$	499,639	$	495,396	$	53,566	$	53,738

Expected maturities of mortgage-backed securities may differ from contractual maturities because borrowers 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
December 31, 2018	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss

Securities Available-for-Sale
US Treasury Notes	$	124,985	$	7	$	39,529	$	151	$	164,514	$	158
US Govt SBA		3,250		28		8,618		132		11,868		160
Mortgage Backed Securities		52,289		528		207,271		4,605		259,560		5,133
Total	$	180,524	$	563	$	255,418	$	4,888	$	435,942	$	5,451

Securities Held-to-Maturity
Obligations of States and Political Subdivisions	$	6,052	$	23	$	849	$	16	$	6,901	$	39
Total	$	6,052	$	23	$	849	$	16	$	6,901	$	39

	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.

As of December 31, 2018, the Company held 636 investment securities of which 83 were in an unrealized loss position for less than twelve months and 120 securities were in an unrealized loss 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 December 31, 2018, no securities of government agency and government sponsored entities were in a loss position for less than 12 months and none were in a loss position for 12 months or more. There were no unrealized losses on the Company’s investments in securities of government agency and government sponsored entities at December 31, 2018 or December 31, 2017. Repayment of these investments is 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 did not consider these investments to be other-than-temporarily impaired at December 31, 2018.

U.S. Treasury Notes – At December 31, 2018, 13 U.S. Treasury Note security investments were in a loss position for less than 12 months and 4 were in a loss position for 12 months or more. The unrealized losses on the Company’s investment in US treasury notes were $158,000 at December 31, 2018 and $442,000 at December 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 December 31, 2018 and December 31, 2017.

U.S. Government SBA – At December 31, 2018, 17 U.S. Government SBA security investments were in a loss position for less than 12 months and 53 were in a loss position for 12 months or more. The unrealized losses on the Company’s investment in U.S. Government SBA were $160,000 at December 31, 2018 and $208,000 at December 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 December 31, 2018 and December 31, 2017.

Mortgage Backed Securities - At December 31, 2018, 37 mortgage backed security investments were in a loss position for less than 12 months and 61 was in a loss position for 12 months or more. The unrealized losses on the Company’s investment in mortgage-backed securities were $5.1 million at December 31, 2018 and $1.5 million at December 31, 2017. The unrealized losses 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 did not consider these investments to be other-than-temporarily impaired at December 31, 2018 or 2017.

Obligations of States and Political Subdivisions - At December 31, 2018, 16 obligations of states and political subdivisions were in a loss position for less than 12 months. Two were in a loss position for 12 months or more. As of December 31, 2018, over ninety-nine percent of the Company’s bank-qualified municipal bond portfolio is rated at either the issue or the issuer level, and all of these ratings are “investment grade.” The Company monitors the status of the one 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 obligation of states and political subdivisions were $39,000 at December 31, 2018 and $0 at December 31, 2017. Management believes that any unrealized losses on the Company’s investments in obligations of states and political subdivisions were 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 would 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 December 31, 2018 and December 31, 2017.

Proceeds from sales and calls of these securities were as follows:

(in thousands)	Gross Proceeds		Gross Gains		Gross Losses
2018	$	99,323	$	78	$	1,338
2017	$	7,831	$	143	$	12
2016	$	105,941	$	250	$	534

Pledged Securities

As of December 31, 2018, securities carried at $268.8 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.