2. Investment Securities

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

(in thousands):

	Amortized		Gross Unrealized				Fair
September 30, 2019	Cost		Gains		Losses		Value
US Treasury Notes	$	129,724	$	270	$	5	$	129,989
US Government Agency SBA		11,844		15		115		11,744
Mortgage Backed Securities⁽¹⁾		343,295		4,425		163		347,557
Other		3,640		-		-		3,640
Total	$	488,503	$	4,710	$	283	$	492,930

	Amortized		Gross Unrealized				Fair
December 31, 2018	Cost		Gains		Losses		Value
Government Agency & Government-Sponsored Entities	$	3,033	$	6	$	-	$	3,039
US Treasury Notes		164,672		-		158		164,514
US Government Agency 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

	Amortized		Gross Unrealized				Fair
September 30, 2018	Cost		Gains		Losses		Value
Government Agency & Government-Sponsored Entities	$	3,045	$	7	$	-	$	3,052
US Treasury Notes		164,671		-		463		164,208
US Government Agency SBA		17,144		6		177		16,973
Mortgage Backed Securities⁽¹⁾		279,757		265		8,955		271,067
Other		3,011		-		-		3,011
Total	$	467,628	$	278	$	9,595	$	458,311

⁽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 debt securities classified as held-to-maturity are as follows (in thousands):

	Book		Gross Unrealized				Fair
September 30, 2019	Value		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	60,354	$	946	$	7	$	61,293
Total	$	60,354	$	946	$	7	$	61,293

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

	Book		Gross Unrealized				Fair
September 30, 2018	Value		Gains		Losses		Value
Obligations of States and Political Subdivisions	$	51,459	$	97	$	174	$	51,382
Total	$	51,459	$	97	$	174	$	51,382

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 September 30, 2019 by contractual maturity are shown in the following table (in thousands):

	Available-for-Sale				Held-to-Maturity
September 30, 2019	Amortized Cost		Fair Value		Book Value		Fair Value
Within one year	$	118,646	$	118,641	$	2,151	$	2,152
After one year through five years		15,118		15,387		4,696		4,702
After five years through ten years		1,126		1,126		25,426		26,174
After ten years		10,318		10,219		28,081		28,265
		145,208		145,373		60,354		61,293
Investment securities not due at a single maturity date:
Mortgage-backed securities		343,295		347,557		-		-

Total	$	488,503	$	492,930	$	60,354	$	61,293

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

The following tables show those investments with gross unrealized losses and their market value (in thousands) 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
September 30, 2019	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss

Securities Available-for-Sale
US Treasury Notes	$	114,995	$	5	$	-	$	-	$	114,995	$	5
US Government Agency SBA		2,046		3		5,779		112		7,825		115
Mortgage Backed Securities		107,628		146		876		17		108,504		163
Total	$	224,669	$	154	$	6,655	$	129	$	231,324	$	283

Securities Held-to-Maturity
Obligations of States and Political Subdivisions	$	212	$	7	$	-	$	-	$	212	$	7
Total	$	212	$	7	$	-	$	-	$	212	$	7

	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 Government Agency 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
September 30, 2018	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss

Securities Available-for-Sale
US Treasury Notes	$	84,315	$	290	$	24,902	$	173	$	109,217	$	463
US Government Agency SBA		4,965		62		8,467		115		13,432		177
Mortgage Backed Securities		182,243		5,772		78,272		3,183		260,515		8,955
Total	$	271,523	$	6,124	$	111,641	$	3,471	$	383,164	$	9,595

Securities Held-to-Maturity
Obligations of States and Political Subdivisions	$	15,309	$	174	$	-	$	-	$	15,309	$	174
Total	$	15,309	$	174	$	-	$	-	$	15,309	$	174

As of September 30, 2019, the Company held 595 investment securities of which 26 were in an unrealized loss position for less than twelve months. 74 securities were in a 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 September 30, 2019, December 31, 2018, and September 30, 2018, no securities of government agency and government sponsored entities were in an unrealized loss position for less than 12 months or for 12 months or more.

U.S. Treasury Notes – At September 30, 2019, three U.S. Treasury Note security investments were in an unrealized loss position for less than 12 months and none were in a loss position for 12 months or more. The unrealized losses on the Company's investment in U.S. Treasury Notes were $5,000, $158,000, and $463,000 at September 30, 2019, December 31, 2018, and September 30, 2018, respectively. 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 September 30, 2019, December 31, 2018, and September 30, 2018.

U.S. Government SBA – At September 30, 2019, 13 U.S. Government SBA security investments were in an unrealized 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 securities were $115,000, $160,000, and $177,000 at September 30, 2019, December 31, 2018, and September 30, 2018, respectively. 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 September 30, 2019, December 31, 2018, and September 30, 2018.

Mortgage Backed Securities – At September 30, 2019, 9 mortgage backed security investments were in an unrealized loss position for less than 12 months and 21 were in a loss position for 12 months or more. The unrealized losses on the Company's investment in mortgage backed securities were $163,000, $5.1 million, and $8.9 million at September 30, 2019, December 31, 2018, and September 30, 2018, 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 September 30, 2019, December 31, 2018, and September 30, 2018.

Obligations of States and Political Subdivisions - At September 30, 2019, one obligation of states and political subdivisions were in an unrealized loss position for less than 12 months. None were in a loss position for 12 months or more. As of September 30, 2019, over ninety-nine 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 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 obligations of states and political subdivisions were $7,000, $39,000 and $174,000 at September 30, 2019, December 31, 2018, and September 30, 2018, 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 September 30, 2019, December 31, 2018, and September 30, 2018.

Proceeds from sales and calls of securities for the periods shown were as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Proceeds	$	2,780	$	-	$	4,090	$	31,370
Gains		1		-		1		8
Losses		-		-		-		1,338

Pledged Securities

As of September 30, 2019, securities carried at $267.2 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 $268.8 million at December 31, 2018, and $241.8 million at September 30, 2018.