NOTE 2 – SECURITIES

The amortized cost and fair value of securities available-for-sale and held-to-maturity at September 30, 2018 and December 31, 2017 are summarized as follows (dollars in thousands):

	September 30, 2018									December 31, 2017
	Amortized Cost		Gross unrealized gains		Gross unrealized (losses)			Estimated fair value		Amortized Cost		Gross unrealized gains		Gross unrealized (losses)			Estimated fair value
Securities available-for-sale:
U. S. government agency securities	$	11,054	$	—	$	(589	)	$	10,465	$	11,433	$	12	$	(168	)	$	11,277
State and municipal securities		45,738		228		(1,721	)		44,245		51,790		1,430		(222	)		52,998
Mortgage-backed securities		109,983		—		(4,781	)		105,202		108,236		40		(1,714	)		106,562
Asset-backed securities		15,687		26		—			15,713		16,575		—		(198	)		16,377
Other debt securities		11,868		26		(50	)		11,844		5,326		81		—			5,407
Total	$	194,330	$	280	$	(7,141	)	$	187,469	$	193,360	$	1,563	$	(2,302	)	$	192,621
Securities held-to-maturity:
State and municipal securities	$	3,740	$	31	$	(5	)	$	3,766	$	3,759	$	89	$	—		$	3,848
Total	$	3,740	$	31	$	(5	)	$	3,766	$	3,759	$	89	$	—		$	3,848

Security fair values are established by an independent pricing service as of the dates indicated. The difference between amortized cost and fair value reflects current interest rates and represents the potential gain (loss) had the portfolio been liquidated on those dates. Security gains (losses) are realized only in the event of dispositions prior to maturity or other-than-temporary impairment. Securities with unrealized losses as of September 30, 2018 and December 31, 2017, and the length of time they were in continuous loss positions as of such dates are as follows (dollars in thousands):

	Less than 12 months					12 months or more					Total
September 30, 2018	Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses			Estimated fair value		Gross unrealized losses
U. S. government agency securities	$	1,827	$	(76	)	$	8,638	$	(513	)	$	10,465	$	(589	)
State and municipal securities		28,333		(1,134	)		7,531		(592	)		35,864		(1,726	)
Mortgage-backed securities		32,051		(871	)		73,151		(3,910	)		105,202		(4,781	)
Asset-backed securities		—		—			—		—			—		—
Other debt securities		5,518		(50	)		—		—			5,518		(50	)
Total temporarily impaired securities	$	67,729	$	(2,131	)	$	89,320	$	(5,015	)	$	157,049	$	(7,146	)

December 31, 2017
U. S. government agency securities	$	7,375	$	(90	)	$	1,912	$	(78	)	$	9,287	$	(168	)
State and municipal securities		7,490		(106	)		5,798		(116	)		13,288		(222	)
Mortgage-backed securities		29,832		(322	)		67,813		(1,392	)		97,645		(1,714	)
Asset-backed securities		—		—			16,377		(198	)		16,377		(198	)
Other debt securities		—		—			—		—			—		—
Total temporarily impaired securities	$	44,697	$	(518	)	$	91,900	$	(1,784	)	$	136,597	$	(2,302	)

As noted in the table above, as of September 30, 2018, the Company had unrealized losses of $7.1 million in its investment securities portfolio. The unrealized losses associated with these investment securities are driven by changes in interest rates and are recorded as a component of equity. These investment securities will continue to be monitored as a part of our ongoing impairment analysis. Management evaluates the financial performance of the issuers on a quarterly basis to determine if it is probable that the issuers can make all contractual principal and interest payments. If a shortfall in future cash flows is identified, a credit loss will be deemed to have occurred and will be recognized as a charge to earnings and a new cost basis for the security will be established.

Because the Company currently does not intend to sell any investment securities that have an unrealized loss at September 30, 2018, and it is not more-likely-than-not that we will be required to sell these investment securities before recovery of their amortized cost bases, which may be at maturity, we do not consider these securities to be other-than-temporarily impaired at September 30, 2018.

Securities with a market value of $148.7 million at September 30, 2018 were pledged to collateralize public deposits, derivative positions and Federal Home Loan Bank advances.

Results from sales of debt and equity securities were as follows (dollars in thousands):

	Nine Months Ended			Nine Months Ended
	September 30, 2018			September 30, 2017
Proceeds	$	5,778		$	34,299
Gross gains		107			99
Gross losses		(105	)		(57	)

The amortized cost and fair value of securities at September 30, 2018, by contractual maturity, are shown below (dollars in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

	Available-for-sale				Held-to-maturity
	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
Due in less than one year	$	1,763	$	1,756	$	394	$	396
Due one to five years		21,080		21,095		3,346		3,370
Due five to ten years		28,383		27,302		—		—
Due beyond ten years		17,434		16,401		—		—
Mortgage-backed securities		109,983		105,202		—		—
Asset-backed securities		15,687		15,713		—		—
Total	$	194,330	$	187,469	$	3,740	$	3,766