3.	Securities

Securities available for sale consist of the following:

	Amortized		Unrealized
	Cost		Gains		Losses		Fair Value
	(In thousands)
September 30, 2018
U.S. agency	$	20,769	$	-	$	346	$	20,423
U.S. agency residential mortgage-backed		126,851		802		2,592		125,061
U.S. agency commercial mortgage-backed		6,039		-		224		5,815
Private label mortgage-backed		29,340		369		736		28,973
Other asset backed		78,567		147		188		78,526
Obligations of states and political subdivisions		143,138		219		3,703		139,654
Corporate		35,017		65		512		34,570
Trust preferred		1,963		-		38		1,925
Foreign government		2,060		-		50		2,010
Total	$	443,744	$	1,602	$	8,389	$	436,957

December 31, 2017
U.S. Treasury	$	898	$	-	$	-	$	898
U.S. agency		25,667		82		67		25,682
U.S. agency residential mortgage-backed		137,785		1,116		983		137,918
U.S. agency commercial mortgage-backed		9,894		36		170		9,760
Private label mortgage-backed		29,011		428		330		29,109
Other asset backed		93,811		202		115		93,898
Obligations of states and political subdivisions		174,073		755		1,883		172,945
Corporate		47,365		578		90		47,853
Trust preferred		2,929		-		127		2,802
Foreign government		2,087		-		27		2,060
Total	$	523,520	$	3,197	$	3,792	$	522,925

Our investments’ gross unrealized losses and fair values aggregated by investment type and length of time that individual securities have been at a continuous unrealized loss position follows:

	Less Than Twelve Months				Twelve Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)

September 30, 2018
U.S. agency	$	11,938	$	239	$	8,485	$	107	$	20,423	$	346
U.S. agency residential mortgage-backed		28,672		765		40,857		1,827		69,529		2,592
U.S. agency commercial mortgage-backed		1,358		12		4,391		212		5,749		224
Private label mortgage- backed		10,209		295		8,473		441		18,682		736
Other asset backed		30,663		92		11,226		96		41,889		188
Obligations of states and political subdivisions		59,590		1,157		57,509		2,546		117,099		3,703
Corporate		20,853		361		5,726		151		26,579		512
Trust preferred		-		-		925		38		925		38
Foreign government		-		-		2,010		50		2,010		50
Total	$	163,283	$	2,921	$	139,602	$	5,468	$	302,885	$	8,389

December 31, 2017
U.S. agency	$	5,466	$	26	$	5,735	$	41	$	11,201	$	67
U.S. agency residential mortgage-backed		22,198		229		40,698		754		62,896		983
U.S. agency commercial mortgage-backed		2,181		34		3,994		136		6,175		170
Private label mortgage-backed		11,390		92		4,396		238		15,786		330
Other asset backed		20,352		40		16,648		75		37,000		115
Obligations of states and political subdivisions		76,574		936		28,246		947		104,820		1,883
Corporate		14,440		33		3,943		57		18,383		90
Trust preferred		-		-		2,802		127		2,802		127
Foreign government		489		10		1,571		17		2,060		27
Total	$	153,090	$	1,400	$	108,033	$	2,392	$	261,123	$	3,792

Our portfolio of securities available for sale is reviewed quarterly for impairment in value. In performing this review management considers (1) the length of time and extent that fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) the impact of changes in market interest rates on the market value of the security and (4) an assessment of whether we intend to sell, or it is more likely than not that we will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. For securities that do not meet the aforementioned recovery criteria, the amount of impairment recognized in earnings is limited to the amount related to credit losses, while impairment related to other factors is recognized in other comprehensive income (loss).

U.S. agency, U.S. agency residential mortgage-backed securities and U.S. agency commercial mortgage backed securities — at September 30, 2018, we had 51 U.S. agency, 133 U.S. agency residential mortgage-backed and 15 U.S. agency commercial mortgage-backed securities whose fair market value is less than amortized cost. The unrealized losses are largely attributed to increases in interest rates since acquisition and widening spreads to Treasury bonds. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Private label mortgage backed securities — at September 30, 2018, we had 27 of this type of security whose fair value is less than amortized cost. Unrealized losses are primarily due to credit spread widening and increases in interest rates since their acquisition.

Two private label mortgage-backed securities (included in the securities discussed further below) were reviewed for other than temporary impairment (“OTTI”) utilizing a cash flow projection. The cash flow analysis forecasts cash flow from the underlying loans in each transaction and then applies these cash flows to the bonds in the securitization. See further discussion below.

As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no other declines discussed above are deemed to be other than temporary.

Other asset backed — at September 30, 2018, we had 72 other asset backed securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Obligations of states and political subdivisions — at September 30, 2018, we had 393 municipal securities whose fair value is less than amortized cost. The unrealized losses are primarily due to wider benchmark pricing spreads and increases in interest rates since acquisition. Tax exempt securities have been negatively impacted by lower federal tax rates signed into law in December, 2017. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Corporate — at September 30, 2018, we had 32 corporate securities whose fair value is less than amortized cost. The unrealized losses are primarily due to credit spread widening and increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

Trust preferred securities — at September 30, 2018, we had one trust preferred security whose fair value is less than amortized cost. This trust preferred security is a single issue security issued by a trust subsidiary of a bank holding company. The pricing of this trust preferred security has suffered from credit spread widening. This security is rated by a major rating agency as investment grade. As management does not intend to liquidate this security and it is more likely than not that we will not be required to sell this security prior to recovery of the unrealized loss, this decline is not deemed to be other than temporary.

Foreign government — at September 30, 2018, we had two foreign government securities whose fair value is less than amortized cost. The unrealized losses are primarily due to increases in interest rates since acquisition. As management does not intend to liquidate these securities and it is more likely than not that we will not be required to sell these securities prior to recovery of these unrealized losses, no declines are deemed to be other than temporary.

We recorded no credit related OTTI charges in our Condensed Consolidated Statements of Operations related to securities available for sale during the three and nine month periods ended September 30, 2018 and 2017, respectively.

At September 30, 2018, three private label mortgage-backed securities had credit related OTTI and are summarized as follows:

	Senior Security		Super Senior Security		Senior Support Security		Total
	(In thousands)

Fair value	$	842	$	808	$	32	$	1,682
Amortized cost		698		633		-		1,331
Non-credit unrealized loss		-		-		-		-
Unrealized gain		144		175		32		351
Cumulative credit related OTTI		757		457		380		1,594

Each of these securities is receiving principal and interest payments similar to principal reductions in the underlying collateral. All three of these securities have unrealized gains at September 30, 2018. The original amortized cost (current amortized cost excluding cumulative credit related OTTI) for each of these securities has been permanently adjusted downward for previously recorded credit related OTTI. The unrealized loss (based on original amortized cost) for these securities is now less than previously recorded credit related OTTI amounts.

A roll forward of credit losses recognized in earnings on securities available for sale follows:

	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
	(In thousands)				(In thousands)
Balance at beginning of period	$	1,594	$	1,594	$	1,594	$	1,594
Additions to credit losses on securities for which no previous OTTI was recognized		-		-		-		-
Increases to credit losses on securities for which OTTI was previously recognized		-		-		-		-
Balance at end of period	$	1,594	$	1,594	$	1,594	$	1,594

The amortized cost and fair value of securities available for sale at September 30, 2018, by contractual maturity, follow:

	Amortized Cost		Fair Value
	(In thousands)
Maturing within one year	$	14,513	$	14,494
Maturing after one year but within five years		79,683		78,634
Maturing after five years but within ten years		62,609		60,979
Maturing after ten years		46,142		44,475
		202,947		198,582
U.S. agency residential mortgage-backed		126,851		125,061
U.S. agency commercial mortgage-backed		6,039		5,815
Private label mortgage-backed		29,340		28,973
Other asset backed		78,567		78,526
Total	$	443,744	$	436,957

The actual maturity may differ from the contractual maturity because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

Gains and losses realized on the sale of securities available for sale are determined using the specific identification method and are recognized on a trade-date basis. A summary of proceeds from the sale of securities available for sale and gains and losses for the nine month periods ending September 30, follows:

			Realized
	Proceeds (1)		Gains (2)		Losses
	(In thousands)
2018	$	31,445	$	81	$	126
2017		9,594		125		-

(1)	2017 includes $0.760 million for trades that did not settle until after September 30, 2017.

(2)	2018 excludes a $0.144 million gain on the sale of 1,000 VISA Class B shares.

Certain preferred stocks have been classified as equity securities at fair value in our Condensed Consolidated Statement of Financial Condition beginning on January 1, 2018. Previously these preferred stocks were classified as trading securities. See note #2. During the nine months ended September 30, 2018 and 2017 we recognized losses on these preferred stocks of $0.170 million and $0.063 million, respectively, that are included in net gains (losses) on securities in the Condensed Consolidated Statements of Operations. These amounts relate to preferred stock still held at each respective period end.