Investment Securities

Investment securities as of the balance sheet dates consisted of the following:



September 30, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available-for-sale
Debt securities:
U.S. Government-sponsored enterprises	$	9,535	$	18	$	(143	)	$	9,410
Agency mortgage-backed	18,820		47		(126		)	18,741
State and political subdivisions	25,304		259		(249		)	25,314
Corporate	9,927		150		(72		)	10,005
Total debt securities	63,586		474		(590		)	63,470
Mutual funds	500		—		—			500
Total	$	64,086	$	474	$	(590	)	$	63,970
Held-to-maturity
U.S. Government-sponsored enterprises	$	1,000	$	—	$	(1	)	$	999



December 31, 2016	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available-for-sale
Debt securities:
U.S. Government-sponsored enterprises	$	10,221	$	15	$	(196	)	$	10,040
Agency mortgage-backed	18,283		27		(269		)	18,041
State and political subdivisions	27,909		113		(650		)	27,372
Corporate	9,745		84		(129		)	9,700
Total debt securities	66,158		239		(1,244		)	65,153
Mutual funds	403		—		—			403
Total	$	66,561	$	239	$	(1,244	)	$	65,556
Held-to-maturity
U.S. Government-sponsored enterprises	$	999	$	—	$	—		$	999

Investment securities with a carrying amount of $4.9 million and $8.4 million at September 30, 2017 and December 31, 2016, respectively, were pledged as collateral for public deposits and for other purposes as required or permitted by law.

The amortized cost and estimated fair value of debt securities by contractual scheduled maturity as of September 30, 2017 were as follows:



	Amortized Cost		Fair Value
	(Dollars in thousands)
Available-for-sale
Due in one year or less	$	250	$	251
Due from one to five years	5,470		5,561
Due from five to ten years	22,143		22,178
Due after ten years	16,903		16,739
	44,766		44,729
Agency mortgage-backed	18,820		18,741
Total debt securities available-for-sale	$	63,586	$	63,470
Held-to-maturity
Due in one year or less	$	1,000	$	999
Total debt securities held-to-maturity	$	1,000	$	999

Actual maturities may differ for certain debt securities that may be called by the issuer prior to the contractual maturity. Actual maturities usually differ from contractual maturities on agency MBS because the mortgages underlying the securities may be prepaid, usually without any penalties. Therefore, these agency MBS are shown separately and are not included in the contractual maturity categories in the above maturity summary.

Information pertaining to all investment securities with gross unrealized losses as of the balance sheet dates, aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:



September 30, 2017	Less Than 12 Months						12 Months and over						Total
	Number of Securities	Fair Value		Gross Unrealized Losses			Number of Securities	Fair Value		Gross Unrealized Losses			Number of Securities	Fair Value		Gross Unrealized Losses
		(Dollars in thousands)
Debt securities:
U.S. Government- sponsored enterprises	8	$	4,855	$	(47	)	8	$	3,801	$	(97	)	16	$	8,656	$	(144	)
Agency mortgage-backed	11	6,448		(43		)	6	4,332		(83		)	17	10,780		(126		)
State and political subdivisions	15	6,541		(44		)	15	6,312		(205		)	30	12,853		(249		)
Corporate	1	478		(22		)	4	1,948		(50		)	5	2,426		(72		)
Total	35	$	18,322	$	(156	)	33	$	16,393	$	(435	)	68	$	34,715	$	(591	)



December 31, 2016	Less Than 12 Months						12 Months and over						Total
	Number of Securities	Fair Value		Gross Unrealized Losses			Number of Securities	Fair Value		Gross Unrealized Losses			Number of Securities	Fair Value		Gross Unrealized Losses
		(Dollars in thousands)
Debt securities:
U.S. Government- sponsored enterprises	13	$	8,351	$	(180	)	3	$	1,172	$	(16	)	16	$	9,523	$	(196	)
Agency mortgage-backed	22	15,141		(261		)	1	344		(8		)	23	15,485		(269		)
State and political subdivisions	40	16,481		(650		)	—	—		—			40	16,481		(650		)
Corporate	8	3,973		(56		)	4	1,627		(73		)	12	5,600		(129		)
Total	83	$	43,946	$	(1,147	)	8	$	3,143	$	(97	)	91	$	47,089	$	(1,244	)

The Company evaluates all investment securities on a quarterly basis, and more frequently when economic conditions warrant, to determine if an OTTI exists. A security is considered impaired if the fair value is lower than its amortized cost basis at the report date. If impaired, management then assesses whether the unrealized loss is OTT.

An unrealized loss on a debt security is generally deemed to be OTT and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. The credit loss component of OTTI write-down is recorded, net of tax effect, through net income as a component of net OTTI losses in the consolidated statements of income, while the remaining portion of the impairment loss is recognized in OCI, provided the Company does not intend to sell the underlying debt security and it is "more likely than not" that the Company will not have to sell the debt security prior to recovery. Declines in the fair values of individual equity securities that are deemed by management to be OTT are reflected in noninterest income when identified.

Management considers the following factors in determining whether OTTI exists and the period over which the security is expected to recover:


•	The length of time, and extent to which, the fair value has been less than the amortized cost;


•	Adverse conditions specifically related to the security, industry, or geographic area;


•	The historical and implied volatility of the fair value of the security;


•	The payment structure of the debt security and the likelihood of the issuer being able to make payments that may increase in the future;


•	Failure of the issuer of the security to make scheduled interest or principal payments;


•	Any changes to the rating of the security by a rating agency;


•	Recoveries or additional declines in fair value subsequent to the balance sheet date; and


•	The nature of the issuer, including whether it is a private company, public entity or government-sponsored enterprise, and the existence or likelihood of any government or third party guaranty.

The Company has the ability to hold the investment securities that had unrealized losses at September 30, 2017 and December 31, 2016 for the foreseeable future and no declines were deemed by management to be OTT.

The following table presents the proceeds, gross realized gains and gross realized losses from the sale of AFS securities:



	For the Three Months Ended September 30,					For The Nine Months Ended September 30,
	2017		2016			2017			2016
	(Dollars in thousands)
Proceeds	$	2,517	$	3,944		$	3,962		$	6,617

Gross gains	24		112			56			131
Gross losses	—		(59		)	(23		)	(60		)
Net gains on sales of investment securities AFS	$	24	$	53		$	33		$	71