7. Investment Securities

The cost basis and fair values of investment securities are summarized as follows (in thousands):

Investment securities available for sale (AFS):


	March 31, 2020
			Gross		Gross
	Cost		Unrealized		Unrealized		Fair
	Basis		Gains		Losses		Value
US Agency	$	3,895	$	72	$	—	$	3,967
US Agency mortgage- backed securities		78,862		3,278		(56)		82,084
Municipal		14,925		899		—		15,824
Corporate bonds		41,693		470		(1,322)		40,841
Total	$	139,375	$	4,719	$	(1,378)	$	142,716

Investment securities held to maturity (HTM):


	March 31, 2020
			Gross		Gross
	Cost		Unrealized		Unrealized		Fair
	Basis		Gains		Losses		Value
US Agency mortgage- backed securities	$	10,510	$	508	$	—	$	11,018
Municipal		25,527		1,674		(50)		27,151
Corporate bonds and other securities		6,031		42		(6)		6,067
Total	$	42,068	$	2,224	$	(56)	$	44,236

Investment securities available for sale (AFS):


	December 31, 2019
			Gross		Gross
	Cost		Unrealized		Unrealized		Fair
	Basis		Gains		Losses		Value
US Agency	$	5,084	$	32	$	—	$	5,116
US Agency mortgage- backed securities		80,046		1,681		(94)		81,633
Municipal		14,678		509		(17)		15,170
Corporate bonds		39,769		342		(281)		39,830
Total	$	139,577	$	2,564	$	(392)	$	141,749

Investment securities held to maturity (HTM):


	December 31, 2019
			Gross		Gross
	Cost		Unrealized		Unrealized		Fair
	Basis		Gains		Losses		Value
US Agency mortgage- backed securities	$	9,466	$	251	$	(4)	$	9,713
Municipal		24,438		941		(53)		25,326
Corporate bonds and other securities		6,032		58		(47)		6,043
Total	$	39,936	$	1,250	$	(104)	$	41,082

Maintaining investment quality is a primary objective of the Company’s investment policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s Investor’s Service or Standard & Poor’s rating of “A.” At March 31, 2020, 52.1% of the portfolio was rated “AAA” as compared to 53.4% at December 31, 2019. Approximately 9.8% of the portfolio was either rated below “A” or unrated at March 31, 2020 as compared to 9.1% at December 31, 2019.

The Company sold no AFS securities during the first quarter of 2020 and 2019.

The carrying value of securities, both available for sale and held to maturity, pledged to secure public and trust deposits was $117,364,000 at March 31, 2020 and $117,076,000 at December 31, 2019.

The following tables present information concerning investments with unrealized losses as of March 31, 2020 and December 31, 2019 (in thousands):

Total investment securities:


	March 31, 2020
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
US Agency	$	—	$	—	$	—	$	—	$	—	$	—
US Agency mortgage-backed securities		2,363		(19)		1,885		(37)		4,248		(56)
Municipal		144		(1)		757		(49)		901		(50)
Corporate bonds and other securities		12,784		(786)		6,958		(542)		19,742		(1,328)
Total	$	15,291	$	(806)	$	9,600	$	(628)	$	24,891	$	(1,434)

Total investment securities:


	December 31, 2019
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
US Agency	$	—	$	—	$	—	$	—	$	—	$	—
US Agency mortgage-backed securities		7,084		(23)		8,562		(75)		15,646		(98)
Municipal		2,269		(18)		1,123		(52)		3,392		(70)
Corporate bonds and other securities		7,797		(85)		11,783		(243)		19,580		(328)
Total	$	17,150	$	(126)	$	21,468	$	(370)	$	38,618	$	(496)

The unrealized losses are primarily a result of increases in market yields from the time of purchase. In general, as market yields rise, the value of securities will decrease; as market yields fall, the fair value of securities will increase. There are 34 positions that are considered temporarily impaired at March 31, 2020. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired. Management has also concluded that based on current information we expect to continue to receive scheduled interest payments as well as the entire principal balance. Furthermore, management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value or mature.

Contractual maturities of securities at March 31, 2020 are shown below (in thousands). Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties. The weighted average duration of the total investment securities portfolio at March 31, 2020 is 24.7 months and is lower than the duration at December 31, 2019 which was 36.9 months. The duration remains within our internal established guideline range of 24 to 60 months which we believe is appropriate to maintain proper levels of liquidity, interest rate risk, market valuation sensitivity and profitability.


Total investment securities:	March 31, 2020
	Available for sale				Held to maturity
	Cost		Fair		Cost		Fair
	Basis		Value		Basis		Value
Within 1 year	$	3,491	$	3,486	$	—	$	—
After 1 year but within 5 years		23,276		23,068		7,530		7,732
After 5 years but within 10 years		39,693		40,334		20,094		21,386
After 10 years but within15 years		21,766		22,749		7,707		8,116
Over 15 years		51,149		53,079		6,737		7,002
Total	$	139,375	$	142,716	$	42,068	$	44,236

As of March 31, 2020 and December 31, 2019, the Company reported $386,000 and $366,000, respectively, of equity securities within other assets on the Consolidated Balance Sheets. These equity securities are held within a nonqualified deferred compensation plan in which a select group of executives of the Company can participate. An eligible executive can defer a certain percentage of their current salary to be placed into the plan and held within a rabbi trust. The assets of the rabbi trust are invested in various publicly listed mutual funds. The gain or loss on the equity securities (both realized and unrealized) is reported within other income on the Consolidated Statements of Operations. For the first quarter of 2020, the Company recorded a realized gain of $6,000 and an unrealized loss of $6,000 was recognized in income on these equity securities. No gain or loss on equity securities (both realized and unrealized) was recognized during the first quarter of 2019. Additionally, the Company has recognized a deferred compensation liability, which is equal to the balance of the equity securities and is reported within other liabilities on the Consolidated Balance Sheets.