The amortized cost and estimated fair values of investment securities available-for-sale at September 30, 2019 and December 31, 2018 were as follows:

			Gross		Gross
			unrealized		unrealized
	Fair		holding		holding			Amortized
September 30, 2019	value		gains		losses			cost
U.S. Treasury	$	5,281	$	—	$	—		$	5,281
U.S. Government agency		68,349		11		(166	)		68,504
State and municipal		51,104		952		(16	)		50,168
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		140,553		519		(727	)		140,761
Collateralized mortgage obligations (CMOs)		87,652		446		(452	)		87,658
Pooled trust preferred		78		—		(8	)		86
Corporate debt		8,140		128		(2	)		8,014
Total investment debt securities available-for-sale	$	361,157	$	2,056	$	(1,371	)	$	360,472

			Gross		Gross
			unrealized		unrealized
	Fair		holding		holding			Amortized
December 31, 2018	value		gains		losses			cost
U.S. Government agency	$	68,409	$	—	$	(2,072	)	$	70,481
State and municipal		66,313		195		(464	)		66,582
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		125,913		79		(4,251	)		130,085
Collateralized mortgage obligations (CMOs)		75,491		87		(2,549	)		77,953
Pooled trust preferred		116		—		(6	)		122
Corporate debt		7,979		33		(80	)		8,026
Total investment debt securities available-for-sale	$	344,221	$	394	$	(9,422	)	$	353,249

The amortized cost and estimated fair value of securities available-for-sale by contractual maturity at September 30, 2019 are shown in the following table. 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 are assigned to categories based on contractual maturity except for mortgage-backed securities and CMOs which are based on the estimated average life of these securities and municipal securities that have been pre-refunded.

Proceeds from sales of investment securities available-for-sale were approximately $9,511,000 and $0 for the three months ended September 30, 2019 and 2018, respectively. Proceeds from sales of investment securities available-for-sale were approximately $30,294,000 and $4,159,000 for the nine months ended September 30, 2019 and 2018, respectively.

At September 30, 2019 and December 31, 2018, investment securities available-for-sale totaling approximately $202,638,000 and $194,573,000, respectively, were pledged as collateral for repurchase agreements and deposits of public funds.

The following table presents information related to the Company’s gains and losses on the sales of securities available-for-sale, and losses recognized for the other-than-temporary impairment (“OTTI”) of these investments. Gains and losses on available-for-sale securities are computed on the specific identification method and included in non-interest income. Gross realized losses on debt securities are net of other-than-temporary impairment charges:

The tax expense applicable to the net realized (losses)/gains for the three-month periods ended September 30, 2019 and 2018 was $0 and $0, respectively. The tax applicable to the net realized (losses)/gains for the nine-month periods ended September 30, 2019 and 2018 were a benefit of $8,000 and an expense of $1,000, respectively.

QNB recognizes OTTI for debt securities classified as available-for-sale in accordance with FASB ASC 320, Investments – Debt and Equity Securities, which requires that we assess whether we intend to sell or it is more likely than not that the Company will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that we do not intend to sell and will not be required to sell prior to recovery of our amortized cost basis, the amount of the impairment is separated into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security’s amortized cost basis and the present value of its expected future cash flows discounted at the security’s effective yield. The remaining difference between the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and, therefore, is not required to be recognized as a loss in the statement of income but is recognized in other comprehensive income. QNB believes that we will fully collect the carrying value of securities on which we have recorded a non-credit related impairment in other comprehensive income. No credit impairments were recognized on debt securities during first nine months ended September 30, 2019 and 2018, respectively.

The following table indicates the length of time individual debt securities have been in a continuous unrealized loss position at September 30, 2019 and December 31, 2018:


			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
September 30, 2019	securities		value		losses			value		losses			value		losses
U.S. Treasury		1	$	—	$	—		$	—	$	—		$	—	$	—
U.S. Government agency		36		23,450		(60	)		22,393		(106	)		45,843		(166	)
State and municipal		4		1,383		(11	)		516		(5	)		1,899		(16	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		80		34,962		(111	)		62,989		(616	)		97,951		(727	)
Collateralized mortgage obligations (CMOs)		57		12,709		(44	)		30,862		(408	)		43,571		(452	)
Pooled trust preferred		1		—		—			78		(8	)		78		(8	)
Corporate debt		3		2,004		(2	)		1,004		—			3,008		(2	)
Total		182	$	74,508	$	(228	)	$	117,842	$	(1,143	)	$	192,350	$	(1,371	)


			Less than 12 months					12 months or longer					Total
	No. of		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2018	securities		value		losses			value		losses			value		losses
U.S. Government agency		51	$	—	$	—		$	68,409	$	(2,072	)	$	68,409	$	(2,072	)
State and municipal		81		21,657		(204	)		10,558		(260	)		32,215		(464	)
U.S. Government agencies and sponsored enterprises (GSEs):
Mortgage-backed		111		12,561		(91	)		108,802		(4,160	)		121,363		(4,251	)
Collateralized mortgage obligations (CMOs)		73		433		(1	)		62,467		(2,548	)		62,900		(2,549	)
Pooled trust preferred		1		—		—			116		(6	)		116		(6	)
Corporate debt		4		—		—			3,947		(80	)		3,947		(80	)
Total		321	$	34,651	$	(296	)	$	254,299	$	(9,126	)	$	288,950	$	(9,422	)

Management evaluates debt securities, which are comprised of U.S Treasury securities, U.S. Government agencies, state and municipalities, mortgage-backed securities, CMOs and corporate debt securities, for other-than-temporary impairment and considers the current economic conditions, the length of time and the extent to which the fair value has been less than cost, interest rates and the bond rating of each security. The unrealized losses at September 30, 2019 in U.S. Government agency securities, state and municipal securities, mortgage-backed securities, CMOs and corporate debt securities are primarily the result of interest rate fluctuations. If held to maturity, these bonds will mature at par, and QNB will not realize a loss. The Company has the intent to hold the securities and does not believe it will be required to sell the securities before recovery occurs.

QNB holds one pooled trust preferred security as of September 30, 2019. This security has a total amortized cost of approximately $86,000 and a fair value of $78,000. The pooled trust preferred security is available-for-sale and is carried at fair value.

The Company’s investment in equity securities primarily consists of investments with readily determinable fair values in large cap stock companies. Changes in fair value is recorded in unrealized gain/(losses) in non-interest income.

At September 30, 2019 and December 31, 2018, the Company had $5,850,000 and $9,421,000, respectively, in equity securities recorded at fair value. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during the three and nine months ended September 30, 2019 and 2018:

Tax expense applicable to the net gains recognized for the three months ended September 30, 2019 and September 30, 2018 was $192,000 and $263,000, respectively. Tax applicable to the net gains recognized for the nine months ended September 30, 2019 and 2018 was $539,000 and $242,000, respectively. Proceeds from sales of investment equity securities were approximately $6,404,000 and $1,330,000 for the three months ended September 30, 2019 and 2018, respectively. Proceeds from sales of investment equity securities were approximately $10,924,000 and $2,720,000 for the nine months ended September 30, 2019 and 2018, respectively.