(4) Investment Securities

Available for sale securities

The amortized cost and fair value of debt securities classified as available-for-sale at September 30, 2019 and December 31, 2018 were as follows:


	Total
	Amortized		Gross Unrealized				Fair
(in thousands)	Cost		Gains		Losses		Value
September 30, 2019
U.S. Treasury	$	985	$	10	$	—	$	995
U.S. government and federal agency obligations		8,495		—		(30)		8,465
Government sponsored enterprises		22,786		50		(38)		22,798
Obligations of states and political subdivisions		29,341		144		(61)		29,424
Mortgage-backed securities		115,261		542		(569)		115,234
Other debt securities (a)		3,000		51		—		3,051
Bank issued trust preferred securities (a)		1,486		—		(183)		1,303
Total available-for-sale securities	$	181,354	$	797	$	(881)	$	181,270

December 31, 2018
U.S. Treasury	$	1,984	$	—	$	(32)	$	1,952
U.S. government and federal agency obligations		10,235		—		(269)		9,966
Government sponsored enterprises		43,784		23		(472)		43,335
Obligations of states and political subdivisions		40,859		28		(501)		40,386
Mortgage-backed securities		121,230		72		(3,110)		118,192
Other debt securities (a)		3,000		—		—		3,000
Bank issued trust preferred securities (a)		1,486		—		(112)		1,374
Total available-for-sale securities	$	222,578	$	123	$	(4,496)	$	218,205

(a) Certain hybrid instruments possessing characteristics typically associated with debt obligations.

The Company’s investment securities are classified as available for sale. Agency bonds and notes, Small Business Administration guaranteed loan certificates (SBA), residential and commercial agency mortgage-backed securities, and agency collateralized mortgage obligations (CMO) include securities issued by the Government National Mortgage Association (GNMA), a U.S. government agency, and the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), and the Federal Home Loan Bank (FHLB), which are U.S. government-sponsored enterprises.

Debt securities with carrying values aggregating approximately $117.9 million and $153.0 million at September 30, 2019 and December 31, 2018, respectively, were pledged to secure public funds, securities sold under agreements to repurchase, and for other purposes as required or permitted by law.

The amortized cost and fair value of debt securities classified as available-for-sale at September 30, 2019, by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without prepayment penalties.


	Amortized		Fair
(in thousands)	Cost		Value
Due in one year or less	$	8,962	$	8,951
Due after one year through five years		36,227		36,256
Due after five years through ten years		10,910		10,926
Due after ten years		9,994		9,903
Total		66,093		66,036
Mortgage-backed securities		115,261		115,234
Total available-for-sale securities	$	181,354	$	181,270

Other securities

Other investment securities include equity securities with readily determinable fair values and other investment securities that do not have readily determinable fair values. Investments in Federal Home Loan Bank (FHLB) stock, and Midwest Independent Bank (MIB) bankers bank stock, that do not have readily determinable fair values, are required for membership in those organizations.


(in thousands)	September 30, 2019		December 31, 2018
Other securities:
FHLB stock	$	6,046	$	5,512
MIB stock		151		151
Equity securities with readily determinable fair values		13		12
Total other investment securities	$	6,210	$	5,675

Gross unrealized losses on debt securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2019 and December 31, 2018 were as follows:


	Less than 12 months				12 months or more				Total		Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Losses		Value		Losses		Value		Losses
At September 30, 2019
U.S. Treasury	$	—	$	—	$	—	$	—	$	—	$	—
U.S. government and federal agency obligations		6,310		(25)		1,913		(5)		8,223		(30)
Government sponsored enterprises		4,539		(6)		8,466		(32)		13,005		(38)
Obligations of states and political subdivisions		9,098		(45)		2,891		(16)		11,989		(61)
Mortgage-backed securities		8,624		(24)		46,968		(545)		55,592		(569)
Other debt securities		—		—		—		—		—		—
Bank issued trust preferred securities		—		—		1,303		(183)		1,303		(183)
Total	$	28,571	$	(100)	$	61,541	$	(781)	$	90,112	$	(881)

(in thousands)
At December 31, 2018
U.S. Treasury	$	—	$	—	$	1,952	$	(32)	$	1,952	$	(32)
U.S. government and federal agency obligations		—		—		9,966		(269)		9,966		(269)
Government sponsored enterprises		1,997		(3)		33,346		(469)		35,343		(472)
Obligations of states and political subdivisions		5,851		(16)		28,832		(485)		34,683		(501)
Mortgage-backed securities		10,085		(61)		99,321		(3,049)		109,406		(3,110)
Bank issued trust preferred securities		—		—		1,374		(112)		1,374		(112)
Total	$	17,933	$	(80)	$	174,791	$	(4,416)	$	192,724	$	(4,496)

The total available for sale portfolio consisted of approximately 314 securities at September 30, 2019. The portfolio included 144 securities having an aggregate fair value of $90.1 million that were in a loss position at September 30, 2019. Securities identified as temporarily impaired which had been in a loss position for 12 months or longer totaled $61.5 million at fair value at September 30, 2019. The $881,000 aggregate unrealized loss included in accumulated other comprehensive loss at September 30, 2019 was caused by interest rate fluctuations.

The total available for sale portfolio consisted of approximately 366 securities at December 31, 2018. The portfolio included 317 securities having an aggregate fair value of $192.7 million that were in a loss position at December 31, 2018. Securities identified as temporarily impaired which had been in a loss position for 12 months or longer totaled $174.8 million at fair value at December 31, 2018. The $4.5 million aggregate unrealized loss included in accumulated other comprehensive loss at December 31, 2018 was caused by interest rate fluctuations.

Because the decline in fair value is attributable to changes in interest rates and not credit quality, these investments were not considered other-than-temporarily impaired at September 30, 2019 and December 31, 2018, respectively. In the absence of changes in credit quality of these investments, the fair value is expected to recover on all debt securities as they approach their maturity date or re-pricing date, or if market yields for such investments decline. In addition, the Company does not have the intent to sell these investments over the period of recovery, and it is not more likely than not that the Company will be required to sell such investment securities.

The table presents the components of investment securities gains and losses, which have been recognized in earnings:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2019		2018		2019		2018
Investment securities (losses) gains, net
Available for sale securities:
Gains realized on sales	$	6	$	47	$	6	$	253
Losses realized on sales		(46)		—		(46)		—
Other-than-temporary impairment recognized		—		—		—		—
Other investment securities:
Fair value adjustments, net		—		3		—		3
Investment securities (losses) gains, net	$	(40)	$	50	$	(40)	$	256

During the three and nine months ended September 30, 2019, the Company received $21.5 million from the proceeds from the sale of available for sale debt securities. During the three and nine months ended September 30, 2018, the Company received $25.4 million and $77.2 million, respectively, from proceeds from a series of short-term sales of U.S. Treasury securities purchased with repurchase agreements, and recognized gains of $47,000 and $253,000, respectively, in order to generate capital gains to offset capital losses that were to expire during 2018 and 2019.