NOTE 2: Securities

The Corporation’s debt securities, all of which are classified as available for sale, are summarized as follows:


	September 30, 2019
			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	22,204	$	2	$	(26)	$	22,180
Mortgage-backed securities		88,933		879		(111)		89,701
Obligations of states and political subdivisions		77,739		1,264		(15)		78,988
	$	188,876	$	2,145	$	(152)	$	190,869


	December 31, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	18,008	$	1	$	(536)	$	17,473
Mortgage-backed securities		106,787		85		(1,889)		104,983
Obligations of states and political subdivisions		91,855		840		(241)		92,454
	$	216,650	$	926	$	(2,666)	$	214,910

The amortized cost and estimated fair value of securities at September 30, 2019, by the earlier of contractual maturity or expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.


	September 30, 2019
	Amortized
(Dollars in thousands)	Cost		Fair Value
Due in one year or less	$	37,681	$	37,796
Due after one year through five years		133,691		135,024
Due after five years through ten years		12,834		13,066
Due after ten years		4,670		4,983
	$	188,876	$	190,869

The following table presents the gross realized gains and losses on and the proceeds from the maturities, calls and paydowns of securities. There were no sales of securities during the periods presented.


	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2019		2018		2019		2018
Realized gains from maturities and calls of securities:
Gross realized gains	$	3	$	5	$	8	$	10
Gross realized losses		—		—		—		(1)
Net realized gains	$	3	$	5	$	8	$	9
Proceeds from maturities, calls and paydowns of securities	$	21,954	$	12,865	$	55,593	$	35,267

The Corporation pledges securities primarily to secure public deposits and repurchase agreements. Securities with an aggregate amortized cost of $94.83 million and aggregate fair value of $95.89 million were pledged at September 30, 2019. Securities with an aggregate amortized cost of $110.81 million and an aggregate fair value of $109.83 million were pledged at December 31, 2018.

Securities in an unrealized loss position at September 30, 2019, by duration of the period of the unrealized loss, are shown below.


	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. government agencies and corporations	$	7,442	$	1	$	8,821	$	25	$	16,263	$	26
Mortgage-backed securities		10,828		22		13,762		89		24,590		111
Obligations of states and political subdivisions		5,777		6		2,590		9		8,367		15
Total temporarily impaired securities	$	24,047	$	29	$	25,173	$	123	$	49,220	$	152

There were 85 debt securities totaling $49.22 million considered temporarily impaired at September 30, 2019. The primary cause of the temporary impairments in the Corporation's investments in debt securities was fluctuations in interest rates, especially in debt securities purchased prior to 2018. The value of debt securities declines as interest rates rise, and interest rates were higher at September 30, 2019 than at the time these securities were purchased. The Corporation’s mortgage-backed securities are entirely issued by either U.S. government agencies or U.S. government-sponsored enterprises. Collectively, these entities provide a guarantee, which is either explicitly or implicitly supported by the full faith and credit of the U.S. government, that investors in such mortgage-backed securities will receive timely principal and interest payments. At September 30, 2019, approximately 95 percent of the Corporation's obligations of states and political subdivisions, as measured by market value, were rated “A” or better by Standard & Poor's (S&P) or Moody's Investors Service (Moody’s). Of those in an unrealized loss position, approximately 97 percent were rated “A” or better by S&P or Moody’s, as measured by market value, at September 30, 2019. For the approximately three percent not rated “A” or better, as measured by market value at September 30, 2019, the Corporation considers these to meet regulatory credit quality standards, meaning that the securities have low risk of default by the obligor and the full and timely repayment of principal and interest is expected over the expected life of the investment. Because the Corporation intends to hold these investments in debt securities to maturity and it is more-likely-than-not that the Corporation will not be required to sell these investments before a recovery of unrealized losses, the Corporation does not consider these investments to be other-than-temporarily impaired at September 30, 2019 and no other-than-temporary impairment loss has been recognized in net income.

Securities in an unrealized loss position at December 31, 2018, by duration of the period of the unrealized loss, are shown below.


	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. government agencies and corporations	$	997	$	1	$	15,725	$	535	$	16,722	$	536
Mortgage-backed securities		17,934		132		72,830		1,757		90,764		1,889
Obligations of states and political subdivisions		9,492		29		20,555		212		30,047		241
Total temporarily impaired securities	$	28,423	$	162	$	109,110	$	2,504	$	137,533	$	2,666

The Corporation’s investment in restricted stock totaled $3.26 million at September 30, 2019 and consisted of Federal Home Loan Bank (FHLB) stock. Restricted stock is generally viewed as a long-term investment, which is carried at cost because there is no market for the stock other than the FHLBs. Therefore, when evaluating restricted stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing any temporary decline in value. The Corporation did not consider its investment in restricted stock to be other-than-temporarily impaired at September 30, 2019 and no impairment has been recognized.