SECURITIES

The amortized cost and fair value of securities as of the dates set forth were as follows:



	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

	(Dollars in thousands)
Available-for-sale:
SBA guaranteed securities	$	104,111	$	129	$	(948	)	$	103,292
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential	250,580		$	297	(1,701		)	249,176
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: commercial	$	65,986	$	—	$	(500	)	$	65,486
Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential	234,881		—		(6,434		)	228,447
Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: commercial	36,151		—		(472		)	35,679
Corporate debt securities	5,789		5		—			5,794
Obligations of municipal subdivisions	6,672		—		(45		)	6,627
CRA qualified investment fund	11,337		—		(299		)	11,038
Total	$	715,507	$	431	$	(10,399	)	$	705,539

Held-to-maturity:
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential	$	10,841	$	61	$	(170	)	$	10,732
Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential	2,434		—		(20		)	2,414
Total	$	13,275	$	61	$	(190	)	$	13,146



	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

	(Dollars in thousands)
Available-for-sale:
Obligations of the U.S. Treasury and other U.S. government agencies or sponsored enterprises	$	118,272	$	17	$	(403	)	$	117,886
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential	99,876		452		(430		)	99,898
Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential	42,379		96		(563		)	41,912
Corporate debt securities	3,788		1		(14		)	3,775
Obligations of municipal subdivisions	236		—		(1		)	235
CRA qualified investment fund	11,183		—		(270		)	10,913
Total	$	275,734	$	566	$	(1,681	)	$	274,619

Held-to-maturity:
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential	$	14,358	$	140	$	(267	)	$	14,231
Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential	21,147		2		(536		)	20,613
Total	$	35,505	$	142	$	(803	)	$	34,844

Expected maturities of securities will differ from contractual maturities because the underlying borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately. The following table sets forth, as of the date indicated, contractual maturities of securities:



	December 31, 2017
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value

	(Dollars in thousands)
Due in one year or less	$	1,789	$	1,794	$	—	$	—
Due after one year through five years	—		—		—		—
Due after five years through ten years	4,236		4,236		—		—
Due after ten years	6,436		6,390		—		—
	12,461		12,420		—		—

Mortgage-backed securities and collateralized mortgage obligations	587,598		578,789		13,275		13,146
SBA guaranteed securities	104,111		103,292		—		—
CRA qualified investment fund	11,337		11,038		—		—
Total	$	715,507	$	705,539	$	13,275	$	13,146

Proceeds from sales of securities classified as available-for-sale of $349.4 million were received during the year ended December 31, 2017. The sales resulted in a net loss of $38 thousand, which is comprised of $910 thousand in gross realized gains, offset by $948 thousand in gross realized losses.

There were no sales of securities during the year ended December 31, 2016.

Proceeds from sales of securities classified as available‑for‑sale of $109.4 million was received during the years ended December 31, 2015. Sales in 2015 included $76.5 million of the acquired securities from the Patriot acquisition and resulted in a net gain of $195 thousand, which is comprised of $225 thousand in gross realized gains offset by $30 thousand in gross realized losses.

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available-for-sale or held-to-maturity are evaluated for OTTI under FASB ASC 320, Investments—Debt and Equity Securities.

In determining OTTI, management considers many factors, including: (1)the length of time and the extent to which the fair value has been less than cost, (2)the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of the other-than-temporary impairment recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss.

As of December 31, 2017, the Company does not intend to sell any debt securities classified as held-to-maturity and management believes that the Company more, likely than not, will not be required to sell any debt securities that are in a loss position before their anticipated recovery, at which time the Company will receive full value for the securities. Furthermore, as of December 31, 2017, management does not have the intent to sell any of its securities classified as available-for-sale that are in a loss position and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of December 31, 2017, management believes any impairment in the Company’s securities is temporary and no impairment loss has been realized in the Company’s consolidated statements of income.

Declines in the fair value of individual securities below their cost that are other-than-temporary would result in writedowns, as a realized loss, to their fair value. In evaluating other-than-temporary impairment losses, management considers several factors including the severity and the duration that the fair value has been less than cost, the credit quality of the issuer, and whether it is more likely than not that the Company will be required to sell the security before a recovery in value. The Company has not realized any losses due to other-than-temporary impairment of securities as of December 31, 2017.

Securities with unrealized losses segregated by length of continuous unrealized loss position as of the dates set forth were as follows:



	December 31, 2017
	Less than 12 Months							12 Months or More
	Amortized Cost		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Losses			Fair Value

	(Dollars in thousands)
Available-for-sale:
SBA guaranteed securities	$	76,603	$	(948	)	$	75,655	$	—	$	—		$	—
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential	192,105		(1,608		)	190,497		9,152		(93		)	9,059
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: commercial	65,986		(500		)	65,486		—		—			—
Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential	210,034		(6,183		)	203,851		9,037		(251		)	8,786
Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: commercial	36,151		(472		)	35,679		—		—			—
Obligations of municipal subdivisions	6,436		(45		)	6,391		—		—
CRA qualified investment fund	—		—			—		11,337		(299		)	11,038
Total	$	587,315	$	(9,756	)	$	577,559	$	29,526	$	(643	)	$	28,883

Held-to-maturity:
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential	$	1,086	$	(9	)	$	1,077	$	6,265	$	(161	)	$	6,104
Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential	2,434		(20		)	2,414		—		—			—
Total	$	3,520	$	(29	)	$	3,491	$	6,265	$	(161	)	$	6,104



	December 31, 2016
	Less than 12 Months							12 Months or More
	Amortized Cost		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Losses			Fair Value

	(Dollars in thousands)
Available-for-sale:
Obligations of the U.S. Treasury and other U.S. government agencies or sponsored enterprises	$	100,517	$	(403	)	$	100,114	$	—	$	—		$	—
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential	60,233		(405		)	59,828		4,121		(25		)	4,096
Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential	29,916		(492		)	29,424		2,874		(71		)	2,803
Corporate debt securities	1,785		(14		)	1,771		—		—			—
Obligations of municipal subdivisions	236		(1		)	235		—		—			—
CRA qualified investment fund	11,183		(270		)	10,913		—		—			—
Total	$	203,870	$	(1,585	)	$	202,285	$	6,995	$	(96	)	$	6,899

Held-to-maturity:
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential	$	8,551	$	(234	)	$	8,317	$	860	$	(33	)	$	827
Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential	12,141		(191		)	11,950		7,644		(345		)	7,299
Total	$	20,692	$	(425	)	$	20,267	$	8,504	$	(378	)	$	8,126

The average loss on securities in an unrealized loss position was 1.69% and 1.04% of the amortized cost basis at December 31, 2017 and 2016, respectively. There were eighteen and nine securities in an unrealized loss position of greater than 12 months at December 31, 2017 and 2016, respectively.

The Company did not own securities of any one issuer (other than the U.S. government and its agencies or sponsored enterprises) for which the aggregate adjusted cost exceeds 10% of the consolidated shareholders’ equity at December 31, 2017 or 2016.

Securities with an amortized cost of $6.3 million and $12.2 million and fair value of $6.3 million and $12.2 million were pledged and available to be sold under repurchase agreements at December 31, 2017 and December 31, 2016, respectively. Securities with an amortized cost of $55.7 million and $73.0 million and fair value of $55.5 million and $72.6 million were pledged to various Federal Reserve Districts related to deposits of bankruptcy trustees at December 31, 2017 and 2016, respectively. Securities with an amortization cost and fair value of $1.3 million at December 31, 2016 were pledged to collateralize public deposits. In addition, securities with an amortized cost of $3.4 million and $5.2 million and fair value of $3.3 million and $5.2 million were pledged as collateral for the Company’s derivative instruments at December 31, 2017 and December 31, 2016, respectively.