INVESTMENT SECURITIES

The Company’s investment policy blends the Company’s liquidity needs and interest rate risk management with its desire to increase income and provide funds for expected growth in loans. The investment securities portfolio consists primarily of U.S. government-sponsored mortgage-backed securities and state, county and municipal securities. The Company’s portfolio and investing philosophy concentrate activities in obligations where the credit risk is limited. For the small portion of the Company’s portfolio found to present credit risk, the Company has reviewed the investments and financial performance of the obligors and believes the credit risk to be acceptable.

The amortized cost and estimated fair value of investment securities available for sale, along with unrealized gains and losses, are summarized as follows:



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2017
U.S. government sponsored agencies	$	1,000	$	4	$	—		$	1,004
State, county and municipal securities	140,190		3,271		(74		)	143,387
Corporate debt securities	46,704		661		(116		)	47,249
Mortgage-backed securities	626,927		3,774		(2,748		)	627,953
Total debt securities	$	814,821	$	7,710	$	(2,938	)	$	819,593

December 31, 2016
U.S. government sponsored agencies	$	999	$	21	$	—		$	1,020
State, county and municipal securities	149,899		2,605		(469		)	152,035
Corporate debt securities	32,375		167		(370		)	32,172
Mortgage-backed securities	641,362		2,700		(6,554		)	637,508
Total debt securities	$	824,635	$	5,493	$	(7,393	)	$	822,735

The amortized cost and fair value of available-for-sale securities at September 30, 2017 by contractual maturity are summarized in the table below. Expected maturities for mortgage-backed securities may differ from contractual maturities because in certain cases borrowers can prepay obligations without prepayment penalties. Therefore, these securities are not included in the following maturity summary.



(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	14,094	$	14,205
Due from one year to five years	57,385		58,204
Due from five to ten years	77,194		79,093
Due after ten years	39,221		40,138
Mortgage-backed securities	626,927		627,953
	$	814,821	$	819,593

Securities with a carrying value of approximately $238.6 million serve as collateral to secure public deposits, securities sold under agreements to repurchase and for other purposes required or permitted by law at September 30, 2017, compared with $618.2 million at December 31, 2016.

The following table details the gross unrealized losses and fair value of securities aggregated by category and duration of continuous unrealized loss position at September 30, 2017 and December 31, 2016.



	Less Than 12 Months					12 Months or More					Total
(dollars in thousands)	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
September 30, 2017
U.S. government sponsored agencies	$	—	$	—		$	—	$	—		$	—	$	—
State, county and municipal securities	11,333		(18		)	4,240		(56		)	15,573		(74		)
Corporate debt securities	8,131		(35		)	10,854		(81		)	18,985		(116		)
Mortgage-backed securities	225,258		(1,685		)	54,465		(1,063		)	279,723		(2,748		)
Total debt securities	$	244,722	$	(1,738	)	$	69,559	$	(1,200	)	$	314,281	$	(2,938	)

December 31, 2016
U.S. government sponsored agencies	$	—	$	—		$	—	$	—		$	—	$	—
State, county and municipal securities	47,647		(469		)	—		—			47,647		(469		)
Corporate debt securities	18,377		(363		)	493		(7		)	18,870		(370		)
Mortgage-backed securities	414,300		(6,177		)	11,791		(377		)	426,091		(6,554		)
Total debt securities	$	480,324	$	(7,009	)	$	12,284	$	(384	)	$	492,608	$	(7,393	)

As of September 30, 2017, the Company’s securities portfolio consisted of 421 securities, 119 of which were in an unrealized loss position. The majority of unrealized losses are related to the Company’s mortgage-backed securities, as discussed below.

At September 30, 2017, the Company held 101 mortgage-backed securities that were in an unrealized loss position, all of which were issued by U.S. government-sponsored entities and agencies. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2017.

At September 30, 2017, the Company held nine state, county and municipal securities and nine corporate debt securities that were in an unrealized loss position. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2017.

The Company’s investments in corporate debt include investments in regional and super-regional banks on which the Company prepares regular analysis through review of financial information and credit ratings. Investments in preferred securities are also concentrated in the preferred obligations of regional and super-regional banks through non-pooled investment structures. The Company did not have investments in “pooled” trust preferred securities at September 30, 2017 or December 31, 2016.

Management and the Company’s Asset and Liability Committee (the “ALCO Committee”) evaluate securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. While the majority of the unrealized losses on debt securities relate to changes in interest rates, corporate debt securities have also been affected by reduced levels of liquidity and higher risk premiums. Occasionally, management engages independent third parties to evaluate the Company’s position in certain corporate debt securities to aid management and the ALCO Committee in its determination regarding the status of impairment. The Company believes that each investment poses minimal credit risk and further, that the Company does not intend to sell these investment securities at an unrealized loss position at September 30, 2017, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Therefore, at September 30, 2017, these investments are not considered impaired on an other-than-temporary basis.

At September 30, 2017 and December 31, 2016, all of the Company’s mortgage-backed securities were obligations of government-sponsored agencies.

The following table is a summary of sales activities in the Company’s investment securities available for sale for the nine months ended September 30, 2017 and 2016:



(dollars in thousands)	September 30, 2017			September 30, 2016
Gross gains on sales of securities	$	38		$	312
Gross losses on sales of securities	(1		)	(218		)
Net realized gains on sales of securities available for sale	$	37		$	94

Sales proceeds	$	3,090		$	53,026