(4) Investment Securities

(a) Securities available for sale

The amortized cost and fair value of the securities available for sale are as follows:

(dollars in thousands)	March 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

U.S. government sponsored enterprises	$	154,861		-		3,534		151,327
State and political subdivisions		515		10		-		525
Corporate bonds		35,347		-		120		35,227
Mortgage backed securities and collateralized mortgage obligations - residential		307,679		75		10,121		297,633
Small Business Administration- guaranteed participation securities		66,153		-		2,040		64,113
Mortgage backed securities and collateralized mortgage obligations - commercial		9,743		-		170		9,573
Other		685		-		-		685
Total Securities Available for Sale	$	574,983	$	85	$	15,985	$	559,083

(dollars in thousands)	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value


U.S. government sponsored enterprises	$	139,890		27		2,066		137,851
State and political subdivisions		515		10		-		525
Mortgage backed securities and collateralized mortgage obligations - residential		320,614		84		4,715		315,983
Corporate bonds		40,270		-		108		40,162
Small Business Administration- guaranteed participation securities		68,921		-		1,862		67,059
Mortgage backed securities and collateralized mortgage obligations - commercial		9,810		-		110		9,700
Other		685		-		-		685
Total Securities Available for Sale	$	580,705		121		8,861		571,965

The following table distributes the available for sale security portfolio as of March 31, 2018, based on the securities’ final maturity. Actual maturities may differ because of securities prepayments and the right of certain issuers to call or prepay their obligations without penalty. Securities not due at a single maturity date are presented separately:

(dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	30,717		30,617
Due in one year through five years		150,597		147,053
Due after five years through ten years		10,094		10,094
Mortgage backed securities and collateralized mortgage obligations - residential		307,679		297,633
Small Business Administration- guaranteed participation securities		66,153		64,113
Mortgage backed securities and collateralized mortgage obligations - commercial		9,743		9,573
	$	574,983		559,083

Gross unrealized losses on securities available for sale and the related fair values aggregated by the length of time that individual securities have been in an unrealized loss position, were as follows:

(dollars in thousands)	March 31, 2018
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unreal. Loss		Fair Value		Gross Unreal. Loss		Fair Value		Gross Unreal. Loss

U.S. government sponsored enterprises	$	59,076		895		82,251		2,639		141,327		3,534
Mortgage backed securities and collateralized mortgage obligations - residential		45,441		1,221		250,721		8,900		296,162		10,121
Corporate bonds		5,218		19		30,008		101		35,227		120
Small Business Administration- guaranteed participation securities		-		-		64,113		2,040		64,113		2,040
Mortgage backed securities and collateralized mortgage obligations - commercial		-		-		9,573		170		9,573		170
Total	$	109,735		2,135		436,666		13,850		546,401		15,985

(dollars in thousands)	December 31, 2017
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unreal. Loss		Fair Value		Gross Unreal. Loss		Fair Value		Gross Unreal. Loss

U.S. government sponsored enterprises	$	29,734		266		98,090		1,800		127,824		2,066
Mortgage backed securities and collateralized mortgage obligations - residential		48,080		371		266,394		4,344		314,474		4,715
Corporate bonds		-		-		40,162		108		40,162		108
Small Business Administration- guaranteed participation securities		-		-		67,059		1,862		67,059		1,862
Mortgage backed securities and collateralized mortgage obligations - commercial		-		-		9,700		110		9,700		110
Total	$	77,814		637		481,405		8,224		559,219		8,861

There were no gross realized gains or losses from calls of available for sale securities during the three months ended March 31, 2018 and 2017.

There were no sales of securities available for sale during the three months ended March 31, 2018 and 2017. There was $25.0 million and $20.7 million in proceeds from calls of securities available for sale during the three months ended March 31, 2018 and 2017, respectively.

(b) Held to maturity securities

The amortized cost and fair value of the held to maturity securities are as follows:

(dollars in thousands)	March 31, 2018
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value

Mortgage backed securities and collateralized mortgage obligations - residential	$	26,174		882		62		26,994
Total held to maturity	$	26,174		882		62		26,994

(dollars in thousands)	December 31, 2017
	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value

Mortgage backed securities and collateralized mortgage obligations - residential	$	27,551		1,150		-		28,701
Total held to maturity	$	27,551		1,150		-		28,701

The following table distributes the held to maturity portfolio as of March 31, 2018, based on the securities’ final maturity. Actual maturities may differ because of securities prepayments and the right of certain issuers to call or prepay their obligations without penalty. Securities not due at a single maturity date are presented separately:

(dollars in thousands)	Amortized Cost		Fair Value

Mortgage backed securities and collateralized mortgage obligations - residential		26,174		26,994
Total held to maturity	$	26,174		26,994

Gross unrecognized losses on securities held to maturity and the related fair values aggregated by the length of time that individual securities have been in an unrecognized loss position, were as follows:

(dollars in thousands)	March 31, 2018
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrecog. Loss		Fair Value		Gross Unrecog. Loss		Fair Value		Gross Unrecog. Loss

Mortgage backed securities and collateralized mortgage obligations - residential		9,539		62		-		-		9,539		62
Total	$	9,539		62		-		-		9,539		62

There were no unrecognized losses on held to maturity investments as of December 31, 2017.

There were no sales or transfers of held to maturity securities during the three months ended March 31, 2018 and 2017.

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 by type and applying the appropriate OTTI model. Investment securities classified as available for sale or held to maturity are evaluated for OTTI under ASC 320 “Investments – Debt and Equity Securities.”

In determining OTTI under the FASB ASC 320 model, 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 Company 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 any 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 OTTI recognized in earnings depends on whether management intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis. If management intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, the OTTI shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If management does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis, the OTTI on securities shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

As of March 31, 2018, the Company’s security portfolio included certain securities which were in an unrealized loss position. All such securities with the exception of corporate bonds were issuances from U.S. government sponsored entities. As it relates to corporate bonds, the company monitors the credit rating of the issuers and all were investment grade. The declines in fair value are attributable to changes in interest rates, 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 March 31, 2018.