SECURITIES

Components of the available for sale portfolio are as follows:

	September 30, 2016
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(Dollars in thousands)
Available for Sale
U.S. Treasury and government sponsored entities' securities	$	188,311	$	7,416	$	—		$	195,727
States of the U.S. and political subdivisions		49,409		1,357		(1	)		50,765
Mortgage-backed GSE securities: residential		105,963		2,014		—			107,977
Total	$	343,683	$	10,787	$	(1	)	$	354,469

	December 31, 2015
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(Dollars in thousands)
Available for Sale
U.S. Treasury and government sponsored entities' securities	$	221,500	$	159	$	(3,009	)	$	218,650
States of the U.S. and political subdivisions		10,848		192		—			11,040
Mortgage-backed GSE securities: residential		129,155		55		(1,230	)		127,980
Total	$	361,503	$	406	$	(4,239	)	$	357,670

Components of held to maturity securities portfolio are as follows:

	September 30, 2016
			Gross		Gross
	Amortized		unrecognized		unrecognized		Fair
	cost		gains		losses		value
	(Dollars in thousands)
Held to maturity
Mortgage-backed GSE securities: residential	$	89,642	$	1,646	$	—	$	91,288
States of the U.S. and political subdivisions		13,560		361		—		13,921
Total	$	103,202	$	2,007	$	—	$	105,209

	December 31, 2015
			Gross		Gross
	Amortized		unrecognized		unrecognized			Fair
	cost		gains		losses			value
	(Dollars in thousands)
Held to maturity
Mortgage-backed GSE securities: residential	$	100,322	$	—	$	(1,203	)	$	99,119
States of the U.S. and political subdivisions		10,377		148		—			10,525
Total	$	110,699	$	148	$	(1,203	)	$	109,644

Debt securities available for sale by contractual maturity, repricing or expected call date are shown below:

	September 30, 2016
	Amortized cost		Fair value
	(Dollars in thousands)
Due in one year or less	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		173,563		180,115
Due after ten years		64,157		66,377
Mortgage-backed GSE securities: residential		105,963		107,977
Total	$	343,683	$	354,469

Debt securities held to maturity by contractual maturity, repricing or expected call date are shown below:

	September 30, 2016
	Amortized cost		Fair value
	(Dollars in thousands)
Due in one year or less	$	4,300	$	4,318
Due after one year through five years		—		—
Due after five years through ten years		4,268		4,429
Due after ten years		4,992		5,174
Mortgage-backed GSE securities: residential		89,642		91,288
Total	$	103,202	$	105,209

Securities pledged for public funds were approximately $150.6 million at September 30, 2016 and $107.1 million at December 31, 2015.

Securities available for sale that have been in an unrealized loss position for less than twelve months or twelve months or more at September 30, 2016 are as follows:

	September 30, 2016
	Less than 12 months					12 months or more				Total
	Fair		Unrealized loss			Fair		Unrealized		Fair		Unrealized
	value		Loss			value		Loss		value		Loss
	(Dollars in thousands)
Description of securities:
U.S. Treasury and government sponsored entities	$	—	$	—		$	—	$	—	$	—	$	—
States of the U.S. and political subdivisions		1,615		(1	)		—		—		1,615		(1	)
Mortgage-backed GSE securities: residential		—		—			—		—		—		—
Total temporarily impaired securities	$	1,615	$	(1	)	$	—	$	—	$	1,615	$	(1	)

Securities available for sale that have been in an unrealized loss position for less than twelve months or twelve months or more at December 31, 2015 are as follows:

	December 31, 2015
	Less than 12 months					12 months or more					Total
	Fair		Unrealized loss			Fair		Unrealized			Fair		Unrealized
	value		Loss			value		Loss			value		Loss
	(Dollars in thousands)
Description of securities:
U.S. Treasury and government sponsored entities	$	139,876	$	(1,654	)	$	55,055	$	(1,355	)	$	194,931	$	(3,009	)
Mortgage-backed GSE securities: residential		100,585		(842	)		14,278		(388	)		114,863		(1,230	)
Total temporarily impaired securities	$	240,461	$	(2,496	)	$	69,333	$	(1,743	)	$	309,794	$	(4,239	)

Securities held to maturity that have been in an unrecognized loss position for less than twelve months or twelve months or more are as follows:

	September 30, 2016
	Less than 12 months					12 months or more					Total
	Fair		Unrealized loss			Fair		Unrealized			Fair		Unrealized
	value		Loss			value		Loss			value		Loss
	(Dollars in thousands)
Description of securities:
Mortgage-backed GSE securities: residential	$	—	$	—		$	28,626	$	(182	)	$	28,626	$	(182	)
States of the U.S. and political subdivisions		—		—			—		—			—		—
Total temporarily impaired securities	$	—	$	—		$	28,626	$	(182	)	$	28,626	$	(182	)

	December 31, 2015
	Less than 12 months					12 months or more					Total
	Fair		Unrealized loss			Fair		Unrealized			Fair		Unrealized
	value		Loss			value		Loss			value		Loss
	(Dollars in thousands)
Description of securities:
Mortgage-backed GSE securities: residential		22,723		(289	)		76,396		(2,390	)		99,119		(2,679	)
Total temporarily impaired securities	$	22,723	$	(289	)	$	76,396	$	(2,390	)	$	99,119	$	(2,679	)

During the third quarter of 2015, Home Savings transferred securities with a total amortized cost of $105.3 million with a corresponding fair value of $103.8 million from available for sale to held to maturity. The net unrealized loss, net of taxes, on these securities at the date of transfer was $999,000. The fair value at the date of transfer becomes the securities’ new cost basis. The unrealized holding loss at the time of transfer continues to be reported in accumulated other comprehensive income, net of tax and is amortized over the remaining lives of the securities as an adjustment of the yield. The amortization of the unamortized holding loss reported in accumulated other comprehensive income will directly offset the effect on interest income from the accretion of the reduced amortized cost for the transferred securities. Because of this transfer, the total losses less than 12 months and greater than 12 months reported in the table above will not agree to the unrealized losses reported in the inventory of held to maturity securities. The inventory table reports unrealized gains and losses based upon the transferred securities adjusted cost basis and current fair value. The reporting of losses less than 12 months and greater than 12 months represents that actual period of time that these securities have been in an unrealized loss position and the securities amortized cost basis as if the transfer did not occur.

There were no U.S. Treasury and government sponsored entities (GSE) securities that were temporarily impaired at September 30, 2016. All of the U.S. Treasury and government sponsored entities (GSE) securities that were temporarily impaired at December 31, 2015, were impaired due to the level of interest rates at that time of purchase compared to current interest rates. Unrealized losses on these securities have not been recognized into income as of December 31, 2015 because the issuer’s securities are of high credit quality (rated AA or higher), it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions. There is risk that longer term rates could rise further resulting in greater unrealized losses. The Company expects to realize all interest and principal on these securities and has no intent to sell and more than likely will not be required to sell these securities before their anticipated recovery.

All of the obligations of U.S. states and political subdivisions that were temporarily impaired at September 30, 2016, were impaired due to the level of interest rates at that time. Unrealized losses on these securities have not been recognized into income as of September 30, 2016 because the issuer’s securities are of high credit quality (rated AA or higher), it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions.

All of the mortgage-backed securities that were temporarily impaired at September 30, 2016 and December 31, 2015, were issued by U.S. government sponsored agencies, primarily Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support. 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 did not consider these securities to be other-than-temporarily impaired at September 30, 2016 or December 31, 2015. The Company expects to realize all interest and principal on these securities.

Proceeds from the sale of available for sale securities were $5.2 million and $0, for the three months ended September 30, 2016 and 2015, respectively. Gross gains of $218,000 and $0 were realized on these sales during the three months ended September 30, 2016 and 2015, respectively. Income tax expense related to net realized gains was $76,000 and $0 for the three months ended September 30, 2016 and 2015, respectively.

Proceeds from the sale of available for sale securities were $33.7 million and $5.2 million for the nine months ended September 30, 2016 and 2015, respectively. Gross gains of $604,000 and $11,000 were realized on these sales during the nine months ended September 30, 2016 and 2015, respectively. Income tax expense related to net realized gains was $211,000 and $4,000 for the nine months ended September 30, 2016 and 2015, respectively.