4 - INVESTMENT SECURITIES

The following tables set forth the amortized cost and estimated fair values of the Bank’s investment securities.



	June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Held-to-Maturity Securities:	(in thousands)
State and municipals	$	8,362	$	117	$	—	$	8,479
Pass-through mortgage securities		334		28		—		362
Collateralized mortgage obligations		505		26		—		531
	$	9,201	$	171	$	—	$	9,372
Available-for-Sale Securities:
State and municipals	$	443,586	$	12,735	$	(1,477)	$	454,844
Pass-through mortgage securities		158,948		116		(2,347)		156,717
Collateralized mortgage obligations		129,063		249		(1,300)		128,012
	$	731,597	$	13,100	$	(5,124)	$	739,573

	December 31, 2016
Held-to-Maturity Securities:
State and municipals	$	10,419	$	177	$	—	$	10,596
Pass-through mortgage securities		361		33		—		394
Collateralized mortgage obligations		607		40		—		647
	$	11,387	$	250	$	—	$	11,637
Available-for-Sale Securities:
State and municipals	$	444,154	$	10,137	$	(3,631)	$	450,660
Pass-through mortgage securities		188,527		156		(2,874)		185,809
Collateralized mortgage obligations		179,993		862		(2,025)		178,830
	$	812,674	$	11,155	$	(8,530)	$	815,299

At June 30, 2017 and December 31, 2016, investment securities with a carrying value of $453,295,000 and $415,419,000, respectively, were pledged as collateral to secure public deposits and borrowed funds.

There were no holdings of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity at June 30, 2017 and December 31, 2016.

Securities With Unrealized Losses. The following tables set forth securities with unrealized losses presented by the length of time the securities have been in a continuous unrealized loss position.



	June 30, 2017
	Less than				12 Months
	12 Months				or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(in thousands)
State and municipals	$	58,324	$	(1,465)	$	1,455	$	(12)	$	59,779	$	(1,477)
Pass-through mortgage securities		136,804		(2,200)		8,225		(147)		145,029		(2,347)
Collateralized mortgage obligations		99,013		(1,126)		6,620		(174)		105,633		(1,300)
Total temporarily impaired	$	294,141	$	(4,791)	$	16,300	$	(333)	$	310,441	$	(5,124)

	December 31, 2016
State and municipals	$	117,181	$	(3,631)	$	—	$	—	$	117,181	$	(3,631)
Pass-through mortgage securities		175,000		(2,874)		—		—		175,000		(2,874)
Collateralized mortgage obligations		125,424		(1,820)		7,737		(205)		133,161		(2,025)
Total temporarily impaired	$	417,605	$	(8,325)	$	7,737	$	(205)	$	425,342	$	(8,530)

Because the unrealized losses reflected in the preceding tables are deemed by management to be attributable to changes in interest rates and not credit losses, and because management does not have the intent to sell these securities and it is not more likely than not that it will be required to sell these securities before their anticipated recovery, the Bank does not consider these securities to be other-than-temporarily impaired at June 30, 2017.

Sales of Available-for-Sale Securities. Sales of available-for-sale securities were as follows:



	Six Months Ended				Three Months Ended
	June 30,				June 30,
	2017		2016		2017		2016
	(in thousands)
Proceeds	$	40,011	$	40,989	$	—	$	40,989

Gross gains	$	366	$	1,845	$	—	$	1,845
Gross losses		(309)		(18)		—		(18)
Net gain	$	57	$	1,827	$	—	$	1,827

Income tax expense related to the net realized gains was $24,000 for the six months ended June 30, 2017 and $761,000 for the six and three months ended June 30, 2016.

Sales of Held-to-Maturity Securities. During the second quarter of 2017 the Bank sold one municipal security that was classified as held-to-maturity. The sale was in response to a significant deterioration in the creditworthiness of the issuer. The security sold had a carrying value of $354,000 at the time of sale and the Bank realized a gain upon sale of $1,000.

During the second quarter of 2016, the Bank sold one mortgage-backed security that was classified as held-to-maturity. The sale occurred after the Bank collected 85% or more of the principal outstanding at acquisition. The security sold had a carrying value of $106,000 at the time of sale and the Bank realized a gain upon sale of $17,000.

Maturities. The following table sets forth by maturity the amortized cost and fair value of the Bank’s state and municipal securities at June 30, 2017 based on the earlier of their stated maturity or, if applicable, their pre-refunded date. The remaining securities in the Bank’s investment securities portfolio are mortgage-backed securities, consisting of pass-through securities and collateralized mortgage obligations. Although these securities are expected to have substantial periodic repayments they are reflected in the table below in aggregate amounts.



	Amortized Cost		Fair Value
Held-to-Maturity Securities:	(in thousands)
Within one year	$	3,702	$	3,719
After 1 through 5 years		4,126		4,224
After 5 through 10 years		534		536
After 10 years		—		—
Mortgage-backed securities		839		893
	$	9,201	$	9,372
Available-for-Sale Securities:
Within one year	$	16,912	$	17,172
After 1 through 5 years		79,797		82,739
After 5 through 10 years		172,873		177,968
After 10 years		174,004		176,965
Mortgage-backed securities		288,011		284,729
	$	731,597	$	739,573