4 - INVESTMENT SECURITIES

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



	June 30, 2018
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(in thousands)	Cost		Gains		Losses		Value
Held-to-Maturity Securities:
State and municipals	$	5,060	$	55	$	—	$	5,115
Pass-through mortgage securities		295		17		—		312
Collateralized mortgage obligations		220		6		—		226
	$	5,575	$	78	$	—	$	5,653
Available-for-Sale Securities:
State and municipals	$	461,047	$	4,833	$	(5,444)	$	460,436
Pass-through mortgage securities		74,603		24		(2,767)		71,860
Collateralized mortgage obligations		276,781		—		(7,218)		269,563
	$	812,431	$	4,857	$	(15,429)	$	801,859

	December 31, 2017
Held-to-Maturity Securities:
State and municipals	$	6,970	$	78	$	—	$	7,048
Pass-through mortgage securities		311		21		—		332
Collateralized mortgage obligations		355		14		—		369
	$	7,636	$	113	$	—	$	7,749
Available-for-Sale Securities:
State and municipals	$	453,158	$	10,051	$	(1,886)	$	461,323
Pass-through mortgage securities		72,539		84		(1,232)		71,391
Collateralized mortgage obligations		190,175		15		(2,776)		187,414
	$	715,872	$	10,150	$	(5,894)	$	720,128

At June 30, 2018 and December 31, 2017, investment securities with a carrying value of $460,671,000 and $423,360,000, 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, 2018 and December 31, 2017.

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, 2018
	Less than				12 Months
	12 Months				or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(in thousands)	Value		Loss		Value		Loss		Value		Loss
State and municipals	$	153,335	$	(2,896)	$	26,941	$	(2,548)	$	180,276	$	(5,444)
Pass-through mortgage securities		19,588		(513)		47,729		(2,254)		67,317		(2,767)
Collateralized mortgage obligations		211,754		(4,325)		57,754		(2,893)		269,508		(7,218)
Total temporarily impaired	$	384,677	$	(7,734)	$	132,424	$	(7,695)	$	517,101	$	(15,429)

	December 31, 2017
State and municipals	$	54,732	$	(574)	$	28,723	$	(1,312)	$	83,455	$	(1,886)
Pass-through mortgage securities		10,172		(81)		52,652		(1,151)		62,824		(1,232)
Collateralized mortgage obligations		130,267		(1,230)		54,751		(1,546)		185,018		(2,776)
Total temporarily impaired	$	195,171	$	(1,885)	$	136,126	$	(4,009)	$	331,297	$	(5,894)

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, 2018.

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



	Six Months Ended				Three Months Ended
(in thousands)	June 30,				June 30,
	2018		2017		2018		2017

Proceeds	$	—	$	40,011	$	—	$	—

Gross gains	$	—	$	366	$	—	$	—
Gross losses		—		(309)		—		—
Net gain	$	—	$	57	$	—	$	—

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

Sales of Held-to-Maturity Securities. There were no sales of held-to-maturity securities during the six months ended June 30, 2018. 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.

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, 2018 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 mortgage 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.



(in thousands)	Amortized Cost		Fair Value
Held-to-Maturity Securities:
Within one year	$	2,988	$	2,995
After 1 through 5 years		2,072		2,120
After 5 through 10 years		—		—
After 10 years		—		—
Mortgage-backed securities		515		538
	$	5,575	$	5,653
Available-for-Sale Securities:
Within one year	$	42,866	$	43,606
After 1 through 5 years		74,020		74,586
After 5 through 10 years		172,977		173,052
After 10 years		171,184		169,192
Mortgage-backed securities		351,384		341,423
	$	812,431	$	801,859