Investment Securities

The portfolio of investment securities consisted of the following (in thousands):



	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	36,500	$	979	$	48	$	37,431
GSE mortgage-backed securities	88,813		2,981		55		91,739
Collateralized mortgage obligations: residential	148,819		690		927		148,582
Collateralized mortgage obligations: commercial	5,653		9		45		5,617
Mutual funds	2,100		16		—		2,116
	$	281,885	$	4,675	$	1,075	$	285,485

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	10,339	$	—	$	112	$	10,227
Obligations of state and political subdivisions	43,079		1,555		29		44,605
GSE mortgage-backed securities	106,208		3,183		288		109,103
Collateralized mortgage obligations: residential	62,093		266		1,520		60,839
Collateralized mortgage obligations: commercial	24,462		190		107		24,545
Other asset-backed securities	24,041		321		19		24,343
Collateralized debt obligation	266		952		—		1,218
Mutual funds	2,100		4		—		2,104
	$	272,588	$	6,471	$	2,075	$	276,984



	September 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	43,933	$	552	$	38	$	44,447
GSE mortgage-backed securities	58,420		1,212		82		59,550
Collateralized mortgage obligations: residential	11,284		—		250		11,034
Collateralized mortgage obligations: commercial	7,406		51		—		7,457
	$	121,043	$	1,815	$	370	$	122,488

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	45,914	$	267	$	192	$	45,989
GSE mortgage-backed securities	67,268		1,080		164		68,184
Collateralized mortgage obligations: residential	12,709		—		479		12,230
Collateralized mortgage obligations: commercial	15,310		53		173		15,190
	$	141,201	$	1,400	$	1,008	$	141,593

With the exception of two private-label collateralized mortgage obligations (“CMOs”) with a combined balance remaining of $34,000 at September 30, 2015, all of the Company’s CMOs are government-sponsored enterprise (“GSE”) securities.

The amortized cost and fair value of debt securities at September 30, 2015 by contractual maturity are shown in the following table (in thousands) with the exception of other asset-backed securities, mortgage-backed securities, CMOs, and the collateralized debt obligation. Expected maturities may differ from contractual maturities for mortgage-backed securities and CMOs because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	5,074	$	5,114
Due after one year through five years	19,498		20,120
Due after five years through ten years	9,540		9,832
Due after ten years	2,388		2,365
Mortgage-backed securities and collateralized mortgage obligations:
Residential	237,632		240,321
Commercial	5,653		5,617
Mutual funds	2,100		2,116
	$	281,885	$	285,485

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	473	$	475
Due after one year through five years	2,923		2,960
Due after five years through ten years	11,105		11,273
Due after ten years	29,432		29,739
Mortgage-backed securities and collateralized mortgage obligations:
Residential	69,704		70,584
Commercial	7,406		7,457
	$	121,043	$	122,488

Details concerning investment securities with unrealized losses are as follows (in thousands):



	September 30, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
Obligations of state and political subdivisions	$	3,190	$	48	$	—	$	—	$	3,190	$	48
GSE mortgage-backed securities	15,860		45		3,754		10		19,614		55
Collateralized mortgage obligations: residential	33,689		128		31,772		799		65,461		927
Collateralized mortgage obligations: commercial	—		—		3,073		45		3,073		45
	$	52,739	$	221	$	38,599	$	854	$	91,338	$	1,075



	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
U.S. Government sponsored enterprises	$	4,973	$	32	$	5,254	$	80	$	10,227	$	112
Obligations of state and political subdivisions	2,029		29		—		—		2,029		29
GSE mortgage-backed securities	6,668		25		21,538		263		28,206		288
Collateralized mortgage obligations: residential	9,366		53		37,997		1,467		47,363		1,520
Collateralized mortgage obligations: commercial	—		—		3,747		107		3,747		107
Other asset-backed securities	6,401		19		—		—		6,401		19
	$	29,437	$	158	$	68,536	$	1,917	$	97,973	$	2,075



	September 30, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	6,544	$	19	$	1,302	$	19	$	7,846	$	38
GSE mortgage-backed securities	—		—		7,309		82		7,309		82
Collateralized mortgage obligations: residential	—		—		11,034		250		11,034		250
	$	6,544	$	19	$	19,645	$	351	$	26,189	$	370

	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	11,761	$	35	$	13,263	$	157	$	25,024	$	192
GSE mortgage-backed securities	—		—		8,142		164		8,142		164
Collateralized mortgage obligations: residential	—		—		12,230		479		12,230		479
Collateralized mortgage obligations: commercial	7,599		173		—		—		7,599		173
	$	19,360	$	208	$	33,635	$	800	$	52,995	$	1,008

Management evaluates each quarter whether unrealized losses on securities represent impairment that is other than temporary. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities. If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management then reviews for potential other than temporary impairment based upon other qualitative factors. In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market’s perception of the issuer’s financial health and the security’s credit quality. If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined. If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.

As of September 30, 2015, 42 securities had unrealized losses totaling 1.21% of the individual securities’ amortized cost basis and 0.36% of the Company’s total amortized cost basis. Of the 42 securities, 20 had been in an unrealized loss position for over twelve months at September 30, 2015. These 20 securities had an amortized cost basis and unrealized loss of $59.4 million and $1.2 million, respectively. The unrealized losses on debt securities at September 30, 2015 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased. Management identified no impairment related to credit quality. At September 30, 2015, management had the intent and ability to hold impaired securities and no impairment was evaluated as other than temporary. As a result, no other than temporary impairment losses were recognized during the three months ended September 30, 2015.

During the nine months ended September 30, 2015, the Company sold 21 securities classified as available-for-sale at a net gain of $1.2 million. Of the 21 securities sold, 11 were sold with gains totaling $1.4 million and 10 securities were sold at a loss of $135,000. During the nine months ended September 30, 2014, the Company sold 4 securities classified as available-for-sale at a net gain of $128,000. All of the securities were sold at a gain.

Securities with an aggregate carrying value of approximately $287.2 million and $279.8 million at September 30, 2015 and December 31, 2014, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.