Investment Securities

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



	March 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	20,943	$	75	$	825	$	20,193
GSE mortgage-backed securities	55,926		561		976		55,511
Collateralized mortgage obligations: residential	194,647		103		6,743		188,007
Collateralized mortgage obligations: commercial	2,230		—		47		2,183
Mutual funds	2,100		—		74		2,026
Corporate debt securities	25,565		579		94		26,050
	$	301,411	$	1,318	$	8,759	$	293,970

	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	23,042	$	209	$	442	$	22,809
GSE mortgage-backed securities	58,620		825		321		59,124
Collateralized mortgage obligations: residential	202,573		90		4,508		198,155
Collateralized mortgage obligations: commercial	2,274		—		34		2,240
Mutual funds	2,100		—		39		2,061
Corporate debt securities	23,975		837		10		24,802
	$	312,584	$	1,961	$	5,354	$	309,191



	March 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	30,550	$	162	$	113	$	30,599
GSE mortgage-backed securities	33,930		—		598		33,332
Collateralized mortgage obligations: residential	7,120		—		387		6,733
Collateralized mortgage obligations: commercial	1,655		—		12		1,643
	$	73,255	$	162	$	1,110	$	72,307

	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	35,908	$	265	$	22	$	36,151
GSE mortgage-backed securities	35,751		171		219		35,703
Collateralized mortgage obligations: residential	7,450		—		321		7,129
Collateralized mortgage obligations: commercial	1,943		—		6		1,937
	$	81,052	$	436	$	568	$	80,920

With the exception of one private-label collateralized mortgage obligations (“CMOs”) with a balance remaining of $7,000 at March 31, 2018, all of the Company’s CMOs are government-sponsored enterprise (“GSE”) securities.

The following table presents the amortized cost and fair value of debt securities at March 31, 2018 by contractual maturity (in thousands). Actual maturities will differ from contractual maturities because of rights to call or repay obligations with or without penalties and scheduled and unscheduled principal payments on mortgage-backed securities and collateralized mortgage obligations.



	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	—	$	—
Due after one year through five years	7,124		7,116
Due after five years through ten years	43,042		43,443
Due after ten years	249,145		241,385
	$	299,311	$	291,944

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	1,392	$	1,389
Due after one year through five years	5,061		5,023
Due after five years through ten years	45,316		44,731
Due after ten years	21,486		21,164
	$	73,255	$	72,307

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



	March 31, 2018
	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	$	1,622	$	28	$	12,343	$	797	$	13,965	$	825
GSE mortgage-backed securities	35,985		791		5,568		185		41,553		976
Collateralized mortgage obligations: residential	54,829		1,208		130,399		5,535		185,228		6,743
Collateralized mortgage obligations: commercial	—		—		2,183		47		2,183		47
Mutual funds	2,026		74		—		—		2,026		74
Corporate debt securities	4,496		94		—		—		4,496		94
	$	98,958	$	2,195	$	150,493	$	6,564	$	249,451	$	8,759

	December 31, 2017
	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	$	596	$	5	$	12,716	$	437	$	13,312	$	442
GSE mortgage-backed securities	29,725		224		5,858		97		35,583		321
Collateralized mortgage obligations: residential	57,665		548		137,598		3,960		195,263		4,508
Collateralized mortgage obligations: commercial	—		—		2,240		34		2,240		34
Mutual funds	2,061		39		—		—		2,061		39
Corporate debt securities	2,990		10		—		—		2,990		10
	$	93,037	$	826	$	158,412	$	4,528	$	251,449	$	5,354



	March 31, 2018
	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	$	9,893	$	113	$	—	$	—	$	9,893	$	113
GSE mortgage-backed securities	$	28,673	$	380	$	4,658	$	218	$	33,331	$	598
Collateralized mortgage obligations: residential	$	—	$	—	$	6,734	$	387	$	6,734	$	387
Collateralized mortgage obligations: commercial	1,643		12		—		—		1,643		12
	$	40,209	$	505	$	11,392	$	605	$	51,601	$	1,110

	December 31, 2017
	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	$	6,340	$	22	$	—	$	—	$	6,340	$	22
GSE mortgage-backed securities	11,201		89		4,961		130		16,162		219
Collateralized mortgage obligations: residential	—		—		7,129		321		7,129		321
Collateralized mortgage obligations: commercial	1,937		6		—		—		1,937		6
	$	19,478	$	117	$	12,090	$	451	$	31,568	$	568

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. For equity securities, management reviews the near term prospects of the issuer, the nature and cause of the unrealized loss, the severity and duration of the impairments and other factors when determining if an unrealized loss is other than temporary. 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 March 31, 2018, 106 securities had unrealized losses totaling 3.17% of the individual securities’ amortized cost basis and 2.63% of the Company’s total amortized cost basis. Of the 106 securities, 45 had been in an unrealized loss position for over twelve months at March 31, 2018. These 45 securities had an amortized cost basis and unrealized loss of $169.1 million and $7.2 million, respectively. The unrealized losses on debt securities at March 31, 2018 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 March 31, 2018, 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 March 31, 2018.

During the three months ended March 31, 2018, the Company sold 1 security classified as available-for-sale. The security was sold at book value; therefore, no gain or loss was recorded on the transaction. During the three months ended March 31, 2017, the Company sold 10 securities classified as available-for-sale and 1 security classified as held-to-maturity. Of the available-for-sale securities, 7 securities were sold with gains totaling $108,000 and 3 securities were sold at a loss of $109,000 for a net loss of $1,000. The decision to sell the 1 held-to-maturity security, which was sold at a gain of $7,000, was based on the pre-refunding of the bond which would accelerate the maturity of the bond by 15 years with an anticipated call date within six months.

Securities with an aggregate carrying value of approximately $187.0 million and $177.9 million at March 31, 2018 and December 31, 2017, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.