Note 3—Investment Securities

The following is the amortized cost and fair value of investment securities held to maturity:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
December 31, 2017:
State and municipal obligations	$	2,529	$	27	$	—	$	2,556
December 31, 2016:
State and municipal obligations	$	6,094	$	156	$	—	$	6,250

The following is the amortized cost and fair value of investment securities available for sale:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
December 31, 2017:
Government-sponsored entities debt*	$	86,535	$	51	$	(1,077)	$	85,509
State and municipal obligations		216,812		3,749		(124)		220,437
Mortgage-backed securities**		1,350,200		2,103		(11,616)		1,340,687
Corporate securities		4,077		—		—		4,077
	$	1,657,624	$	5,903	$	(12,817)	$	1,650,710
December 31, 2016:
Government-sponsored entities debt*	$	85,488	$	—	$	(846)	$	84,642
State and municipal obligations		105,303		2,289		(190)		107,402
Mortgage-backed securities**		807,717		3,085		(7,225)		803,577
Corporate securities		3,658		473		(347)		3,784
	$	1,002,166	$	5,847	$	(8,608)	$	999,405

* The Company’s government-sponsored entities holdings are comprised of debt securities offered by Federal Home Loan Mortgage Corporation (“FHLMC”) or Freddie Mac, Federal National Mortgage Association (“FNMA”) or Fannie Mae, FHLB, and Federal Farm Credit Banks (“FFCB”). Also included in the Company’s government-sponsored entities are debt securities offered by the Small Business Administration (“SBA”), which have the full faith and credit backing of the United States Government.

** All of the mortgage-backed securities are issued by government-sponsored entities; there are no private-label holdings.

The following is the amortized cost and fair value of other investment securities:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
December 31, 2017:
Federal Home Loan Bank stock	$	16,967	$	—	$	—	$	16,967
Investment in unconsolidated subsidiaries		3,563		—		—		3,563
	$	20,530	$	—	$	—	$	20,530
December 31, 2016:
Federal Home Loan Bank stock	$	7,840	$	—	$	—	$	7,840
Investment in unconsolidated subsidiaries		1,642		—		—		1,642
	$	9,482	$	—	$	—	$	9,482

The Company has determined that the investment in Federal Home Loan Bank stock is not other than temporarily impaired as of December 31, 2017 and ultimate recoverability of the par value of these investments is probable.

The amortized cost and fair value of debt and equity securities at December 31, 2017 by contractual maturity are detailed below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties. Equity securities have no set maturity dates and are classified as “Due after ten years”.


	Securities				Securities
	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	—	$	—	$	3,143	$	3,143
Due after one year through five years		655		661		101,866		101,509
Due after five years through ten years		1,874		1,895		369,235		369,038
Due after ten years		—		—		1,183,380		1,177,020
	$	2,529	$	2,556	$	1,657,624	$	1,650,710

The following table summarizes information with respect to sales of available‑for‑sale and held-to-maturity securities:


	Year Ended December 31,
(Dollars in thousands)	2017		2016		2015
Securities Held to Maturity:
Sale proceeds	$	—	$	—	$	—
Gross realized gains	$	—	$	—	$	—
Gross realized losses		—		—		—
Net realized loss	$	—	$	—	$	—

Securities Available for Sale:
Sale proceeds	$	374,938	$	137	$	—
Gross realized gains	$	1,832	$	122	$	—
Gross realized losses		(411)		—		—
Net realized gain	$	1,421	$	122	$	—

The Company had 223 securities with gross unrealized losses at December 31, 2017. Information pertaining to securities with gross unrealized losses at December 31, 2017 and 2016, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:


	Less Than				Twelve Months
	Twelve Months				or More
	Gross				Gross
	Unrealized		Fair		Unrealized		Fair
(Dollars in thousands)	Losses		Value		Losses		Value
December 31, 2017:
Securities Available for Sale
Government-sponsored entities debt	$	403	$	27,442	$	674	$	52,324
State and municipal obligations		124		17,400		—		—
Mortgage-backed securities		4,493		610,051		7,123		322,258
Corporate securities		—		—		—		—
	$	5,020	$	654,893	$	7,797	$	374,582
December 31, 2016:
Securities Available for Sale
Government-sponsored entities debt	$	846	$	84,642	$	—	$	—
State and municipal obligations		190		11,506		—		—
Mortgage-backed securities		7,148		592,228		77		2,058
Corporate securities		—		—		347		1,395
	$	8,184	$	688,376	$	424	$	3,453

Management evaluates securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the financial condition and near-term prospects of the issuer, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that the Company will be required to sell the debt security prior to recovering its fair value, and (5) the anticipated outlook for changes in the general level of interest rates. As part of the Company’s evaluation of its intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, the Company considers its investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position.

The unrealized loss position of the debt securities continued to increase during 2017 from the unrealized loss position in 2016. This change was primarily related to the mortgage-backed securities category, and was the result of the increase in interest rates during the year. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, the results of reviews of the issuer’s financial condition, and the issuer’s anticipated ability to pay the contractual cash flows of the investments. The Company does not currently intend to sell the securities within the portfolio and it is not more-likely-than-not that the Company will be required to sell the debt securities; therefore, management does not consider these investments to be other-than-temporarily impaired at December 31, 2017. With respect to equity securities, the Company sold all of its marketable equity securities during the third and fourth quarters of 2017. The Company did record an OTTI charge of $753,000 related to two equity securities during the third quarter of 2017. This charge was recorded due to the fact that management made the decision to sell the two securities in the fourth quarter of 2017 and therefore, no longer had the intent to hold the investments for a period of time sufficient to allow for any anticipated recovery. Management continues to monitor all of its securities with a high degree of scrutiny. There can be no assurance that the Company will not conclude in future periods that conditions existing at that time indicate some or all of these securities may be sold or are other than temporarily impaired, which would require a charge to earnings in such periods.

At December 31, 2017 and 2016, investment securities with a carrying value of $766.0 million and $295.2 million, respectively, were pledged to secure public funds deposits and for other purposes required and permitted by law. At December 31, 2017 and 2016, the carrying amount of the securities pledged to collateralize repurchase agreements was $211.1 million and $238.3 million, respectively.