INVESTMENT SECURITIES



	March 31, 2018									December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)									(in thousands)
AVAILABLE FOR SALE
U.S. Treasury and U.S. government agencies	$	147,678	$	27	$	(3,005	)	$	144,700	$	148,968	$	78	$	(1,791	)	$	147,255
Mortgage-backed securities, residential	421,077		158		(10,718		)	410,517		419,538		479		(5,763		)	414,254
Mortgage-backed securities, multifamily	13,200		—		(256		)	12,944		10,133		7		(63		)	10,077
Obligations of states and political subdivisions	50,671		189		(873		)	49,987		51,289		448		(417		)	51,320
Debt securities	5,000		94		—			5,094		5,000		140		—			5,140
	$	637,626	$	468	$	(14,852	)	$	623,242	$	634,928	$	1,152	$	(8,034	)	$	628,046



	March 31, 2018									December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)									(in thousands)
HELD TO MATURITY
U.S. government agencies	$	38,694	$	—	$	(793	)	$	37,901	$	33,415	$	24	$	(402	)	$	33,037
Mortgage-backed securities, residential	65,614		164		(1,984		)	63,794		54,991		249		(978		)	54,262
Mortgage-backed securities, multifamily	1,931		—		(44		)	1,887		1,957		—		(22		)	1,935
Obligations of states and political subdivisions	39,886		133		(412		)	39,607		43,318		306		(188		)	43,436
Debt securities	6,002		22		—			6,024		6,004		14		—			6,018
	$	152,127	$	319	$	(3,233	)	$	149,213	$	139,685	$	593	$	(1,590	)	$	138,688

The following table shows investment securities by stated maturity. Securities backed by mortgages have expected maturities that differ from contractual maturities because borrowers have the right to call or prepay, and are, therefore, classified separately with no specific maturity date (in thousands):



	Available for Sale				Held to Maturity
March 31, 2018	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	22,184	$	22,074	$	13,926	$	13,921
Due after one year through five years	102,466		100,885		39,602		39,172
Due after five years through ten years	49,826		48,236		27,775		27,247
Due after ten years	28,873		28,586		3,279		3,192
	203,349		199,781		84,582		83,532
Mortgage-backed securities	434,277		423,461		67,545		65,681
Total securities	$	637,626	$	623,242	$	152,127	$	149,213

The following table shows proceeds from sales of securities and gross gains and losses on sales of securities for the periods indicated (in thousands):



	For the Three Months Ended March 31,
	2018		2017
Sale proceeds	$	—	$	4,499
Gross gains	—		2,539
Gross losses	—		—

There were no other-than-temporary impairments during the three months ended March 31, 2018 or 2017.

Gains or losses on sales of investment securities are based on the net proceeds and the adjusted carrying amount of the securities sold using the specific identification method.

Securities with a carrying value of approximately $388.6 million and $400.4 million at March 31, 2018 and December 31, 2017, respectively, were pledged to secure public deposits and for other purposes required by applicable laws and regulations.

The following table indicates the length of time individual securities have been in a continuous unrealized loss position for the periods presented:



	Less Than 12 Months				12 Months or Longer				Total
March 31, 2018	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
					(dollars in thousands)
AVAILABLE FOR SALE
U.S. Treasury and U.S. government agencies	$	79,243	$	1,393	$	54,249	$	1,612	26	$	133,492	$	3,005
Mortgage-backed securities, residential	236,142		4,725		153,022		5,993		147	389,164		10,718
Mortgage-backed securities, multifamily	7,920		144		5,024		112		3	12,944		256
Obligations of states and political subdivisions	21,666		291		12,689		582		63	34,355		873
	$	344,971	$	6,553	$	224,984	$	8,299	239	$	569,955	$	14,852
HELD TO MATURITY
U.S. government agencies	$	31,295	$	372	$	6,605	$	421	7	$	37,900	$	793
Mortgage-backed securities, residential	41,131		1,110		18,323		874		32	59,454		1,984
Mortgage-backed securities, multifamily	1,887		44		—		—		2	1,887		44
Obligations of states and political subdivisions	20,440		222		5,948		190		38	26,388		412
	$	94,753	$	1,748	$	30,876	$	1,485	79	$	125,629	$	3,233



	Less Than 12 Months				12 Months or Longer				Total
December 31, 2017	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
	(dollars in thousands)
AVAILABLE FOR SALE
U.S. Treasury and U.S. government agencies	$	80,391	$	646	$	54,769	$	1,145	27	$	135,160	$	1,791
Mortgage-backed securities, residential	199,387		1,723		157,739		4,040		118	357,126		5,763
Mortgage-backed securities, multifamily	—		—		5,088		63		1	5,088		63
Obligations of states and political subdivisions	9,612		77		12,970		340		39	22,582		417
	$	289,390	$	2,446	$	230,566	$	5,588	185	$	519,956	$	8,034
HELD TO MATURITY
U.S. government agencies	$	15,371	$	95	$	6,720	$	307	4	$	22,091	$	402
Mortgage-backed securities, residential	26,090		426		19,203		552		25	45,293		978
Mortgage-backed securities, multifamily	1,935		22		—		—		2	1,935		22
Obligations of states and political subdivisions	15,353		56		6,028		132		23	21,381		188
	$	58,749	$	599	$	31,951	$	991	54	$	90,700	$	1,590

Management has evaluated the securities in the above table and has concluded that none of the securities are other-than-temporarily impaired. The fair values being below cost is due to interest rate movements and is deemed temporary. All investment securities are evaluated on a periodic basis to identify any factors that would require a further analysis. In evaluating the Company’s securities, management considers the following items:


•	The Company’s ability and intent to hold the securities, including an evaluation of the need to sell the security to meet certain liquidity measures, or whether the Company has sufficient levels of cash to hold the identified security in order to recover the entire amortized cost of the security;


•	The financial condition of the underlying issuer;


•	The credit ratings of the underlying issuer and if any changes in the credit rating have occurred;


•	The length of time the security’s fair value has been less than amortized cost; and


•	Adverse conditions related to the security or its issuer if the issuer has failed to make scheduled payments or other factors.

If the above factors indicate that an additional analysis is required, management will perform and consider the results of a discounted cash flow analysis.

Equity securities at fair value

The Company has an equity securities portfolio which consists of investments in other financial institutions for market appreciation purposes, and investments in Community Reinvestment funds. The market value of these investments was $18.4 million and $18.1 million as of March 31, 2018 and December 31, 2017, respectively. Upon implementation of Accounting Standards Update 2016-01 - Financial Instruments ("ASU 2016-01"), the Company made a cumulative adjustment of $2.0 million from other comprehensive income to retained earnings as of January 1, 2018. In the first quarter of 2018, the Company recorded $18,000 in market value loss on equity securities in other income.

As of March 31, 2018, the equity investments in other financial institutions and Community Reinvestment funds had a market value of $5.3 million and $13.1 million, respectively.

The Community Reinvestment funds include $9.5 million that are invested in government guaranteed loans, mortgage-backed securities, small business loans and other instruments supporting affordable housing and economic development. The Company may redeem these funds at the net asset value calculated at the end of the current business day less any unpaid management fees. There are no restrictions on redemptions for the holdings in these investments other than the notice required by the fund manager. There are no unfunded commitments related to these investments.

The investment funds also include $3.5 million that are primarily invested in community development loans that are guaranteed by the Small Business Administration (“SBA”). Because the funds are primarily guaranteed by the federal government there are minimal changes in market value between accounting periods. These funds can be redeemed with 60 days notice at the net asset value less unpaid management fees with the approval of the fund manager. As of March 31, 2018, the net amortized cost equaled the market value of the investment. There are no unfunded commitments related to these investments.