INVESTMENT SECURITIES

The amortized cost, gross unrealized gains and losses and the fair value of the Company's available for sale and held to maturity investment securities are as follows:



	March 31, 2019									December 31, 2018
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

AVAILABLE FOR SALE
U.S. Treasury and U.S. government agencies	$	141,088	$	94	$	(1,601	)	$	139,581	$	143,495	$	—	$	(2,568	)	$	140,927
Mortgage-backed securities, residential	442,358		1,473		(5,204		)	438,627		434,208		779		(8,843		)	426,144
Mortgage-backed securities, multifamily	30,956		135		(82		)	31,009		21,087		67		(204		)	20,950
Obligations of states and political subdivisions	44,850		362		(195		)	45,017		45,951		140		(586		)	45,505
Debt securities	5,000		4		—			5,004		5,000		92		—			5,092
	$	664,252	$	2,068	$	(7,082	)	$	659,238	$	649,741	$	1,078	$	(12,201	)	$	638,618



	March 31, 2019									December 31, 2018
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

HELD TO MATURITY
U.S. government agencies	$	32,461	$	—	$	(360	)	$	32,101	$	33,025	$	—	$	(677	)	$	32,348
Mortgage-backed securities, residential	82,070		246		(1,033		)	81,283		75,859		169		(1,838		)	74,190
Mortgage-backed securities, multifamily	1,827		—		(19		)	1,808		1,853		—		(35		)	1,818
Obligations of states and political subdivisions	36,450		274		(127		)	36,597		37,909		113		(328		)	37,694
Debt securities	6,500		—		(70		)	6,430		5,000		—		(118		)	4,882
	$	159,308	$	520	$	(1,609	)	$	158,219	$	153,646	$	282	$	(2,996	)	$	150,932

The following table lists contractual maturities of investment securities classified as available for sale and held to maturity as of March 31, 2019. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	Available for Sale				Held to Maturity
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
March 31, 2019
Due in one year or less	$	24,755	$	24,636	$	5,924	$	5,929
Due after one year through five years	116,056		115,089		42,423		42,361
Due after five years through ten years	32,550		32,602		24,379		24,144
Due after ten years	17,577		17,275		2,685		2,694
	190,938		189,602		75,411		75,128
Mortgage-backed securities	473,314		469,636		83,897		83,091
Total securities	$	664,252	$	659,238	$	159,308	$	158,219

There were no sales of available for sale or held to maturity securities during the three months ended March 31, 2019 and 2018.

Securities with a carrying value of approximately $511.3 million and $476.3 million at March 31, 2019 and December 31, 2018, respectively, were pledged to secure public deposits and for other purposes required by applicable laws and regulations.

The following tables 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
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
March 31, 2019
AVAILABLE FOR SALE
U.S. Treasury and U.S. government agencies	$	12,112	$	78	$	116,126	$	1,523	25	$	128,238	$	1,601
Mortgage-backed securities, residential	719		1		289,307		5,203		126	290,026		5,204
Mortgage-backed securities, multifamily	4,979		9		12,993		73		4	17,972		82
Obligations of states and political subdivisions	—		—		16,088		195		30	16,088		195
	$	17,810	$	88	$	434,514	$	6,994	185	$	452,324	$	7,082
HELD TO MATURITY
U.S. government agencies	$	—	$	—	$	32,101	$	360	6	$	32,101	$	360
Mortgage-backed securities, residential	9,012		27		47,210		1,006		31	56,222		1,033
Mortgage-backed securities, multifamily	—		—		1,808		19		2	1,808		19
Obligations of states and political subdivisions	—		—		8,222		127		7	8,222		127
Debt securities	3,930		70		—		—		1	3,930		70
	$	12,942	$	97	$	89,341	$	1,512	47	$	102,283	$	1,609



	Less Than 12 Months				12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Number of Securities	Fair Value		Unrealized Losses
December 31, 2018
AVAILABLE FOR SALE
U.S. Treasury and U.S. government agencies	$	20,588	$	216	$	120,338	$	2,352	27	$	140,926	$	2,568
Mortgage-backed securities, residential	10,119		58		316,851		8,785		139	326,970		8,843
Mortgage-backed securities, multifamily	1,977		2		12,911		202		4	14,888		204
Obligations of states and political subdivisions	1,289		2		26,522		584		50	27,811		586
	$	33,973	$	278	$	476,622	$	11,923	220	$	510,595	$	12,201
HELD TO MATURITY
U.S. government agencies	$	—	$	—	$	32,348	$	677	6	$	32,348	$	677
Mortgage-backed securities, residential	8,325		59		53,761		1,779		36	62,086		1,838
Mortgage-backed securities, multifamily	—		—		1,818		35		2	1,818		35
Obligations of states and political subdivisions	1,764		8		15,580		320		27	17,344		328
Debt securities	3,882		118		—		—		1	3,882		118
	$	13,971	$	185	$	103,507	$	2,811	72	$	117,478	$	2,996

Management has evaluated the securities in the above table and has concluded that none of the securities with unrealized losses has impairments that are other-than-temporary. Fair value below cost is solely due to interest rate movements and is deemed temporary.

Investment securities, including the mortgage-backed securities and corporate securities, are evaluated on a periodic basis to determine if factors are identified that would require 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 a discounted cash flow analysis evaluating the security.

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 $15.2 million and $15.9 million at March 31, 2019 and December 31, 2018, 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 three months of 2019, the Company recorded proceeds from sales of equity securities of $1.1 million while recording no sales in the first three months of 2018. The Company also recorded $353,000 in market value gain on equity securities in noninterest income for the first quarter of 2019 and $18,000 in market value loss in the same period of 2018.

As of March 31, 2019, the equity investments in other financial institutions and Community Reinvestment funds had a market value of $1.9 million and $13.4 million, respectively. The Community Reinvestment funds 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, 2019, the net amortized cost equaled the market value of the investment. There are no unfunded commitments related to these investments.

The Community Reinvestment funds include $9.8 million that are primarily 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.