Investment Securities

The amortized cost and estimated fair value of securities were as follows:



	December 31, 2018
	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
	(dollars in thousands)
Investment securities available-for-sale:
U.S. Treasury	$	59,688	$	1,224	$	—		$	60,912
Agency	128,958		1,631		(519		)	130,070
Corporate debt	104,158		291		(906		)	103,543
Municipal bonds	238,914		1,941		(2,225		)	238,630
Collateralized mortgage obligation: residential	24,699		64		(425		)	24,338
Mortgage-backed securities: residential	554,751		1,112		(10,134		)	545,729
Total investment securities available-for-sale	1,111,168		6,263		(14,209		)	1,103,222
Investment securities held-to-maturity:
Mortgage-backed securities: residential	43,381		148		(686		)	42,843
Other	1,829		—		—			1,829
Total investment securities held-to-maturity	45,210		148		(686		)	44,672
Total investment securities	$	1,156,378	$	6,411	$	(14,895	)	$	1,147,894

	December 31, 2017
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gain		Loss			Fair Value
	(dollars in thousands)
Investment securities available-for-sale:
Agency	$	47,051	$	236	$	(78	)	$	47,209
Corporate debt	78,155		1,585		(194		)	79,546
Municipal bonds	228,929		3,942		(743		)	232,128
Collateralized mortgage obligation: residential	33,984		132		(335		)	33,781
Mortgage-backed securities: residential	398,664		266		(4,165		)	394,765
Total investment securities available-for-sale	786,783		6,161		(5,515		)	787,429
Investment securities held-to-maturity:
Mortgage-backed securities: residential	17,153		—		(209		)	16,944
Other	1,138		—		—			1,138
Total investment securities held-to-maturity	18,291		—		(209		)	18,082
Total investment securities	$	805,074	$	6,161	$	(5,724	)	$	805,511

Unrealized gains and losses on investment securities available-for-sale are recognized in stockholders’ equity as accumulated other comprehensive income or loss. At December 31, 2018, the Company had accumulated other comprehensive loss of $7.9 million, or $5.6 million net of tax, compared to accumulated other comprehensive income of $646,000 or $415,000 net of tax, at December 31, 2017.

At December 31, 2018, mortgage-backed securities with an estimated par value of $20.3 million and a fair value of $20.9 million were pledged as collateral for the Bank’s HOA reverse repurchase agreements, which totaled $75,000. The average balance of repurchase agreement facilities was $15.0 million during the year ended December 31, 2018.

At December 31, 2018 and 2017, there were not holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

The Company reviews individual securities classified as available-for-sale to determine whether a decline in fair value below the amortized cost basis is temporary, meaning: (i) those declines were due to interest rate changes and not to a deterioration in the creditworthiness of the issuers of those investment securities, and (ii) we have the ability to hold those securities until there is a recovery in their values or until their maturity.

If it is probable that the Company will be unable to collect all amounts due according to contractual terms of the debt security not impaired at acquisition, an other-than-temporary impairment shall be considered to have occurred. If an OTTI occurs, the cost basis of the security will be written down to its fair value as the new cost basis and the write down accounted for as a realized loss. There were no OTTI as of December 31, 2018 and 2017. As of December 2016, the Company realized OTTI losses net of recoveries of $205,000.

The table below shows the number, fair value and gross unrealized holding losses of the Company’s investment securities by investment category and length of time that the securities have been in a continuous loss position.



	December 31, 2018
	Less than 12 months						12 months or Longer						Total
	Number	Fair Value		Gross Unrealized Holding Losses			Number	Fair Value		Gross Unrealized Holding Losses			Number	Fair Value		Gross Unrealized Holding Losses
	(dollars in thousands)
Investment securities available-for-sale:
Agency	15	26,229		(333		)	6	10,434		(186		)	21	36,663		(519		)
Corporate debt	9	47,805		(471		)	8	19,369		(435		)	17	67,174		(906		)
Municipal bonds	60	45,083		(369		)	102	69,693		(1,856		)	162	114,776		(2,225		)
Collateralized mortgage obligation: residential	1	814		(1		)	8	18,104		(424		)	9	18,918		(425		)
Mortgage-backed securities: residential	20	70,839		(435		)	120	324,864		(9,699		)	140	395,703		(10,134		)
Total investment securities available-for-sale	105	190,770		(1,609		)	244	442,464		(12,600		)	349	633,234		(14,209		)
Investment securities held-to-maturity:
Mortgage-backed securities: residential	3	11,256		(81		)	3	15,741		(605		)	6	26,997		(686		)
Other	—	—		—			—	—		—			—	—		—
Total investment securities held-to-maturity	3	11,256		(81		)	3	15,741		(605		)	6	26,997		(686		)
Total investment securities	108	$	202,026	$	(1,690	)	247	$	458,205	$	(13,205	)	355	$	660,231	$	(14,895	)

	December 31, 2017
	Less than 12 months						12 months or Longer						Total
	Number	Fair Value		Gross Unrealized Holding Losses			Number	Fair Value		Gross Unrealized Holding Losses			Number	Fair Value		Gross Unrealized Holding Losses
	(dollars in thousands)
Investment securities available-for-sale:
Agency	6	$	13,754	$	(78	)	—	$	—	$	—		6	$	13,754	$	(78	)
Corporate debt	4	10,079		(64		)	2	6,076		(130		)	6	16,155		(194		)
Municipal bonds	103	61,313		(268		)	30	15,658		(475		)	133	76,971		(743		)
Collateralized mortgage obligation: residential	5	13,971		(149		)	3	8,943		(186		)	8	22,914		(335		)
Mortgage-backed securities: residential	66	220,951		(1,600		)	41	110,062		(2,565		)	107	331,013		(4,165		)
Total available-for-sale	184	320,068		(2,159		)	76	140,739		(3,356		)	260	460,807		(5,515		)
Investment securities held-to-maturity:
Mortgage-backed securities: residential	2	10,745		(133		)	1	6,198		(76		)	3	16,943		(209		)
Other	—	—		—			—	—		—			—	—		—
Total held-to-maturity	2	10,745		(133		)	1	6,198		(76		)	3	16,943		(209		)
Total securities	186	$	330,813	$	(2,292	)	77	$	146,937	$	(3,432	)	263	$	477,750	$	(5,724	)

The amortized cost and estimated fair value of investment securities available for sale at December 31, 2018, by contractual maturity are shown in the table below.



	One Year or Less				More than One Year to Five Years				More than Five Years to Ten Years				More than Ten Years				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(dollars in thousands)
Investment securities available-for-sale:
Treasury	$	—	$	—	$	10,407	$	10,606	$	49,281	$	50,306	$	—	$	—	$	59,688	$	60,912
Agency	992		991		35,103		35,769		74,149		74,926		18,714		18,384		128,958		130,070
Corporate	—		—		—		—		104,158		103,543		—		—		104,158		103,543
Municipal bonds	5,271		5,264		29,715		29,704		70,354		69,581		133,574		134,081		238,914		238,630
Collateralized mortgage obligation: residential	—		—		—		—		815		814		23,884		23,524		24,699		24,338
Mortgage-backed securities: residential	—		—		1,569		1,527		162,855		161,964		390,327		382,238		554,751		545,729
Total investment securities available-for-sale	6,263		6,255		76,794		77,606		461,612		461,134		566,499		558,227		1,111,168		1,103,222
Investment securities held-to-maturity:
Mortgage-backed securities: residential	—		—		928		942		—		—		42,453		41,901		43,381		42,843
Other	—		—		—		—		—		—		1,829		1,829		1,829		1,829
Total investment securities held-to-maturity	—		—		928		942		—		—		44,282		43,730		45,210		44,672
Total investment securities	$	6,263	$	6,255	$	77,722	$	78,548	$	461,612	$	461,134	$	610,781	$	601,957	$	1,156,378	$	1,147,894

During the years ended December 31, 2018, 2017 and 2016, the Company recognized gross gains on sales of available-for-sale securities in the amounts of $1.6 million, $3.1 million and $1.8 million, respectively. During the years ended December 31, 2018, 2017 and 2016, the Company recognized gross losses on sales of available-for-sale securities in the amounts of $208,000, $386,000 and $9,000, respectively. The Company had net proceeds from the sale or maturity/call of available-for-sale securities of $407.0 million, $268.6 million and $230.9 million during the years ended December 31, 2018, 2017 and 2016, respectively.

FHLB, FRB and other stock

At December 31, 2018, the Company had $19.6 million in FHLB stock, $51.5 million in FRB stock and $37.7 million in other stock, all carried at cost. During the years ended December 31, 2018 and 2017, FHLB had repurchased $24.9 million and $10.3 million, respectively, of the Company’s excess FHLB stock through their stock repurchase program. During the year ended December 31, 2016, FHLB did not repurchase any of the Company’s excess FHLB stock through their stock repurchase program. The Company evaluates its investments in FHLB and other stock for impairment periodically, including their capital adequacy and overall financial condition. No impairment losses have been recorded through December 31, 2018.