SECURITIES

The amortized cost and fair value of available for sale securities and the related pre-tax gross unrealized gains and losses recognized in accumulated other comprehensive income are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2018
U.S. Government agency debt obligations	$	184,422,000	$	4,000	$	(11,257,000	)	$	173,169,000
Mortgage-backed securities		41,104,000		278,000		(1,031,000	)		40,351,000
Municipal general obligation bonds		118,881,000		404,000		(1,625,000	)		117,660,000
Municipal revenue bonds		3,910,000		6,000		(73,000	)		3,843,000
Other investments		2,018,000		0		(53,000	)		1,965,000

	$	350,335,000	$	692,000	$	(14,039,000	)	$	336,988,000

December 31, 2017
U.S. Government agency debt obligations	$	175,953,000	$	99,000	$	(6,352,000	)	$	169,700,000
Mortgage-backed securities		38,967,000		335,000		(510,000	)		38,792,000
Municipal general obligation bonds		121,040,000		891,000		(638,000	)		121,293,000
Municipal revenue bonds		3,978,000		30,000		(30,000	)		3,978,000
Other investments		2,010,000		0		(29,000	)		1,981,000

	$	341,948,000	$	1,355,000	$	(7,559,000	)	$	335,744,000

Securities with unrealized losses at

March 31, 2018

and

December 31, 2017,

aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows:

	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
March 31, 2018
U.S. Government agency debt obligations	$	44,594,000	$	1,464,000	$	126,600,000	$	9,793,000	$	171,194,000	$	11,257,000
Mortgage-backed securities		14,519,000		479,000		18,867,000		552,000		33,386,000		1,031,000
Municipal general obligation bonds		43,826,000		615,000		43,537,000		1,010,000		87,363,000		1,625,000
Municipal revenue bonds		1,499,000		16,000		1,159,000		57,000		2,658,000		73,000
Other investments		1,518,000		53,000		0		0		1,518,000		53,000

	$	105,956,000	$	2,627,000	$	190,163,000	$	11,412,000	$	296,119,000	$	14,039,000

	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
December 31, 2017
U.S. Government agency debt obligations	$	35,677,000	$	434,000	$	115,374,000	$	5,918,000	$	151,051,000	$	6,352,000
Mortgage-backed securities		10,179,000		156,000		21,084,000		354,000		31,263,000		510,000
Municipal general obligation bonds		12,807,000		114,000		54,703,000		524,000		67,510,000		638,000
Municipal revenue bonds		0		0		1,187,000		30,000		1,187,000		30,000
Other investments		1,510,000		29,000		0		0		1,510,000		29,000

	$	60,173,000	$	733,000	$	192,348,000	$	6,826,000	$	252,521,000	$	7,559,000

We evaluate securities for other-than-temporary impairment at least on a quarterly basis. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability we have to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. For those debt securities whose fair value is less than their amortized cost basis, we also consider our intent to sell the security, whether it is more likely than

not

that we will be required to sell the security before recovery and if we do

not

expect to recover the entire amortized cost basis of the security. In analyzing an issuer’s financial condition, we

may

consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition.

March 31, 2018,

394

debt securities and

one

mutual fund with fair values totaling

$296

million have unrealized losses aggregating

$14.0

million. After we considered whether the securities were issued by the federal government or its agencies and whether downgrades by bond rating agencies had occurred, we determined that the unrealized losses were due to changing interest rate environments. As we do

not

intend to sell our debt securities before recovery of their cost basis and we believe it is more likely than

not

that we will

not

be required to sell our debt securities before recovery of the cost basis,

unrealized losses are deemed to be other-than-temporary.

The amortized cost and fair value of debt securities at

March 31, 2018,

by maturity, are shown in the following table. The contractual maturity is utilized for U.S. Government agency debt obligations and municipal bonds. Expected maturities

may

differ from contractual maturities because borrowers

may

have the right to call or prepay obligations with or without call or prepayment penalties. Securities

not

due at a single maturity date, primarily mortgage-backed securities, are shown separately. Weighted average yields are also reflected, with yields for municipal securities shown at their tax equivalent yield.

	Weighted
	Average		Amortized		Fair
	Yield (%)		Cost		Value

Due in 2018		1.86	$	28,193,000	$	28,181,000
Due in 2019 through 2023		2.12		65,051,000		64,576,000
Due in 2024 through 2028		2.52		99,189,000		94,685,000
Due in 2029 and beyond		2.95		114,780,000		107,230,000
Mortgage-backed securities		2.33		41,104,000		40,351,000
Other investments		2.84		2,018,000		1,965,000

Total available for sale securities		2.51	$	350,335,000	$	336,988,000

Securities issued by the State of Michigan and all its political subdivisions had a combined amortized cost of

$112

million at

March 31, 2018

and

December 31, 2017,

with estimated market values of

$111

million and

$112

million, respectively. Securities issued by all other states and their political subdivisions had a combined amortized cost of

$10.8

million and

$12.9

million at

March 31, 2018

and

December 31, 2017,

respectively, with estimated market values of

$10.7

million and

$13.0

million, respectively. Total securities of any other specific issuer, other than the U.S. Government and its agencies and the State of Michigan and all its political subdivisions, did

not

exceed

10%

of shareholders’ equity.

The carrying value of U.S. Government agency debt obligations and mortgage-backed securities that are pledged to secure repurchase agreements was

$105

million and

$119

million at

March 31, 2018

and

December 31, 2017,

respectively. Investments in Federal Home Loan Bank stock are restricted and

may

only be resold or redeemed by the issuer.