4. INVESTMENTS

Unrealized Gains and Losses

The difference between amortized cost or cost and estimated fair value and gross unrealized gains and losses, by major investment category, consisted of the following:

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	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized
	or Cost		Gains		Losses		Fair Value
	(In thousands)
March 31, 2018
Debt securities - available-for-sale:
United States government obligations and authorities	$	131,292	$	231	$	1,813	$	129,710
Obligations of states and political subdivisions	23,535		54		287		23,302
Corporate	261,772		553		3,807		258,518
International	18,068		11		152		17,927
	434,667		849		6,059		429,457

Debt securities - held-to-maturity:
United States government obligations and authorities	4,161		3		139		4,025
Corporate	1,072		6		4		1,074
International	65		—		—		65
	5,298		9		143		5,164
Total investments (1)	$	439,965	$	858	$	6,202	$	434,621

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(1) As a result of the adoption of ASU 2016-01 on January 1, 2018 (see additional details in Note 2) our equity securities no longer have unrealized gains or losses, therefore they are not included as of March 31, 2018.



	Amortized		Gross		Gross
	Cost		Unrealized		Unrealized
	or Cost		Gains		Losses		Fair Value
	(In thousands)
December 31, 2017
Debt securities - available-for-sale:
United States government obligations and authorities	$	98,739	$	244	$	846	$	98,137
Obligations of states and political subdivisions	66,319		325		378		66,266
Corporate	239,435		2,233		749		240,919
International	17,807		136		27		17,916
	422,300		2,938		2,000		423,238

Debt securities - held-to-maturity:
United States government obligations and authorities	4,160		9		106		4,063
Corporate	1,123		21		—		1,144
International	66		1		—		67
	5,349		31		106		5,274
Equity securities	14,085		1,628		279		15,434
Total investments	$	441,734	$	4,597	$	2,385	$	443,946

Net Realized and Unrealized Gains and Losses

The Company calculates the gain or loss realized on the sale of investments by comparing the sales price (fair value) to the cost or amortized cost of the security sold. Net realized gains and losses on investments are determined in accordance with the specific identification method.

Net realized and unrealized gains, by major investment category, consisted of the following:

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	Three Months Ended
	March 31,
	2018			2017
	(In thousands)
Gross realized and unrealized gains:
Debt securities	$	223		$	570
Equity securities	1,153			560
Total gross realized and unrealized gains	1,376			1,130

Gross realized and unrealized losses:
Debt securities	(1,441		)	(1,092		)
Equity securities	(987		)	(143		)
Total gross realized and unrealized losses	(2,428		)	(1,235		)
Net realized and unrealized gains on investments	$	(1,052	)	$	(105	)

Proceeds from sale of investment securities were $78.1 million and $128.6 million for the three months ended March 31, 2018 and 2017, respectively.

The portion of unrealized gains and losses for equity securities that was recognized in the line item, net realized and unrealized gains on investments securities for the three months ended March 31, 2018 was less than $0.1 million.

Contractual Maturity

Expected maturities and contractual maturities may differ because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Amortized cost and estimated fair value of debt securities, by contractual maturity, consisted of the following:

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	March 31, 2018
	Amortized
	Cost		Fair Value
Securities with maturity dates:	(In thousands)
Debt securities, available-for-sale:
One year or less	$	50,526	$	50,394
Over one through five years	207,292		205,249
Over five through ten years	175,529		172,538
Over ten years	1,320		1,276
	434,667		429,457
Debt securities, held-to-maturity:
One year or less	730		732
Over one through five years	3,940		3,812
Over five through ten years	628		620
	5,298		5,164
Total	$	439,965	$	434,621

Net Investment Income

Net investment income consisted of the following:

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	Three Months Ended
	March 31,
	2018		2017
	(In thousands)
Interest income	$	2,887	$	2,169
Dividends income	56		149
Net investment income	$	2,943	$	2,318

Aging of Gross Unrealized Losses

Gross unrealized losses and related fair values for debt securities (and equity securities as of December 31, 2017), grouped by duration of time in a continuous unrealized loss position, consisted of the following:

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	Less than 12 months				12 months or longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
March 31, 2018					(In thousands)
Debt securities - available-for-sale:
United States government obligations and authorities	$	61,093	$	1,284	$	18,399	$	529	$	79,492	$	1,813
Obligations of states and political subdivisions	15,762		203		1,821		84		17,583		287
Corporate	198,468		3,547		5,022		260		203,490		3,807
International	14,682		152		—		—		14,682		152
	$	290,005	$	5,186	$	25,242	$	873	$	315,247	$	6,059



	Less than 12 months				12 months or longer				Total
			Gross				Gross				Gross
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
December 31, 2017					(In thousands)
Debt securities - available-for-sale:
United States government obligations and authorities	$	52,368	$	517	$	19,287	$	329	$	71,655	$	846
Obligations of states and political subdivisions	32,030		221		5,676		157		37,706		378
Corporate	109,780		625		6,452		124		116,232		749
International	8,935		27		25		—		8,960		27
	203,113		1,390		31,440		610		234,553		2,000

Equity securities	4,312		279		—		—		4,312		279

Total investments	$	207,425	$	1,669	$	31,440	$	610	$	238,865	$	2,279

As of March 31, 2018, the Company held a total of 1,346 debt securities that were in an unrealized loss position, of which 52 securities were in an unrealized loss position continuously for 12 months or more. As of December 31, 2017, the Company held a total of 866 debt and equity securities that were in an unrealized loss position, of which 73 securities were in an unrealized loss position continuously for 12 months or more. The unrealized losses associated with these securities consisted primarily of losses related to corporate securities.

The Company holds some of its debt securities as available-for-sale and as such, these securities are recorded at fair value. The Company continually monitors the difference between cost and the estimated fair value of its investments, which involves uncertainty as to whether declines in value are temporary in nature. If the decline of a particular investment is deemed temporary, the Company records the decline as an unrealized loss in shareholders’ equity. If the decline is deemed to be other than temporary, the Company will write the security’s cost-basis or amortized cost-basis down to the fair value of the investment and recognizes an OTTI loss in the Company’s consolidated statement of operations. Additionally, any portion of such decline related to debt securities that is believed to arise from factors other than credit will be recorded as a component of other comprehensive income rather than charged against income. The company did not have any OTTI losses on its available-for-sale debt securities for the first three months of 2018 and 2017.

As discussed in Note 2 above, beginning January 1, 2018, the Company’s equity investments are measured at fair value through net income. See Note 4 of 2017 Form 10-K for information on how the Company assessed and determined whether unrealized losses on our equity securities were other-than-temporary, which was primarily based on the duration of the decline in the fair value of such securities relative to their cost as of the balance sheet date. The company did not have any OTTI losses on its equity securities for the first three months of 2017.

Collateral Deposits

Investments, the majority of which were debt securities, with fair values of approximately $12.8 million and $12.9 million, were deposited with governmental authorities and into custodial bank accounts as required by law or contractual obligations as of March 31, 2018 and December 31, 2017, respectively.