INVESTMENT SECURITIES

The Company’s investment policy blends the Company’s liquidity needs and interest rate risk management with its desire to increase income and provide funds for expected growth in loans. The investment securities portfolio consists primarily of U.S. government-sponsored mortgage-backed securities and state, county and municipal securities. The Company’s portfolio and investing philosophy concentrate activities in obligations where the credit risk is limited. For the small portion of the Company’s portfolio found to present credit risk, the Company has reviewed the investments and financial performance of the obligors and believes the credit risk to be acceptable.

The amortized cost and estimated fair value of investment securities available for sale, along with unrealized gains and losses, are summarized as follows:



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2018
State, county and municipal securities	$	151,934	$	696	$	(881	)	$	151,749
Corporate debt securities	67,175		502		(559		)	67,118
Mortgage-backed securities	965,185		470		(21,952		)	943,703
Total debt securities	$	1,184,294	$	1,668	$	(23,392	)	$	1,162,570

December 31, 2017
State, county and municipal securities	$	135,968	$	1,989	$	(163	)	$	137,794
Corporate debt securities	46,659		721		(237		)	47,143
Mortgage-backed securities	630,666		1,762		(6,492		)	625,936
Total debt securities	$	813,293	$	4,472	$	(6,892	)	$	810,873

The amortized cost and estimated fair value of available for sale securities at September 30, 2018 by contractual maturity are summarized in the table below. Expected maturities for mortgage-backed securities may differ from contractual maturities because in certain cases borrowers can prepay obligations without prepayment penalties. Therefore, these securities are not included in the following maturity summary.



(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	16,066	$	16,077
Due from one year to five years	87,492		86,858
Due from five to ten years	86,201		86,565
Due after ten years	29,350		29,367
Mortgage-backed securities	965,185		943,703
	$	1,184,294	$	1,162,570

Securities with a carrying value of approximately $363.1 million serve as collateral to secure public deposits, securities sold under agreements to repurchase and for other purposes required or permitted by law at September 30, 2018, compared with $403.3 million at December 31, 2017.

The following table details the gross unrealized losses and estimated fair value of securities aggregated by category and duration of continuous unrealized loss position at September 30, 2018 and December 31, 2017.



	Less Than 12 Months					12 Months or More					Total
(dollars in thousands)	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
September 30, 2018
State, county and municipal securities	$	83,727	$	(688	)	$	12,067	$	(193	)	$	95,794	$	(881	)
Corporate debt securities	12,141		(113		)	17,970		(446		)	30,111		(559		)
Mortgage-backed securities	583,330		(9,344		)	267,078		(12,608		)	850,408		(21,952		)
Total debt securities	$	679,198	$	(10,145	)	$	297,115	$	(13,247	)	$	976,313	$	(23,392	)

December 31, 2017
State, county and municipal securities	$	33,976	$	(115	)	$	4,725	$	(48	)	$	38,701	$	(163	)
Corporate debt securities	3,465		(35		)	18,853		(202		)	22,318		(237		)
Mortgage-backed securities	262,353		(2,401		)	190,368		(4,091		)	452,721		(6,492		)
Total debt securities	$	299,794	$	(2,551	)	$	213,946	$	(4,341	)	$	513,740	$	(6,892	)

As of September 30, 2018, the Company’s securities portfolio consisted of 527 securities, 386 of which were in an unrealized loss position. The majority of unrealized losses are related to the Company’s mortgage-backed securities, as discussed below.

At September 30, 2018, the Company held 303 mortgage-backed securities that were in an unrealized loss position, all of which were issued by U.S. government-sponsored entities and agencies. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2018.

At September 30, 2018, the Company held 68 state, county and municipal securities and 15 corporate debt securities that were in an unrealized loss position. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2018.

The Company’s investments in corporate debt include investments in regional and super-regional banks on which the Company prepares regular analysis through review of financial information and credit ratings. Investments in preferred securities are also concentrated in the preferred obligations of regional and super-regional banks through non-pooled investment structures. The Company did not have investments in “pooled” trust preferred securities at September 30, 2018 or December 31, 2017.

Management and the Company’s Asset and Liability Committee (the “ALCO Committee”) evaluate securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. While the majority of the unrealized losses on debt securities relate to changes in interest rates, corporate debt securities have also been affected by reduced levels of liquidity and higher risk premiums. Occasionally, management engages independent third parties to evaluate the Company’s position in certain corporate debt securities to aid management and the ALCO Committee in its determination regarding the status of impairment. The Company believes that each investment poses minimal credit risk and further, that the Company does not intend to sell these investment securities at an unrealized loss position at September 30, 2018, and it is more likely than not that the Company will not be required to sell these securities prior to recovery or maturity. Therefore, at September 30, 2018, these investments are not considered impaired on an other-than-temporary basis.

At September 30, 2018 and December 31, 2017, all of the Company’s mortgage-backed securities were obligations of government-sponsored agencies.

The following table is a summary of sales activities in the Company’s investment securities available for sale for the nine months ended September 30, 2018 and 2017:



(dollars in thousands)	September 30, 2018			September 30, 2017
Gross gains on sales of securities	$	390		$	38
Gross losses on sales of securities	(301		)	(1		)
Net realized gains on sales of securities available for sale	$	89		$	37

Sales proceeds	$	68,727		$	3,090

Total gain (loss) on securities reported on the consolidated statements of income and comprehensive income is comprised of the following for the nine months ended September 30, 2018 and 2017:



(dollars in thousands)	September 30, 2018			September 30, 2017
Net realized gains on sales of securities available for sale	$	89		$	37
Unrealized holding losses on equity securities	(127		)	—
Total gain (loss) on securities	$	(38	)	$	37