4.	SECURITIES

The components of securities available for sale are as follows:

	December 31, 2017
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(Dollars in thousands)
Available for Sale
U.S. Treasury and government sponsored entities' securities	$	124,982	$	19	$	(1,184	)	$	123,817
States of the U.S. and political subdivisions		58,806		955		(138	)		59,623
Mortgage-backed GSE securities: residential		87,917		42		(838	)		87,121
Total	$	271,705	$	1,016	$	(2,160	)	$	270,561

	December 31, 2016
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(Dollars in thousands)
Available for Sale
U.S. Treasury and government sponsored entities' securities	$	188,082	$	172	$	(2,221	)	$	186,033
States of the U.S. and political subdivisions		59,415		3		(1,661	)		57,757
Mortgage-backed GSE securities: residential		100,602		50		(1,158	)		99,494
Total	$	348,099	$	225	$	(5,040	)	$	343,284

The components of securities held to maturity are as follows:

	December 31, 2017
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(Dollars in thousands)
Held to maturity
Mortgage-backed GSE securities: residential	$	73,682	$	—	$	(890	)	$	72,792
States of the U.S. and political subdivisions		9,229		112		(7	)		9,334
Total	$	82,911	$	112	$	(897	)	$	82,126

	December 31, 2016
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(Dollars in thousands)
Held to maturity
Mortgage-backed GSE securities: residential	$	85,065	$	—	$	(1,300	)	$	83,765
States of the U.S. and political subdivisions		12,454		17		(86	)		12,385
Total	$	97,519	$	17	$	(1,386	)	$	96,150

Debt securities available for sale by contractual maturity, repricing or expected call date are shown below:

	December 31, 2017
	Amortized cost		Fair value
	(Dollars in thousands)
Due in one year or less	$	—	$	—
Due after one year through five years		26,497		26,193
Due after five years through ten years		99,042		98,193
Due after ten years		58,249		59,054
Mortgage-backed GSE securities: residential		87,917		87,121
Total	$	271,705	$	270,561

Debt securities held to maturity by contractual maturity, repricing or expected call date are shown below:

	December 31, 2017
	Amortized cost		Fair value
	(Dollars in thousands)
Due in one year or less	$	—	$	—
Due after one year through five years		—		—
Due after five years through ten years		7,568		7,655
Due after ten years		1,661		1,679
Mortgage-backed GSE securities: residential		73,682		72,792
Total	$	82,911	$	82,126

Proceeds, gross realized gains, losses and impairment charges of available for sale securities were as follows:

	2017		2016		2015
	(Dollars in thousands)
Proceeds	$	62,906	$	33,701	$	16,627
Gross gains		610		604		142
Gross losses		44		—		—

Income tax expense related to net realized gains and losses was $198,000 for 2017 and $211,000 for 2016 and $50,000 for 2015.

Securities pledged for public funds were $129.8 million and $146.5 million at December 31, 2017 and 2016, respectively. See further discussion regarding pledged securities in Note 12.

Securities available for sale that have been in an unrealized loss position for less than twelve months or twelve months or more are as follows at December 31, 2017:

	Less than 12 months					12 months or more					Total
	Fair		Unrealized loss			Fair		Unrealized loss			Fair		Unrealized loss
	value		Loss			value		Loss			value		Loss
	(Dollars in thousands)
Description of securities:
U.S. Treasury and government sponsored entities	$	99,766	$	(734	)	$	21,222	$	(450	)	$	120,988	$	(1,184	)
States of the U.S. and political subdivisions		—					14,009		(138	)		14,009		(138	)
Mortgage-backed GSE securities: residential		28,837		(154	)		57,588		(684	)		86,425		(838	)
Total temporarily impaired securities	$	128,603	$	(888	)	$	92,819	$	(1,272	)	$	221,422	$	(2,160	)

All of the U.S. Treasury and government sponsored entities, obligations of U.S. states and political subdivisions, and mortgage-backed securities that were temporarily impaired at December 31, 2017, were impaired due to the level of interest rates at that time compared to when securities were purchased. Unrealized losses on these securities have not been recognized into income as of December 31, 2017 because the issuer’s securities are of high credit quality (rated AA or higher), management does not intend to sell, and it is likely that management will not be required to sell, the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions.

Securities available for sale that have been in an unrealized loss position for less than twelve months or twelve months or more are as follows at December 31, 2016:

	Less than 12 months					12 months or more				Total
	Fair		Unrealized loss			Fair		Unrealized loss		Fair		Unrealized loss
	value		Loss			value		Loss		value		Loss
	(Dollars in thousands)
Description of securities:
U.S. Treasury and government sponsored entities	$	171,411	$	(2,221	)	$	—	$	—	$	171,411	$	(2,221	)
States of the U.S. and political subdivisions		53,283		(1,661	)		—		—		53,283		(1,661	)
Mortgage-backed GSE securities: residential		98,775		(1,158	)		—		—		98,775		(1,158	)
Total temporarily impaired securities	$	323,469	$	(5,040	)	$	—	$	—	$	323,469	$	(5,040	)

At December 31, 2016, all of the U.S. Treasury and government sponsored entities, obligations of U.S. states and political subdivisions and mortgage-backed securities that were temporarily impaired were impaired due to the level of interest rates at that time compared to when the securities were purchased. Unrealized losses on these securities have not been recognized into income as of December 31, 2016 because the issuer’s securities are of high credit quality (rated AA or higher), management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions.

During the third quarter of 2015, Home Savings transferred mortgage-backed GSE securities with a total amortized cost of $105.3 million with a corresponding fair value of $103.8 million from available for sale to held to maturity. The net unrealized loss, net of taxes, on these securities at the date of transfer was $999,000. The fair value at the date of transfer becomes the securities’ new cost basis. The unrealized holding loss at the time of transfer continues to be reported in accumulated other comprehensive income, net of tax and is amortized over the remaining lives of the securities as an adjustment of the yield. The amortization of the unamortized holding loss reported in accumulated other comprehensive income will directly offset the effect on interest income from the accretion of the reduced amortized cost for the transferred securities. The remaining unaccreted unrealized holding loss totaled $1,035,000 at December 31, 2017 and $1,230,000 at December 31, 2016. Because of this transfer, the total losses less than 12 months and greater than 12 months reported in the table below will not agree to the unrealized losses reported in the inventory of held to maturity securities. The inventory table reports unrealized gains and losses based upon the transferred securities adjusted cost basis and current fair value. The reporting of losses less than 12 months and greater than 12 months represents that actual period of time that these securities have been in an unrealized loss position and the securities amortized cost basis as if the transfer did not occur.

Securities held to maturity that have been in an unrealized loss position for less than twelve months or twelve months or more are as follows at December 31, 2017:

	Less than 12 months					12 months or more					Total
	Fair		Unrealized loss			Fair		Unrealized			Fair		Unrealized
	value		Loss			value		Loss			value		Loss
	(Dollars in thousands)
Description of securities:
Mortgage-backed GSE securities: residential	$	—	$	—		$	72,792	$	(1,925	)	$	72,792	$	(1,925	)
States of the U.S. and political subdivisions		608		(7	)		—		—			608		(7	)
Total temporarily impaired securities	$	608	$	(7	)	$	72,792	$	(1,925	)	$	73,400	$	(1,932	)

All of the mortgage-backed securities and obligations of U.S. states and political subdivisions that were temporarily impaired at December 31, 2017, were impaired due to the level of interest rates at that time compared to when the securities were purchased. Unrealized losses on these securities have not been recognized into income as of December 31, 2017 because the issuer’s securities are of high credit quality (rated AA or higher), management does not intend to sell, and it is likely that management will not be required to sell, the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions.

Securities held to maturity that have been in an unrealized loss position for less than twelve months or twelve months or more are as follows at December 31, 2016:

	Less than 12 months					12 months or more					Total
	Fair		Unrealized loss			Fair		Unrealized			Fair		Unrealized
	value		Loss			value		Loss			value		Loss
	(Dollars in thousands)
Description of securities:
Mortgage-backed GSE securities: residential	$	57,340	$	(1,243	)	$	26,426	$	(1,287	)	$	83,766	$	(2,530	)
States of the U.S. and political subdivisions		7,416		(86	)		—		—			7,416		(86	)
Total temporarily impaired securities	$	64,756	$	(1,329	)	$	26,426	$	(1,287	)	$	91,182	$	(2,616	)

At December 31, 2016, all of the obligations of U.S. states and political subdivisions were impaired due to the level of interest rates at that time compared to when the securities were purchased. Unrealized losses on these securities have not been recognized into income as of December 31, 2016 because the issuer’s securities are of high credit quality (rated AA or higher), management does not intend to sell and it is likely that management will not be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates and other market conditions.