SECURITIES

Components of the available for sale portfolio are as follows:

	September 30, 2018
			Gross		Gross
	Amortized		unrealized		unrealized			Fair
	cost		gains		losses			value
	(Dollars in thousands)
Available for Sale
U.S. Treasury and government sponsored entities' securities	$	124,467	$	—	$	(5,179	)	$	119,288
States of the U.S. and political subdivisions		48,290		4		(1,271	)		47,023
Mortgage-backed GSE securities: residential		79,599		28		(3,832	)		75,795
Total	$	252,356	$	32	$	(10,282	)	$	242,106

	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

Components of held to maturity securities portfolio are as follows:

	September 30, 2018
			Gross		Gross
	Amortized		unrecognized		unrecognized			Fair
	cost		gains		losses			value
	(Dollars in thousands)
Held to maturity
Mortgage-backed GSE securities: residential	$	66,489	$	—	$	(3,637	)	$	62,852
States of the U.S. and political subdivisions		12,211		19		(270	)		11,960
Total	$	78,700	$	19	$	(3,907	)	$	74,812

	December 31, 2017
			Gross		Gross
	Amortized		unrecognized		unrecognized			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

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

	September 30, 2018
	Amortized cost		Fair value
	(Dollars in thousands)
Due in one year or less	$	—	$	—
Due after one year through five years		53,014		51,087
Due after five years through ten years		72,006		68,758
Due after ten years		47,737		46,466
Mortgage-backed GSE securities: residential		79,599		75,795
Total	$	252,356	$	242,106

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

	September 30, 2018
	Amortized cost		Fair value
	(Dollars in thousands)
Due in one year or less	$	3,000	$	3,019
Due after one year through five years		—		—
Due after five years through ten years		8,437		8,181
Due after ten years		774		760
Mortgage-backed GSE securities: residential		66,489		62,852
Total	$	78,700	$	74,812

Securities pledged for public funds were approximately $141.6 million at September 30, 2018 and approximately $129.8 million at December 31, 2017.

Securities available for sale that have been in an unrealized loss position for less than twelve months or twelve months or more at September 30, 2018 are as follows:

	September 30, 2018
	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:
U.S. Treasury and government sponsored entities	$	34,659	$	(1,351	)	$	84,629	$	(3,828	)	$	119,288	$	(5,179	)
States of the U.S. and political subdivisions		33,187		(694	)		13,473		(577	)		46,660		(1,271	)
Mortgage-backed GSE securities: residential		3,478		(133	)		71,646		(3,699	)		75,124		(3,832	)
Total temporarily impaired securities	$	71,324	$	(2,178	)	$	169,748	$	(8,104	)	$	241,072	$	(10,282	)

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

	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:
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 and mortgage-backed securities available for sale that were temporarily impaired at September 30, 2018 and December 31, 2017, were impaired due to the level of interest rates at the time of purchase compared to current interest rates. Unrealized losses on these securities have not been recognized into income during the three and nine months ended September 30, 2018 and 2017 because the issuer’s securities are of high credit quality (rated AA or higher). 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. There is risk that longer term rates could rise further resulting in greater unrealized losses. The Company expects to realize all interest and principal on these securities and has no intent to sell, and more than likely will not be required to sell, these securities before their anticipated recovery.

All of the obligations of U.S. states and political subdivisions held for sale that were temporarily impaired at September 30, 2018 and December 31, 2017, were impaired due to the level of interest rates at the time of purchase compared to current interest rates. Unrealized losses on these securities have not been recognized into income for the three and nine months ended September 30, 2018 or 2017 because the issuer’s securities are of high credit quality (rated AA or higher), it is likely that management will not be required to sell, and has no intent 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 unrecognized loss position for less than twelve months or twelve months or more are as follows:

	September 30, 2018
	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	$	—	$	—		$	62,852	$	(4,550	)	$	62,852	$	(4,550	)
States of the U.S. and political subdivisions		8,357		(241	)		584		(29	)		8,941		(270	)
Total temporarily impaired securities	$	8,357	$	(241	)	$	63,436	$	(4,579	)	$	71,793	$	(4,820	)

	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	)

During the third quarter of 2015, Home Savings transferred 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 unrealizable 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. Because of this transfer, the total losses less than 12 months and greater than 12 months reported in the table above 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.

All of the mortgage-backed securities held to maturity that were temporarily impaired at September 30, 2018 and December 31, 2017, were impaired due to the level of interest rates at the time of purchase compared to current interest rates. Unrealized losses on these securities have not been recognized into income for the three and nine months ended September 30, 2018 and 2017 because the issuer’s securities are of high credit quality (rated AA or higher), 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. There is risk that longer term rates could rise further resulting in greater unrealized losses. The Company expects to realize all interest and principal on these securities and has no intent to sell and more than likely will not be required to sell these securities before their anticipated recovery.

All of the obligations of U.S. states and political subdivisions held to maturity that were temporarily impaired at September 30, 2018, and December 31, 2017, were impaired due to the level of interest rates at the time of purchase compared to current interest rates. Unrealized losses on these securities have not been recognized into income for the three and nine months ended September 30, 2018 or 2017 because the issuer’s securities are of high credit quality (rated AA or higher). It is likely that management will not be required to sell and has no intent 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.

Proceeds from the sale of available for sale securities were $0 million and $9.7 million, for the three months ended September 30, 2018 and 2017, respectively. Gross gains of $0 and $236,000 were realized on these sales during the three months ended September 30, 2018 and 2017, respectively. Gross losses of $0 and $0 were realized on these sales during these same periods.

Proceeds from the sale of available for sale securities were $10.4 million and $62.9 million, for the nine months ended September 30, 2018 and 2017, respectively. Gross gains of $233,000 and $610,000 were realized on these sales during the nine months ended September 30, 2018 and 2017, respectively. Gross losses of $0 and $44,000 were realized during the nine months ended September 30, 2018 and 2017, respectively.