Investment Securities

The portfolio of investment securities consisted of the following (in thousands):



	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	31,104	$	446	$	29	$	31,521
GSE mortgage-backed securities	65,916		3,229		—		69,145
Collateralized mortgage obligations: residential	195,047		1,289		331		196,005
Collateralized mortgage obligations: commercial	3,497		—		32		3,465
Mutual funds	2,100		25		—		2,125
Corporate debt securities	13,500		384		—		13,884
	$	311,164	$	5,373	$	392	$	316,145

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	30,750	$	770	$	27	$	31,493
GSE mortgage-backed securities	84,946		2,321		229		87,038
Collateralized mortgage obligations: residential	194,067		297		2,276		192,088
Collateralized mortgage obligations: commercial	5,512		1		65		5,448
Mutual funds	2,100		—		8		2,092
	$	317,375	$	3,389	$	2,605	$	318,159



	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	40,695	$	1,151	$	—	$	41,846
GSE mortgage-backed securities	47,451		1,496		—		48,947
Collateralized mortgage obligations: residential	9,414		—		76		9,338
Collateralized mortgage obligations: commercial	5,852		26		—		5,878
	$	103,412	$	2,673	$	76	$	106,009

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	43,737	$	697	$	6	$	44,428
GSE mortgage-backed securities	55,696		705		131		56,270
Collateralized mortgage obligations: residential	10,803		—		361		10,442
Collateralized mortgage obligations: commercial	6,556		2		—		6,558
	$	116,792	$	1,404	$	498	$	117,698

With the exception of two private-label collateralized mortgage obligations (“CMOs”) with a combined balance remaining of $19,000 at September 30, 2016, all of the Company’s CMOs are government-sponsored enterprise (“GSE”) securities.

The following table presents the amortized cost and fair value of debt securities at September 30, 2016 by contractual maturity (in thousands). Actual maturities will differ from contractual maturities because of rights to call or repay obligations with or without penalties and scheduled and unscheduled principal payments on mortgage-backed securities and collateralized mortgage obligations.



	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	2,812	$	2,843
Due after one year through five years	15,374		15,608
Due after five years through ten years	41,740		43,819
Due after ten years	249,138		251,750
	$	309,064	$	314,020

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	348	$	349
Due after one year through five years	4,909		5,005
Due after five years through ten years	20,222		20,948
Due after ten years	77,933		79,707
	$	103,412	$	106,009

Details concerning investment securities with unrealized losses are as follows (in thousands):



	September 30, 2016
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
Obligations of state and political subdivisions	$	5,517	$	29	$	—	$	—	$	5,517	$	29
Collateralized mortgage obligations: residential	49,802		182		12,111		149		61,913		331
Collateralized mortgage obligations: commercial	989		3		2,475		29		3,464		32
	$	56,308	$	214	$	14,586	$	178	$	70,894	$	392

	December 31, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
Obligations of state and political subdivisions	$	1,192	$	27	$	—	$	—	$	1,192	$	27
GSE mortgage-backed securities	21,607		229		—		—		21,607		229
Collateralized mortgage obligations: residential	140,999		1,207		30,029		1,069		171,028		2,276
Collateralized mortgage obligations: commercial	—		—		2,946		65		2,946		65
Mutual funds	2,092		8		—		—		2,092		8
	$	165,890	$	1,471	$	32,975	$	1,134	$	198,865	$	2,605



	September 30, 2016
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Collateralized mortgage obligations: residential	$	—	$	—	$	9,338	$	76	$	9,338	$	76

	December 31, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	541	$	1	$	505	$	5	$	1,046	$	6
GSE mortgage-backed securities	—		—		7,021		131		7,021		131
Collateralized mortgage obligations: residential	—		—		10,442		361		10,442		361
	$	541	$	1	$	17,968	$	497	$	18,509	$	498

Management evaluates each quarter whether unrealized losses on securities represent impairment that is other than temporary. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities. If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management then reviews for potential other than temporary impairment based upon other qualitative factors. In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market’s perception of the issuer’s financial health and the security’s credit quality. If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined. If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.

As of September 30, 2016, 23 securities had unrealized losses totaling 0.58% of the individual securities’ amortized cost basis and 0.11% of the Company’s total amortized cost basis. Of the 23 securities, 9 had been in an unrealized loss position for over twelve months at September 30, 2016. These 9 securities had an amortized cost basis and unrealized loss of $24.2 million and $254,000, respectively. The unrealized losses on debt securities at September 30, 2016 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased. Management identified no impairment related to credit quality. At September 30, 2016, management had the intent and ability to hold impaired securities and no impairment was evaluated as other than temporary. As a result, no other than temporary impairment losses were recognized during the three months ended September 30, 2016.

During the nine months ended September 30, 2016, the Company sold 2 securities classified as available-for-sale at a gross gain of $20,000. During the nine months ended September 30, 2015, the Company sold 21 securities classified as available-for-sale at a net gain of $1.2 million. Of the 21 securities sold, 11 were sold with gains totaling $1.4 million and 10 securities were sold at a loss of $135,000.

Securities with an aggregate carrying value of approximately $309.9 million and $285.4 million at September 30, 2016 and December 31, 2015, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.