Investment Securities

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



	March 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	26,465	$	114	$	968	$	25,611
GSE mortgage-backed securities	78,554		1,618		146		80,026
Collateralized mortgage obligations: residential	230,413		282		3,181		227,514
Collateralized mortgage obligations: commercial	3,027		—		36		2,991
Mutual funds	2,100		—		41		2,059
Corporate debt securities	18,973		629		—		19,602
	$	359,532	$	2,643	$	4,372	$	357,803

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	29,935	$	226	$	1,020	$	29,141
GSE mortgage-backed securities	72,144		1,736		302		73,578
Collateralized mortgage obligations: residential	223,602		206		3,606		220,202
Collateralized mortgage obligations: commercial	3,135		—		53		3,082
Mutual funds	2,100		—		41		2,059
Corporate debt securities	13,500		311		—		13,811
	$	344,416	$	2,479	$	5,022	$	341,873



	March 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	37,338	$	523	$	6	$	37,855
GSE mortgage-backed securities	42,004		433		140		42,297
Collateralized mortgage obligations: residential	8,605		—		273		8,332
Collateralized mortgage obligations: commercial	3,295		—		12		3,283
	$	91,242	$	956	$	431	$	91,767

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	40,515	$	309	$	39	$	40,785
GSE mortgage-backed securities	44,375		426		311		44,490
Collateralized mortgage obligations: residential	8,969		—		323		8,646
Collateralized mortgage obligations: commercial	4,352		—		12		4,340
	$	98,211	$	735	$	685	$	98,261

With the exception of two private-label collateralized mortgage obligations (“CMOs”) with a combined balance remaining of $15,000 at March 31, 2017, 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 March 31, 2017 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	$	2,682	$	2,688
Due after one year through five years	6,265		6,430
Due after five years through ten years	51,206		52,768
Due after ten years	297,279		293,858
	$	357,432	$	355,744

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	354	$	354
Due after one year through five years	6,535		6,579
Due after five years through ten years	31,540		32,064
Due after ten years	52,813		52,770
	$	91,242	$	91,767

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



	March 31, 2017
	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	$	12,827	$	968	$	—	$	—	$	12,827	$	968
GSE mortgage-backed securities	26,478		146		—		—		26,478		146
Collateralized mortgage obligations: residential	162,695		2,806		11,051		375		173,746		3,181
Collateralized mortgage obligations: commercial	—		—		2,991		36		2,991		36
Mutual funds	2,059		41		—		—		2,059		41
	$	204,059	$	3,961	$	14,042	$	411	$	218,101	$	4,372

	December 31, 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	$	13,402	$	1,020	$	—	$	—	$	13,402	$	1,020
GSE mortgage-backed securities	29,119		302		—		—		29,119		302
Collateralized mortgage obligations: residential	187,235		3,099		14,194		507		201,429		3,606
Collateralized mortgage obligations: commercial	961		4		2,121		49		3,082		53
Mutual funds	2,059		41		—		—		2,059		41
	$	232,776	$	4,466	$	16,315	$	556	$	249,091	$	5,022



	March 31, 2017
	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	$	4,249	$	6	$	—	$	—	$	4,249	$	6
GSE mortgage-backed securities	5,694		140		—		—		5,694		140
Collateralized mortgage obligations: residential	—		—		8,332		273		8,332		273
Collateralized mortgage obligations: commercial	3,283		12		—		—		3,283		12
	$	13,226	$	158	$	8,332	$	273	$	21,558	$	431

	December 31, 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:
Obligations of state and political subdivisions	$	8,054	$	39	$	—	$	—	$	8,054	$	39
GSE mortgage-backed securities	19,408		311		—		—		19,408		311
Collateralized mortgage obligations: residential	—		—		8,645		323		8,645		323
Collateralized mortgage obligations: commercial	4,340		12		—		—		4,340		12
	$	31,802	$	362	$	8,645	$	323	$	40,447	$	685

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. For equity securities, management reviews the near term prospects of the issuer, the nature and cause of the unrealized loss, the severity and duration of the impairments and other factors when determining if an unrealized loss is other than temporary. 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 March 31, 2017, 64 securities had unrealized losses totaling 1.96% of the individual securities’ amortized cost basis and 1.07% of the Company’s total amortized cost basis. Of the 64 securities, 10 had been in an unrealized loss position for over twelve months at March 31, 2017. These 10 securities had an amortized cost basis and unrealized loss of $23.1 million and $684,000, respectively. The unrealized losses on debt securities at March 31, 2017 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 March 31, 2017, 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 March 31, 2017.

During the three months ended March 31, 2017, the Company sold 10 securities classified as available-for-sale and 1 security classified as held-to-maturity. Of the available-for-sale securities, 7 securities were sold with gains totaling $108,000 and 3 securities were sold at a loss of $109,000 for a net loss of $1,000. The decision to sell the 1 held-to-maturity security, which was sold at a gain of $7,000, was based on the pre-refunding of the bond which would accelerate the maturity of the bond by 15 years with an anticipated call date within six months. During the three months ended March 31, 2016, the Company did not sell any securities.

Securities with an aggregate carrying value of approximately $295.6 million and $293.4 million at March 31, 2017 and December 31, 2016, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.