INVESTMENT SECURITIES

The amortized cost and estimated fair value of available-for-sale investment securities are as follows (dollars in thousands):



	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
September 30, 2018
Available for sale:
State, county, and municipal securities	$	23,775	$	27	$	1,043	$	22,759
Mortgage-backed securities	313,605		468		10,028		304,045
Corporate debt securities	25,566		328		92		25,802
	$	362,946	$	823	$	11,163	$	352,606

December 31, 2017
State, county, and municipal securities	$	23,042	$	209	$	442	$	22,809
Mortgage-backed securities	263,467		915		4,863		259,519
Mutual funds	2,100		—		39		2,061
Corporate debt securities	23,975		837		10		24,802
	$	312,584	$	1,961	$	5,354	$	309,191

The amortized cost and estimated fair value of held-to-maturity investment securities are as follows (dollars in thousands):



	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
September 30, 2018
Held-to-maturity:
State, county, and municipal securities	$	27,148	$	83	$	149	$	27,082
Mortgage-backed securities	37,745		—		1,246		36,499
	$	64,893	$	83	$	1,395	$	63,581

December 31, 2017
State, county, and municipal securities	$	35,908	$	265	$	22	$	36,151
Mortgage-backed securities	45,144		171		546		$	44,769
	$	81,052	$	436	$	568	$	80,920

The amortized cost and estimated fair value of debt securities by contractual maturity are summarized in the tables below (dollars 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
September 30, 2018
Available for sale:
Due in one year or less	$	—	$	—
Due after one year through five years	8,140		8,150
Due after five years through ten years	22,640		22,805
Due after ten years	270,755		261,169
Mortgage-backed securities	61,411		60,482
	$	362,946	$	352,606

Held-to-maturity:
Due in one year or less	$	768	$	767
Due after one year through five years	4,821		4,763
Due after five years through ten years	13,347		13,316
Due after ten years	15,963		15,563
Mortgage-backed securities	29,994		29,172
	$	64,893	$	63,581

The following tables detail the gross unrealized losses and estimated fair value of available for sale and held-to-maturity securities aggregated by category and duration of continuous unrealized loss position at September 30, 2018 and December 31, 2017 (dollars in thousands):



	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 30, 2018
Available for sale:
State, county, and municipal securities	$	5,948	$	44	$	12,714	$	999	$	18,662	$	1,043
Mortgage-backed securities	96,704		1,193		179,082		8,835		275,786		10,028
Corporate debt securities	2,908		92		—		—		2,908		92
	$	105,560	$	1,329	$	191,796	$	9,834	$	297,356	$	11,163

December 31, 2017
State, county, and municipal securities	$	596	$	5	$	12,716	$	437	$	13,312	$	442
Mortgage-backed securities	87,390		772		145,696		4,091		233,086		4,863
Mutual funds	2,061		39		—		—		2,061		39
Corporate debt securities	2,990		10		—		—		2,990		10
	$	93,037	$	826	$	158,412	$	4,528	$	251,449	$	5,354



	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
September 30, 2018
Held-to-maturity:
State, county, and municipal securities	$	12,645	$	149	$	—	$	—	$	12,645	$	149
Mortgage-backed securities	15,922		226		20,578		1,020		36,500		1,246
	$	28,567	$	375	$	20,578	$	1,020	$	49,145	$	1,395

December 31, 2017
State, county, and municipal securities	$	6,340	$	22	$	—	$	—	$	6,340	$	22
Mortgage-backed securities	13,138		95		12,090		451		25,228		546
	$	19,478	$	117	$	12,090	$	451	$	31,568	$	568

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. Effective January 1, 2018, equity securities with readily determinable fair values are measured at fair value with changes in the fair value recognized through net income.

As of September 30, 2018, 124 securities had unrealized losses totaling 3.50% of the individual securities’ amortized cost basis and 2.94% of the Company’s total amortized cost basis. Of the 124 securities, 60 had been in an unrealized loss position for over twelve months at September 30, 2018. These 60 securities had an amortized cost basis and unrealized loss of $223.2 million and $10.9 million, respectively. The unrealized losses on debt securities at September 30, 2018 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, 2018, 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, 2018.

During the nine months ended September 30, 2018, the Company sold 1 security classified as available-for-sale for $410,000 which resulted in neither a gain nor a loss. During the nine months ended September 30, 2017, the Company sold 16 securities classified as available-for-sale and 1 security classified as held-to-maturity. Of the available-for-sale securities, 13 securities were sold with gains totaling $449,000 and 3 securities were sold at a loss of $109,000 for a net gain of $340,000. 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.

Securities with a carrying value of approximately $189.4 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 $189.0 million at December 31, 2017.