NOTE 3 — SECURITIES

Securities have been classified in the financial statements as available for sale or held to maturity. The amortized cost of securities and their approximate fair values at December 31, 2017 and 2016 are as follows:

			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
December 31, 2017	Cost		Gains		Losses			Value
Available for sale securities:
U.S. Government agency obligations	$	110,531	$	76	$	(717	)	$	109,890
U.S. Treasury notes		1,940		—		(6	)		1,934
Mortgage-backed securities, residential		33,537		306		(180	)		33,663
Asset backed securities		11,883		47		(85	)		11,845
State and municipal		74,684		150		(443	)		74,391
Corporate bonds		15,271		52		(3	)		15,320
SBA pooled securities		3,535		27		(2	)		3,560
Mutual fund		5,000		6		—			5,006
Total available for sale securities	$	256,381	$	664	$	(1,436	)	$	255,609

			Gross		Gross
(Dollars in thousands)	Amortized		Unrecognized		Unrecognized			Fair
December 31, 2017	Cost		Gains		Losses			Value
Held to maturity securities:
CLO securities	$	8,557	$	—	$	(1,030	)	$	7,527

			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
December 31, 2016	Cost		Gains		Losses			Value
Available for sale securities:
U.S. Government agency obligations	$	180,945	$	640	$	(643	)	$	180,942
Mortgage-backed securities, residential		24,710		453		(173	)		24,990
Asset backed securities		13,031		30		(159	)		12,902
State and municipal		27,339		6		(708	)		26,637
Corporate bonds		27,287		106		(3	)		27,390
SBA pooled securities		156		1		—			157
Mutual fund		2,000		11		—			2,011
Total available for sale securities	$	275,468	$	1,247	$	(1,686	)	$	275,029

			Gross		Gross
(Dollars in thousands)	Amortized		Unrecognized		Unrecognized			Fair
December 31, 2016	Cost		Gains		Losses			Value
Held to maturity securities:
CLO securities	$	29,352	$	1,527	$	(58	)	$	30,821

The amortized cost and estimated fair value of securities at December 31, 2017, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale Securities				Held to Maturity Securities
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	30,577	$	30,540	$	—	$	—
Due from one year to five years		118,179		117,532		—		—
Due from five years to ten years		32,427		32,363		—		—
Due after ten years		21,243		21,100		8,557		7,527
		202,426		201,535		8,557		7,527
Mortgage-backed securities, residential		33,537		33,663		—		—
Asset backed securities		11,883		11,845		—		—
SBA pooled securities		3,535		3,560		—		—
Mutual fund		5,000		5,006		—		—
	$	256,381	$	255,609	$	8,557	$	7,527

Proceeds from sales of securities and the associated gross gains and losses for the years ended December 31, 2017, 2016, and 2015 are as follows:

(Dollars in thousands)	2017		2016			2015
Proceeds	$	32,441	$	34,338		$	17,635
Gross gains		35		17			259
Gross losses		—		(73	)		—

Securities with a carrying amount of approximately $85,985,000 and $194,571,000 at December 31, 2017 and 2016, respectively, were pledged to secure public deposits, customer repurchase agreements, and for other purposes required or permitted by law.

Information pertaining to securities with gross unrealized losses at December 31, 2017 and 2016, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are summarized as follows:

	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2017	Value		Losses			Value		Losses			Value		Losses
Available for sale securities:
U.S. Government agency obligations	$	47,605	$	(166	)	$	40,053	$	(551	)	$	87,658	$	(717	)
U.S. Treasury notes		1,934		(6	)		—		—			1,934		(6	)
Mortgage-backed securities, residential		10,349		(21	)		6,200		(159	)		16,549		(180	)
Asset backed securities		4,898		(85	)		—		—			4,898		(85	)
State and municipal		32,257		(216	)		12,138		(227	)		44,395		(443	)
Corporate bonds		4,073		(2	)		149		(1	)		4,222		(3	)
SBA pooled securities		1,654		(2	)		—		—			1,654		(2	)
Mutual fund		—		—			—		—			—		—
Total available for sale securities	$	102,770	$	(498	)	$	58,540	$	(938	)	$	161,310	$	(1,436	)

	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
December 31, 2017	Value		Losses			Value		Losses			Value		Losses
Held to maturity securities:
CLO securities	$	1,835	$	(28	)	$	5,692	$	(1,002	)	$	7,527	$	(1,030	)

	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2016	Value		Losses			Value		Losses			Value		Losses
Available for sale securities:
U.S. Government agency obligations	$	95,362	$	(643	)	$	—	$	—		$	95,362	$	(643	)
Mortgage-backed securities, residential		6,594		(173	)		—		—			6,594		(173	)
Asset backed securities		—		—			7,946		(159	)		7,946		(159	)
State and municipal		25,771		(708	)		—		—			25,771		(708	)
Corporate bonds		372		(3	)		—		—			372		(3	)
SBA pooled securities		—		—			—		—			—		—
Mutual fund		—		—			—		—			—		—
	$	128,099	$	(1,527	)	$	7,946	$	(159	)	$	136,045	$	(1,686	)

	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
December 31, 2016	Value		Losses			Value		Losses			Value		Losses
Held to maturity securities:
CLO securities	$	3,323	$	(58	)	$	—	$	—		$	3,323	$	(58	)

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value.

At December 31, 2017, the Company had 169 securities in an unrealized loss position. Management does not have the intent to sell any of these securities and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of December 31, 2017, management believes the unrealized losses detailed in the previous table are temporary and no other than temporary impairment loss has been recognized in the Company’s consolidated statements of income.