NOTE 3 - SECURITIES

Equity Securities

The Company held equity securities with fair values of $4,981,000 and $5,006,000 at September 30, 2018 and December 31, 2017, respectively. During the three and nine months ended September 30, 2018, the Company recognized unrealized losses of $44,000 and $25,000, respectively, on the equity securities held at September 30, 2018, which were recorded in noninterest income in the consolidated statements of income. There were no sales of equity securities during the three and nine months ended September 30, 2018.

Debt Securities

Debt securities have been classified in the financial statements as available for sale or held to maturity. The amortized cost of debt securities and their approximate fair values are as follows:

			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
September 30, 2018	Cost		Gains		Losses			Value
Available for sale securities:
U.S. Government agency obligations	$	96,102	$	—	$	(1,328	)	$	94,774
U.S. Treasury notes		1,952		—		(47	)		1,905
Mortgage-backed securities, residential		31,067		155		(641	)		30,581
Asset backed securities		10,803		36		(34	)		10,805
State and municipal		145,017		70		(1,025	)		144,062
Corporate bonds		69,088		43		(145	)		68,986
SBA pooled securities		4,952		5		(89	)		4,868
Total available for sale securities	$	358,981	$	309	$	(3,309	)	$	355,981

			Gross		Gross
	Amortized		Unrecognized		Unrecognized			Fair
	Cost		Gains		Losses			Value
Held to maturity securities:
CLO securities	$	8,403	$	230	$	(539	)	$	8,094

			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
Total available for sale securities	$	251,381	$	658	$	(1,436	)	$	250,603

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

The amortized cost and estimated fair value of securities at September 30, 2018, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers 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	$	87,890	$	87,668	$	—	$	—
Due from one year to five years		175,252		173,829		—		—
Due from five years to ten years		38,428		37,827		3,052		3,282
Due after ten years		10,589		10,403		5,351		4,812
		312,159		309,727		8,403		8,094
Mortgage-backed securities, residential		31,067		30,581		—		—
Asset backed securities		10,803		10,805		—		—
SBA pooled securities		4,952		4,868		—		—
	$	358,981	$	355,981	$	8,403	$	8,094

Proceeds from sales of debt securities and the associated gross gains and losses are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2018		2017		2018			2017
Proceeds	$	88,820	$	2,936	$	123,016		$	2,936
Gross gains		—		35		5			35
Gross losses		—		—		(277	)		—

Debt securities with a carrying amount of approximately $107,249,000 and $85,985,000 at September 30, 2018 and December 31, 2017, respectively, were pledged to secure public deposits, customer repurchase agreements, and for other purposes required or permitted by law.

Information pertaining to debt securities with gross unrealized and unrecognized losses, 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
September 30, 2018	Value		Losses			Value		Losses			Value		Losses
Available for sale securities:
U.S. Government agency obligations	$	62,335	$	(685	)	$	32,439	$	(643	)	$	94,774	$	(1,328	)
U.S. Treasury notes		1,905		(47	)		—		—			1,905		(47	)
Mortgage-backed securities, residential		12,554		(349	)		5,782		(292	)		18,336		(641	)
Asset backed securities		110		(2	)		4,967		(32	)		5,077		(34	)
State and municipal		100,141		(804	)		9,917		(221	)		110,058		(1,025	)
Corporate bonds		45,583		(144	)		149		(1	)		45,732		(145	)
SBA pooled securities		3,920		(89	)		—		—			3,920		(89	)
	$	226,548	$	(2,120	)	$	53,254	$	(1,189	)	$	279,802	$	(3,309	)

	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
September 30, 2018	Value		Losses			Value		Losses			Value		Losses
Held to maturity securities:
CLO securities	$	—	$	—		$	4,812	$	(539	)	$	4,812	$	(539	)


	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
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	)
	$	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	)

Management evaluates debt 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 September 30, 2018, the Company had 516 debt 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 that any of the securities are impaired due to reasons of credit quality. Accordingly, as of September 30, 2018, management believes that 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.