Note 3 – Securities

The fair value of securities is as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
September 30, 2016	Cost		Gains		Losses			Value
Available for sale
U.S. Treasury and federal agencies	$	27,383	$	54	$	(15	)	$	27,422
State and municipal		62,825		1,321		(107	)		64,039
Federal agency collateralized mortgage obligations		188,072		1,894		(282	)		189,684
Federal agency mortgage-backed pools		272,144		4,240		(411	)		275,973
Corporate notes		32		63		—			95

Total available for sale investment securities	$	550,456	$	7,572	$	(815	)	$	557,213


Held to maturity
State and municipal	$	158,543	$	6,718	$	(761	)	$	164,500
Federal agency collateralized mortgage obligations		6,828		144		—			6,972
Federal agency mortgage-backed pools		21,656		1,166		—			22,822

Total held to maturity investment securities	$	187,027	$	8,028	$	(761	)	$	194,294


			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2015	Cost		Gains		Losses			Value
Available for sale
U.S. Treasury and federal agencies	$	5,940	$	3	$	(17	)	$	5,926
State and municipal		73,829		1,299		(33	)		75,095
Federal agency collateralized mortgage obligations		157,291		567		(1,655	)		156,203
Federal agency mortgage-backed pools		206,970		2,080		(1,346	)		207,704
Corporate notes		32		22		—			54

Total available for sale investment securities	$	444,062	$	3,971	$	(3,051	)	$	444,982


Held to maturity
U.S. Treasury and federal agencies	$	5,859	$	93	$	—		$	5,952
State and municipal		146,331		5,375		(253	)		151,453
Federal agency collateralized mortgage obligations		9,051		27		(124	)		8,954
Federal agency mortgage-backed pools		26,388		1,141		(185	)		27,344

Total held to maturity investment securities	$	187,629	$	6,636	$	(562	)	$	193,703

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information, and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary. While these securities are held in the available for sale portfolio and held-to-maturity, Horizon intends, and has the ability, to hold them until the earlier of a recovery in fair value or maturity.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified. At September 30, 2016, no individual investment security had an unrealized loss that was determined to be other-than-temporary.

The unrealized losses on the Company’s investments in securities of state and municipal governmental agencies, U.S. Treasury and federal agencies, federal agency collateralized mortgage obligations, and federal agency mortgage-backed pools were caused by interest rate volatility and not a decline in credit quality. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Company expects to recover the amortized cost basis over the term of the securities. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider those investments to be other-than-temporarily impaired at September 30, 2016.

The amortized cost and fair value of securities available for sale and held to maturity at September 30, 2016 and December 31, 2015, 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.


	September 30, 2016				December 31, 2015
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale
Within one year	$	6,921	$	6,953	$	7,192	$	7,232
One to five years		52,105		52,482		38,197		38,894
Five to ten years		12,934		13,325		16,807		17,152
After ten years		18,280		18,796		17,605		17,797

		90,240		91,556		79,801		81,075
Federal agency collateralized mortgage obligations		188,072		189,684		157,291		156,203
Federal agency mortgage-backed pools		272,144		275,973		206,970		207,704

Total available for sale investment securities	$	550,456	$	557,213	$	444,062	$	444,982


Held to maturity
Within one year	$	—	$	—	$	—	$	—
One to five years		22,801		23,965		17,815		18,403
Five to ten years		88,924		93,501		106,167		110,026
After ten years		46,818		47,034		28,208		28,976

		158,543		164,500		152,190		157,405
Federal agency collateralized mortgage obligations		6,828		6,972		9,051		8,954
Federal agency mortgage-backed pools		21,656		22,822		26,388		27,344

Total held to maturity investment securities	$	187,027	$	194,294	$	187,629	$	193,703

The following table shows the gross unrealized losses and the fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
September 30, 2016	Value		Losses			Value		Losses			Value		Losses

U.S. Treasury and federal agencies	$	6,594	$	(15	)	$	—	$	—		$	6,594	$	(15	)
State and municipal		26,360		(868	)		—		—			26,360		(868	)
Federal agency collateralized mortgage obligations		48,837		(184	)		12,304		(98	)		61,141		(282	)
Federal agency mortgage-backed pools		47,054		(365	)		6,779		(46	)		53,833		(411	)

Total temporarily impaired securities	$	128,845	$	(1,432	)	$	19,083	$	(144	)	$	147,928	$	(1,576	)


	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2015	Value		Losses			Value		Losses			Value		Losses

U.S. Treasury and federal agencies	$	5,468	$	(17	)	$	—	$	—		$	5,468	$	(17	)
State and municipal		17,353		(280	)		446		(6	)		17,799		(286	)
Federal agency collateralized mortgage obligations		89,459		(1,124	)		25,428		(655	)		114,887		(1,779	)
Federal agency mortgage-backed pools		113,244		(1,212	)		16,506		(319	)		129,750		(1,531	)

Total temporarily impaired securities	$	225,524	$	(2,633	)	$	42,380	$	(980	)	$	267,904	$	(3,613	)


	Three Months Ended September 30				Nine Months Ended September 30
	2016		2015		2016			2015
Sales of securities available for sale (Unaudited)
Proceeds	$	—	$	—	$	25,077		$	13,332
Gross gains		—		—		1,060			147
Gross losses		—		—		(185	)		(23	)