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Securities | 12 Months Ended
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Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract] |
Securities | Note 4 – Securities The fair value of securities is as follows:
|  |  |  |  | Gross |  |  | Gross |  |  |  |
December 31, 2017 |  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and federal agencies |  | $ | 19,277 |  |  | $ | — |  |  | $ | (225 | ) |  | $ | 19,052 |
State and municipal |  |  | 148,045 |  |  |  | 2,189 |  |  |  | (670 | ) |  |  | 149,564 |
Federal agency collateralized mortgage obligations |  |  | 132,871 |  |  |  | 45 |  |  |  | (2,551 | ) |  |  | 130,365 |
Federal agency mortgage-backed pools |  |  | 211,487 |  |  |  | 155 |  |  |  | (2,985 | ) |  |  | 208,657 |
Private labeled mortgage-backed pools |  |  | 1,650 |  |  |  | — |  |  |  | (8 | ) |  |  | 1,642 |
Corporate notes |  |  | 272 |  |  |  | 113 |  |  |  | — |  |  |  | 385 |
Total available for sale investment securities |  | $ | 513,602 |  |  | $ | 2,502 |  |  | $ | (6,439 | ) |  | $ | 509,665 |
Held to maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal |  | $ | 179,836 |  |  | $ | 3,493 |  |  | $ | (2,932 | ) |  | $ | 180,397 |
Federal agency collateralized mortgage obligations |  |  | 5,734 |  |  |  | 17 |  |  |  | (69 | ) |  |  | 5,682 |
Federal agency mortgage-backed pools |  |  | 14,878 |  |  |  | 216 |  |  |  | (88 | ) |  |  | 15,006 |
Total held to maturity investment securities |  | $ | 200,448 |  |  | $ | 3,726 |  |  | $ | (3,089 | ) |  | $ | 201,085 |
|  |  |  |  | Gross |  |  | Gross |  |  |  |
December 31, 2016 |  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury and federal agencies |  | $ | 8,051 |  |  | $ | 2 |  |  | $ | (64 | ) |  | $ | 7,989 |
State and municipal |  |  | 117,327 |  |  |  | 324 |  |  |  | (1,059 | ) |  |  | 116,592 |
Federal agency collateralized mortgage obligations |  |  | 139,040 |  |  |  | 254 |  |  |  | (2,099 | ) |  |  | 137,195 |
Federal agency mortgage-backed pools |  |  | 180,183 |  |  |  | 251 |  |  |  | (3,707 | ) |  |  | 176,726 |
Corporate notes |  |  | 1,238 |  |  |  | 91 |  |  |  | — |  |  |  | 1,329 |
Total available for sale investment securities |  | $ | 445,839 |  |  | $ | 922 |  |  | $ | (6,929 | ) |  | $ | 439,831 |
Held to maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State and municipal |  | $ | 165,607 |  |  | $ | 2,700 |  |  | $ | (2,485 | ) |  | $ | 165,822 |
Federal agency collateralized mortgage obligations |  |  | 6,530 |  |  |  | 31 |  |  |  | (71 | ) |  |  | 6,490 |
Federal agency mortgage-backed pools |  |  | 21,057 |  |  |  | 897 |  |  |  | (180 | ) |  |  | 21,774 |
Total held to maturity investment securities |  | $ | 193,194 |  |  | $ | 3,628 |  |  | $ | (2,736 | ) |  | $ | 194,086 |
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 December 31, 2017, 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 December 31, 2017. The Company elected to transfer 319 available-for-sale (“AFS”) securities with an aggregate fair value of $167.1 million to a classification of held-to-maturity (“HTM”) on April 1, 2014. In accordance with FASB ASC 320-10-55-24, the transfer from AFS to HTM must be recorded at the fair value of the AFS securities at the time of transfer. The net unrealized holding gain of $1.3 million, net of tax, at the date of transfer was retained in accumulated other comprehensive income (loss), with the associated pre-tax amount retained in the carrying value of the HTM securities. Such amounts will be amortized to comprehensive income over the remaining life of the securities. The fair value of the transferred AFS securities became the book value of the HTM securities at April 1, 2014, with no unrealized gain or loss at this date. Future reporting periods, with potential changes in market value for these securities, would likely record an unrealized gain or loss for disclosure purposes. The amortized cost and fair value of securities available for sale and held-to-maturity at December 31, 2017 and December 31, 2016, 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.
|  | December 31, 2017 |  |  | December 31, 2016 |
|  | Amortized |  |  | Fair |  |  | Amortized |  |  | Fair |
|  | Cost |  |  | Value |  |  | Cost |  |  | Value |
Available for sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 13,347 |  |  | $ | 13,326 |  |  | $ | 7,455 |  |  | $ | 7,480 |
One to five years |  |  | 40,468 |  |  |  | 40,193 |  |  |  | 37,483 |  |  |  | 37,479 |
Five to ten years |  |  | 50,473 |  |  |  | 51,156 |  |  |  | 21,112 |  |  |  | 20,984 |
After ten years |  |  | 63,306 |  |  |  | 64,326 |  |  |  | 60,566 |  |  |  | 59,967 |
|  |  | 167,594 |  |  |  | 169,001 |  |  |  | 126,616 |  |  |  | 125,910 |
Federal agency collateralized mortgage obligations |  |  | 132,871 |  |  |  | 130,365 |  |  |  | 139,040 |  |  |  | 137,195 |
Federal agency mortgage-backed pools |  |  | 211,487 |  |  |  | 208,657 |  |  |  | 180,183 |  |  |  | 176,726 |
Private labeled mortgage-backed pools |  |  | 1,650 |  |  |  | 1,642 |  |  |  | — |  |  |  | — |
Total available for sale investment securities |  | $ | 513,602 |  |  | $ | 509,665 |  |  | $ | 445,839 |  |  | $ | 439,831 |
Held to maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 1,948 |  |  | $ | 1,934 |  |  | $ | — |  |  | $ | — |
One to five years |  |  | 40,603 |  |  |  | 41,531 |  |  |  | 24,594 |  |  |  | 25,271 |
Five to ten years |  |  | 89,801 |  |  |  | 91,249 |  |  |  | 87,645 |  |  |  | 88,805 |
After ten years |  |  | 47,484 |  |  |  | 45,683 |  |  |  | 53,368 |  |  |  | 51,746 |
|  |  | 179,836 |  |  |  | 180,397 |  |  |  | 165,607 |  |  |  | 165,822 |
Federal agency collateralized mortgage obligations |  |  | 5,734 |  |  |  | 5,682 |  |  |  | 6,530 |  |  |  | 6,490 |
Federal agency mortgage-backed pools |  |  | 14,878 |  |  |  | 15,006 |  |  |  | 21,057 |  |  |  | 21,774 |
Total held to maturity investment securities |  | $ | 200,448 |  |  | $ | 201,085 |  |  | $ | 193,194 |  |  | $ | 194,086 |
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 |
December 31, 2017 |  | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
U.S. Treasury and federal agencies |  | $ | 15,882 |  |  | $ | (180 | ) |  | $ | 2,870 |  |  | $ | (45 | ) |  | $ | 18,752 |  |  | $ | (225 | )
State and municipal |  |  | 54,312 |  |  |  | (2,758 | ) |  |  | 30,691 |  |  |  | (844 | ) |  |  | 85,003 |  |  |  | (3,602 | )
Federal agency collateralized mortgage obligations |  |  | 54,006 |  |  |  | (589 | ) |  |  | 73,462 |  |  |  | (2,031 | ) |  |  | 127,468 |  |  |  | (2,620 | )
Federal agency mortgage-backed pools |  |  | 103,926 |  |  |  | (1,019 | ) |  |  | 86,846 |  |  |  | (2,054 | ) |  |  | 190,772 |  |  |  | (3,073 | )
Private labeled mortgage-backed pools |  |  | 1,642 |  |  |  | (8 | ) |  |  | — |  |  |  | — |  |  |  | 1,642 |  |  |  | (8 | )
Total temporarily impaired securities |  | $ | 229,768 |  |  | $ | (4,554 | ) |  | $ | 193,869 |  |  | $ | (4,974 | ) |  | $ | 423,637 |  |  | $ | (9,528 | )
|  | Less than 12 Months |  |  | 12 Months or More |  |  | Total |
|  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |
December 31, 2016 |  | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses |
U.S. Treasury and federal agencies |  | $ | 6,987 |  |  | $ | (64 | ) |  | $ | — |  |  | $ | — |  |  | $ | 6,987 |  |  | $ | (64 | )
State and municipal |  |  | 142,466 |  |  |  | (3,544 | ) |  |  | — |  |  |  | — |  |  |  | 142,466 |  |  |  | (3,544 | )
Federal agency collateralized mortgage obligations |  |  | 112,414 |  |  |  | (1,918 | ) |  |  | 10,199 |  |  |  | (252 | ) |  |  | 122,613 |  |  |  | (2,170 | )
Federal agency mortgage-backed pools |  |  | 163,768 |  |  |  | (3,887 | ) |  |  | — |  |  |  | — |  |  |  | 163,768 |  |  |  | (3,887 | )
Total temporarily impaired securities |  | $ | 425,635 |  |  | $ | (9,413 | ) |  | $ | 10,199 |  |  | $ | (252 | ) |  | $ | 435,834 |  |  | $ | (9,665 | )
U.S. Treasury, federal agency, state and municipal The unrealized losses on the Company’s investments in U.S. Treasury, federal agency and state and municipals were caused by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2017. Federal agency mortgage-backed pools and collateralized mortgage obligations The unrealized losses on the Company’s investment in federal agency mortgage backed pools and collateralized mortgage obligations securities were caused by interest rate changes. The Company expects to recover the amortized cost basis over the term of the securities. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2017. Information regarding security proceeds, gross gains and gross losses are presented below.
|  | Years ended December 31 |
|  | 2017 |  |  | 2016 |  |  | 2015 |
Sales of securities available for sale |  |  |  |  |  |  |  |  |  |  |  |
Proceeds |  | $ | 5,490 |  |  | $ | 182,549 |  |  | $ | 43,051 |
Gross gains |  |  | 151 |  |  |  | 2,646 |  |  |  | 254 |
Gross losses |  |  | (113 | ) |  |  | (810 | ) |  |  | (65 | )
The tax effect of the proceeds from the sale of securities available for sale was $13,000, $643,000 and $66,000 for the years ended December 31, 2017, 2016 and 2015, respectively. The Company pledges securities to secure retail and corporate repurchase agreements to the Federal Reserve for borrowing availability and as settlements for the fair value of swap agreements. At December 31, 2017, the Company had pledged $74.0 million of fair value or $75.6 million of amortized cost, in securities as collateral for $61.1 million in repurchase agreements, $94.6 million of fair value or $93.1 million of amortized cost, in securities as collateral for borrowing availability at the Federal Reserve with $11.0 million current outstanding borrowings and $13.1 million of fair value or $13.1 million of amortized cost, in securities as collateral for $917,000 in settlements on the fair value of swap agreements.

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