Note 3 – Securities

The fair value of securities is as follows:


	June 30, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U.S. Treasury and federal agencies	$	24,654	$	—	$	(435	)	$	24,219
State and municipal		136,732		300		(2,051	)		134,981
Federal agency collateralized mortgage obligations		168,382		112		(4,360	)		164,134
Federal agency mortgage-backed pools		203,593		28		(6,626	)		196,995
Private labeled mortgage-backed pools		—		—		—			—
Corporate notes		5,725		145		(4	)		5,866

Total available for sale investment securities	$	539,086	$	585	$	(13,476	)	$	526,195

Held to maturity
State and municipal	$	190,079	$	1,610	$	(4,309	)	$	187,380
Federal agency collateralized mortgage obligations		5,409		8		(157	)		5,260
Federal agency mortgage-backed pools		14,279		55		(244	)		14,090

Total held to maturity investment securities	$	209,767	$	1,673	$	(4,710	)	$	206,730


	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair 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

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 June 30, 2018, 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 June 30, 2018.

The amortized cost and fair value of securities available for sale and held to maturity at June 30, 2018 and 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.


	June 30, 2018				December 31, 2017
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale
Within one year	$	10,054	$	10,013	$	13,347	$	13,326
One to five years		29,238		28,739		40,468		40,193
Five to ten years		80,973		79,937		50,473		51,156
After ten years		46,846		46,377		63,306		64,326

		167,111		165,066		167,594		169,001
Federal agency collateralized mortgage obligations		168,382		164,134		132,871		130,365
Federal agency mortgage-backed pools		203,593		196,995		211,487		208,657
Private labeled mortgage-backed pools		—		—		1,650		1,642

Total available for sale investment securities	$	539,086	$	526,195	$	513,602	$	509,665

Held to maturity
Within one year	$	5,578	$	5,546	$	1,948	$	1,934
One to five years		43,825		44,383		40,603		41,531
Five to ten years		103,804		103,252		89,801		91,249
After ten years		36,872		34,199		47,484		45,683

		190,079		187,380		179,836		180,397
Federal agency collateralized mortgage obligations		5,409		5,260		5,734		5,682
Federal agency mortgage-backed pools		14,279		14,090		14,878		15,006

Total held to maturity investment securities	$	209,767	$	206,730	$	200,448	$	201,085

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.


	June 30, 2018
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available for sale
U.S. Treasury and federal agencies	$	20,387	$	(352	)	$	3,832	$	(83	)	$	24,219	$	(435	)
State and municipal		149,412		(4,495	)		37,546		(1,865	)		186,958		(6,360	)
Federal agency collateralized mortgage obligations		67,216		(1,507	)		67,923		(3,010	)		135,139		(4,517	)
Federal agency mortgage-backed pools		119,369		(3,073	)		84,772		(3,797	)		204,141		(6,870	)
Private labeled mortgage-backed pools		—		—			—		—			—		—
Corporate notes		971		(4	)		—		—			971		(4	)

Total temporarily impaired securities	$	357,355	$	(9,431	)	$	194,073	$	(8,755	)	$	551,428	$	(18,186	)


	December 31, 2017
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available for sale
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	)

Information regarding security proceeds, gross gains and gross losses are presented below.


	Three Months Ended					Six Months Ended
	June 30					June 30
	2018		2017			2018			2017
Sales of securities available for sale
Proceeds	$	—	$	3,013		$	9,836		$	5,103
Gross gains		—		110			37			145
Gross losses		—		(113	)		(26	)		(113	)