Note 3 – Securities

The fair value of securities is as follows:


	September 30, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U.S. Treasury and federal agencies	$	17,036	$	—	$	(464	)	$	16,572
State and municipal		159,812		57		(3,194	)		156,675
Federal agency collateralized mortgage obligations		178,069		—		(5,398	)		172,671
Federal agency mortgage-backed pools		193,461		16		(7,502	)		185,975
Corporate notes		10,408		103		(99	)		10,412

Total available for sale investment securities	$	558,786	$	176	$	(16,657	)	$	542,305

Held to maturity
State and municipal	$	204,619	$	1,062	$	(5,257	)	$	200,424
Federal agency collateralized mortgage obligations		5,262		3		(182	)		5,083
Federal agency mortgage-backed pools		13,967		27		(343	)		13,651

Total held to maturity investment securities	$	223,848	$	1,092	$	(5,782	)	$	219,158


	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 September 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 September 30, 2018.

The amortized cost and fair value of securities available for sale and held to maturity at September 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.


	September 30, 2018				December 31, 2017
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for sale
Within one year	$	19,958	$	19,861	$	13,347	$	13,326
One to five years		34,822		34,019		40,468		40,193
Five to ten years		96,035		94,103		50,473		51,156
After ten years		36,441		35,676		63,306		64,326

		187,256		183,659		167,594		169,001
Federal agency collateralized mortgage obligations		178,069		172,671		132,871		130,365
Federal agency mortgage-backed pools		193,461		185,975		211,487		208,657
Private labeled mortgage-backed pools		—		—		1,650		1,642

Total available for sale investment securities	$	558,786	$	542,305	$	513,602	$	509,665

Held to maturity
Within one year	$	5,646	$	5,628	$	1,948	$	1,934
One to five years		48,383		48,788		40,603		41,531
Five to ten years		102,816		101,199		89,801		91,249
After ten years		47,774		44,809		47,484		45,683

		204,619		200,424		179,836		180,397
Federal agency collateralized mortgage obligations		5,262		5,083		5,734		5,682
Federal agency mortgage-backed pools		13,967		13,651		14,878		15,006

Total held to maturity investment securities	$	223,848	$	219,158	$	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.


	September 30, 2018
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Investment Securities
U.S. Treasury and federal agencies	$	7,763	$	(137	)	$	8,809	$	(327	)	$	16,572	$	(464	)
State and municipal		215,439		(3,691	)		56,725		(4,760	)		272,164		(8,451	)
Federal agency collateralized mortgage obligations		72,495		(830	)		102,498		(4,750	)		174,993		(5,580	)
Federal agency mortgage-backed pools		48,696		(1,270	)		145,787		(6,575	)		194,483		(7,845	)
Corporate notes		8,124		(99)			—		—			8,124		(99	)

Total temporarily impaired securities	$	352,517	$	(6,027	)	$	313,819	$	(16,412	)	$	666,336	$	(22,439	)


	December 31, 2017
	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Investment Securities
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					Nine Months Ended
	September 30					September 30
	2018			2017		2018			2017
Sales of securities available for sale
Proceeds	$	7,485		$	387	$	17,321		$	5,490
Gross gains		—			6		37			151
Gross losses		(122	)		—		(148	)		(113	)