Investment Securities

6 Months Ended

Jun. 30, 2019

(4.)INVESTMENT SECURITIES

The amortized cost and fair value of investment securities are summarized below (in thousands):

	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
June 30, 2019
Securities available for sale:
U.S. Government agency and government sponsored enterprises	$	109,621	$	1,623	$	58	$	111,186
Mortgage-backed securities:
Federal National Mortgage Association		251,417		2,251		367		253,301
Federal Home Loan Mortgage Corporation		36,290		263		256		36,297
Government National Mortgage Association		4,815		67		—		4,882
Collateralized mortgage obligations:
Federal National Mortgage Association		119		—		1		118
Federal Home Loan Mortgage Corporation		35		—		—		35
Privately issued		—		690		—		690
Total mortgage-backed securities		292,676		3,271		624		295,323
Total available for sale securities	$	402,297	$	4,894	$	682	$	406,509
Securities held to maturity:
State and political subdivisions	$	200,274	$	3,527	$	19	$	203,782
Mortgage-backed securities:
Federal National Mortgage Association		10,977		152		33		11,096
Federal Home Loan Mortgage Corporation		4,145		72		65		4,152
Government National Mortgage Association		39,587		186		217		39,556
Collateralized mortgage obligations:
Federal National Mortgage Association		56,428		123		592		55,959
Federal Home Loan Mortgage Corporation		71,293		272		535		71,030
Government National Mortgage Association		15,906		17		93		15,830
Total mortgage-backed securities		198,336		822		1,535		197,623
Total held to maturity securities	$	398,610	$	4,349	$	1,554	$	401,405
December 31, 2018
Securities available for sale:
U.S. Government agency and government sponsored enterprises	$	155,102	$	—	$	3,074	$	152,028
Mortgage-backed securities:
Federal National Mortgage Association		258,984		44		6,325		252,703
Federal Home Loan Mortgage Corporation		35,962		13		1,275		34,700
Government National Mortgage Association		5,364		21		76		5,309
Collateralized mortgage obligations:
Federal National Mortgage Association		133		—		—		133
Federal Home Loan Mortgage Corporation		37		—		—		37
Privately issued		—		767		—		767
Total mortgage-backed securities		300,480		845		7,676		293,649
Total available for sale securities	$	455,582	$	845	$	10,750	$	445,677

(4.)INVESTMENT SECURITIES (Continued)

	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2018 (continued)
Securities held to maturity:
State and political subdivisions	$	234,845	$	876	$	1,211	$	234,510
Mortgage-backed securities:
Federal National Mortgage Association		11,602		8		261		11,349
Federal Home Loan Mortgage Corporation		4,583		—		193		4,390
Government National Mortgage Association		37,450		14		923		36,541
Collateralized mortgage obligations:
Federal National Mortgage Association		62,103		1		2,179		59,925
Federal Home Loan Mortgage Corporation		78,200		—		2,597		75,603
Government National Mortgage Association		17,798		—		535		17,263
Total mortgage-backed securities		211,736		23		6,688		205,071
Total held to maturity securities	$	446,581	$	899	$	7,899	$	439,581

Investment securities with a total fair value of $694.8 million and $751.0 million at June 30, 2019 and December 31, 2018, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

Sales of securities available for sale were as follows (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2019		2018		2019		2018
Proceeds from sales	$	39,667	$	5,768	$	44,615	$	5,768
Gross realized gains		203		9		203		9
Gross realized losses		37		2		90		2

The scheduled maturities of securities available for sale and securities held to maturity at June 30, 2019 are shown below (in thousands). Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.

	Amortized		Fair
	Cost		Value
Debt securities available for sale:
Due in one year or less	$	21,794	$	21,721
Due from one to five years		105,018		106,314
Due after five years through ten years		173,807		176,526
Due after ten years		101,678		101,948
Total available for sale securities	$	402,297	$	406,509
Debt securities held to maturity:
Due in one year or less	$	47,189	$	47,565
Due from one to five years		131,918		134,551
Due after five years through ten years		58,251		58,541
Due after ten years		161,252		160,748
Total held to maturity securities	$	398,610	$	401,405

(4.)INVESTMENT SECURITIES (Continued)

Unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (in thousands):

	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
June 30, 2019
Securities available for sale:
U.S. Government agency and government sponsored enterprises	$	—	$	—	$	18,952	$	58	$	18,952	$	58
Mortgage-backed securities:
Federal National Mortgage Association		14,209		28		59,305		339		73,514		367
Federal Home Loan Mortgage Corporation		—		—		24,333		256		24,333		256
Government National Mortgage Association		—		—		—		—		—		—
Collateralized mortgage obligations:
Federal National Mortgage Association		67		1		16		—		83		1
Federal Home Loan Mortgage Corporation		—		—		5		—		5		—
Total mortgage-backed securities		14,276		29		83,659		595		97,935		624
Total available for sale securities		14,276		29		102,611		653		116,887		682
Securities held to maturity:
State and political subdivisions		—		—		4,631		19		4,631		19
Mortgage-backed securities:
Federal National Mortgage Association		2,422		3		3,442		30		5,864		33
Federal Home Loan Mortgage Corporation		—		—		2,643		65		2,643		65
Government National Mortgage Association		—		—		19,077		217		19,077		217
Collateralized mortgage obligations:
Federal National Mortgage Association		6,763		8		37,056		584		43,819		592
Federal Home Loan Mortgage Corporation		—		—		52,528		535		52,528		535
Government National Mortgage Association		—		—		11,586		93		11,586		93
Total mortgage-backed securities		9,185		11		126,332		1,524		135,517		1,535
Total held to maturity securities		9,185		11		130,963		1,543		140,148		1,554
Total temporarily impaired securities	$	23,461	$	40	$	233,574	$	2,196	$	257,035	$	2,236
December 31, 2018
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	—	$	—	$	152,028	$	3,074	$	152,028	$	3,074
Mortgage-backed securities:
Federal National Mortgage Association		251		1		247,615		6,324		247,866		6,325
Federal Home Loan Mortgage Corporation		—		—		33,918		1,275		33,918		1,275
Government National Mortgage Association		—		—		4,667		76		4,667		76
Collateralized mortgage obligations:
Federal National Mortgage Association		—		—		56		—		56		—
Federal Home Loan Mortgage Corporation		—		—		6		—		6		—
Total mortgage-backed securities		251		1		286,262		7,675		286,513		7,676
Total available for sale securities		251		1		438,290		10,749		438,541		10,750

(4.)INVESTMENT SECURITIES (Continued)

	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
December 31, 2018 (continued)
Securities held to maturity:
State and political subdivisions		35,751		91		49,534		1,120		85,285		1,211
Mortgage-backed securities:
Federal National Mortgage Association		1,518		3		8,695		258		10,213		261
Federal Home Loan Mortgage Corporation		1,467		5		2,923		188		4,390		193
Government National Mortgage Association		11,783		82		22,516		841		34,299		923
Collateralized mortgage obligations:
Federal National Mortgage Association		—		—		57,973		2,179		57,973		2,179
Federal Home Loan Mortgage Corporation		—		—		75,603		2,597		75,603		2,597
Government National Mortgage Association		—		—		17,263		535		17,263		535
Total mortgage-backed securities		14,768		90		184,973		6,598		199,741		6,688
Total held to maturity securities		50,519		181		234,507		7,718		285,026		7,899
Total temporarily impaired securities	$	50,770	$	182	$	672,797	$	18,467	$	723,567	$	18,649

The total number of security positions in the investment portfolio in an unrealized loss position at June 30, 2019 was 161 compared to 571 at December 31, 2018. At June 30, 2019, the Company had positions in 152 investment securities with a fair value of $233.6 million and a total unrealized loss of $2.2 million that have been in a continuous unrealized loss position for more than 12 months. At June 30, 2019, there were a total of nine securities positions in the Company’s investment portfolio with a fair value of $23.5 million and a total unrealized loss of $40 thousand that had been in a continuous unrealized loss position for less than 12 months. At December 31, 2018, the Company had positions in 435 investment securities with a fair value of $672.8 million and a total unrealized loss of $18.5 million that had been in a continuous unrealized loss position for more than 12 months. At December 31, 2018, there were a total of 136 securities positions in the Company’s investment portfolio with a fair value of $50.8 million and a total unrealized loss of $182 thousand that had been in a continuous unrealized loss position for less than 12 months. The unrealized loss on investment securities was predominantly caused by changes in market interest rates subsequent to purchase. The fair value of most of the investment securities in the Company’s portfolio fluctuates as market interest rates change.

The Company reviews investment securities on an ongoing basis for the presence of other than temporary impairment (“OTTI”) with formal reviews performed quarterly. When evaluating debt securities for OTTI, management considers many factors, including: (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, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intention to sell the debt security or whether it is more likely than not that it will be required to sell the debt security before its anticipated recovery. The assessment of whether OTTI exists involves a high degree of subjectivity and judgment and is based on the information then available to management. There was no impairment recorded during the six months ended June 30, 2019 and 2018.

Based on management’s review and evaluation of the Company’s debt securities as of June 30, 2019, the debt securities with unrealized losses were not considered to be OTTI. As of June 30, 2019, the Company did not intend to sell any of the securities in a loss position and believes that it is not likely that it will be required to sell any such securities before the anticipated recovery of amortized cost. Accordingly, as of June 30, 2019, management has concluded that unrealized losses on its investment securities are temporary and no further impairment loss has been realized in the Company’s consolidated statements of income.