Investment Securities Available-for-sale

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Investment Securities Available-for-Sale

Note 3. Investment Securities Available-for-Sale

Amortized cost and estimated fair value of securities available-for-sale are summarized as follows:

June 30, 2017 (dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U. S. agency securities	$	146,873	$	360	$	1,371	$	145,862
Residential mortgage backed securities		299,136		449		3,044		296,541
Municipal bonds		43,166		1,720		—		44,886
Corporate bonds		10,012		153		—		10,165
Other equity investments		218		—		—		218
	$	499,405	$	2,682	$	4,415	$	497,672

December 31, 2016 (dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U. S. agency securities	$	107,425	$	519	$	1,802	$	106,142
Residential mortgage backed securities		329,606		324		3,691		326,239
Municipal bonds		94,607		1,723		400		95,930
Corporate bonds		9,508		82		11		9,579
Other equity investments		218		—		—		218
	$	541,364	$	2,648	$	5,904	$	538,108

In addition, at June 30, 2017, the Company held $28.6 million in equity securities in a combination of Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stocks, which are required to be held for regulatory purposes and which are not marketable, and therefore are carried at cost.

Gross unrealized losses and fair value by length of time that the individual available-for-sale securities have been in a continuous unrealized loss position are as follows:

			Less than 12 Months				12 Months or Greater				Total
June 30, 2017 (dollars in thousands)	Number of Securities		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
U. S. agency securities		24	$	83,448	$	1,353	$	3,381	$	18	$	86,829	$	1,371
Residential mortgage backed securities		116		220,943		2,469		23,478		575		244,421		3,044
		140	$	304,391	$	3,822	$	26,859	$	593	$	331,250	$	4,415

			Less than 12 Months				12 Months or Greater				Total
December 31, 2016 (dollars in thousands)	Number of Securities		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
U. S. agency securities		27	$	88,991	$	1,764	$	3,768	$	38	$	92,759	$	1,802
Residential mortgage backed securities		112		232,347		3,110		19,402		581		251,749		3,691
Municipal bonds		16		34,743		400		—		—		34,743		400
Corporate bonds		2		4,998		11		—		—		4,998		11
		157	$	361,079	$	5,285	$	23,170	$	619	$	384,249	$	5,904

The unrealized losses that exist are generally the result of changes in market interest rates and interest spread relationships since original purchases. The weighted average duration of debt securities, which comprise 99.9% of total investment securities, is relatively short at 3.4 years. If quoted prices are not available, fair value is measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. The Company does not believe that the investment securities that were in an unrealized loss position as of June 30, 2017 represent an other-than-temporary impairment. The Company does not intend to sell the investments and it is more likely than not that the Company will not have to sell the securities before recovery of its amortized cost basis, which may be at maturity.

 The amortized cost and estimated fair value of investments available-for-sale at June 30, 2017 and December 31, 2016 by contractual maturity are shown in the table below. Expected maturities for residential mortgage backed securities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2017				December 31, 2016
(dollars in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
U. S. agency securities maturing:
One year or less	$	82,671	$	81,668	$	83,885	$	82,548
After one year through five years		55,134		55,281		20,736		20,897
Five years through ten years		9,068		8,913		2,804		2,697
Residential mortgage backed securities		299,136		296,541		329,606		326,239
Municipal bonds maturing:
One year or less		2,891		2,952		1,056		1,070
After one year through five years		19,616		20,430		45,808		46,865
Five years through ten years		19,586		20,317		46,668		46,839
After ten years		1,073		1,187		1,075		1,156
Corporate bonds
After one year through five years		8,512		8,665		8,008		8,079
After ten years		1,500		1,500		1,500		1,500
Other equity investments		218		218		218		218
	$	499,405	$	497,672	$	541,364	$	538,108

For the six months ended June 30, 2017, gross realized gains on sales of investments securities were $750 thousand and gross realized losses on sales of investment securities were $219 thousand. For the six months ended June 30, 2016, gross realized gains on sales of investments securities were $1.3 million and gross realized losses on sales of investment securities were $184 thousand.

Proceeds from sales and calls of investment securities for the six months ended June 30, 2017 were $58.0 million, and in 2016 were $87.7 million.

The carrying value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase, and certain lines of credit with correspondent banks at June 30, 2017 was $440.2 million, which is well in excess of required amounts in order to operationally provide significant reserve amounts for new business. As of June 30, 2017 and December 31, 2016, there were no holdings of securities of any one issuer, other than the U.S. Government and U.S. agency securities, which exceeded ten percent of shareholders’ equity.