Note

Investment Securities Available-for-Sale

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

			Gross		Gross		Estimated
March 31, 2017	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value
U. S. agency securities	$	149,160	$	315	$	1,567	$	147,908
Residential mortgage backed securities		299,757		478		3,310		296,925
Municipal bonds		43,255		1,369		15		44,609
Corporate bonds		10,013		134		-		10,147
Other equity investments		218		-		-		218
	$	502,403	$	2,296	$	4,892	$	499,807

			Gross		Gross		Estimated
December 31, 2016	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		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

			Gross		Gross		Estimated
March 31, 2016	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value
U. S. agency securities	$	54,948	$	774	$	100	$	55,622
Residential mortgage backed securities		305,351		2,073		612		306,812
Municipal bonds		104,840		5,069		-		109,909
Corporate bonds		15,085		-		147		14,938
Other equity investments		310		18		-		328
	$	480,534	$	7,934	$	859	$	487,609

In addition, at

March

2017,

the Company held

$25.6

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
			Estimated				Estimated				Estimated
March 31, 2017	Number of		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Securities		Value		Losses		Value		Losses		Value		Losses
U. S. agency securities		30	$	98,493	$	1,535	$	3,661	$	32	$	102,154	$	1,567
Residential mortgage backed securities		114		229,743		2,730		20,711		580		250,454		3,310
Municipal bonds		4		3,487		15		-		-		3,487		15
		148	$	331,723	$	4,280	$	24,372	$	612	$	356,095	$	4,892

			Less than				12 Months
			12 Months				or Greater				Total
			Estimated				Estimated				Estimated
December 31, 2016	Number of		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Securities		Value		Losses		Value		Losses		Value		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

3.6

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

March

31,

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

March

31,

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.

	March 31, 2017				December 31, 2016
	Amortized		Estimated		Amortized		Estimated
(dollars in thousands)	Cost		Fair Value		Cost		Fair Value
U. S. agency securities maturing:
One year or less	$	82,631	$	81,401	$	83,885	$	82,548
After one year through five years		47,693		47,725		20,736		20,897
Five years through ten years		9,071		9,017		2,804		2,697
After ten years		9,765		9,765		-		-
Residential mortgage backed securities		299,757		296,925		329,606		326,239
Municipal bonds maturing:
One year or less		831		837		1,056		1,070
After one year through five years		19,913		20,801		45,808		46,865
Five years through ten years		21,437		21,794		46,668		46,839
After ten years		1,074		1,177		1,075		1,156
Corporate bonds
After one year through five years		8,513		8,647		8,008		8,079
After ten years		1,500		1,500		1,500		1,500
Other equity investments		218		218		218		218
	$	502,403	$	499,807	$	541,364	$	538,108

For the

three

months ended

March

31,

2017

, gross realized gains on sales of investments securities were

$723

thousand and gross realized losses on sales of investment securities were

$218

thousand. For the

three

months ended

March

31,

2016,

gross realized gains on sales of investments securities were

$624

thousand and there were

gross realized losses on sales of investment securities.

Proceeds from sales and calls of investment securities for the

three

months ended

March

31,

2017

were

$51.2

million, and in

2016

were

$15.7

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

March

31,

2017

was

$440.1

million, which is well in excess of required amounts in order to operationally provide significant reserve amounts for new business. As of

March

31,

2017

and

December

31,

2016,

there were

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.