MARKETABLE SECURITIES

The following tables summarize the amortized cost and fair value of securities available for sale and securities held to maturity as of June 30, 2017 and December 31, 2016 and the corresponding amounts of gross unrealized gains and losses:



June 30, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available for sale:
Corporate bonds	$	18,861	$	180	$	8	$	19,033
Municipal securities	7,793		—		300		7,493
Mortgage-backed securities	95,343		24		902		94,465
Collateralized mortgage obligations	124,833		628		219		125,242
Total available for sale	$	246,830	$	832	$	1,429	$	246,233

Held to maturity:
Municipal securities	$	148,021	$	2,869	$	530	$	150,360
Mortgage-backed securities	24,642		320		93		24,869
Collateralized mortgage obligations	9,585		220		507		9,298
Total held to maturity	$	182,248	$	3,409	$	1,130	$	184,527



December 31, 2016	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available for sale:
Corporate bonds	$	25,254	$	6	$	377	$	24,883
Municipal securities	7,841		—		622		7,219
Mortgage-backed securities	61,298		—		1,608		59,690
Collateralized mortgage obligations	65,789		10		666		65,133
Total available for sale	$	160,182	$	16	$	3,273	$	156,925

Held to maturity:
Municipal securities	$	149,420	$	901	$	3,889	$	146,432
Mortgage-backed securities	28,450		318		290		28,478
Collateralized mortgage obligations	11,501		265		521		11,245
Total held to maturity	$	189,371	$	1,484	$	4,700	$	186,155

The Company’s held to maturity mortgage-backed securities portfolio includes non-agency collateralized mortgage obligations with a carrying value of $1,522, which had unrealized losses of $507 as of June 30, 2017. These non-agency mortgage-backed securities were rated AAA at purchase. The Company monitors to ensure it has adequate credit support, and the Company records other than temporary impairment (OTTI) as appropriate. The Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

Management evaluates securities for OTTI on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (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, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. The Company did not record any other than temporary impairment losses on any of its securities during the six months ended June 30, 2017 or for the year ended December 31, 2016.

Information pertaining to securities with gross unrealized losses as of June 30, 2017 and December 31, 2016 aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position is detailed in the following tables:



	Less Than 12 Months					12 Months or Longer					Total
June 30, 2017	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
Available for sale:
Corporate bonds	$	(8	)	$	2,981	$	—		$	—	$	(8	)	$	2,981
Municipal securities	(300		)	7,493		—			—		(300		)	7,493
Mortgage-backed securities	(569		)	75,674		(333		)	14,375		(902		)	90,049
Collateralized mortgage obligations	(68		)	25,407		(151		)	8,143		(219		)	33,550
Total available for sale	$	(945	)	$	111,555	$	(484	)	$	22,518	$	(1,429	)	$	134,073

Held to maturity:
Municipal securities	$	(406	)	$	38,442	$	(124	)	$	6,015	$	(530	)	$	44,457
Mortgage-backed securities	(93		)	11,154		—			—		(93		)	11,154
Collateralized mortgage obligations	—			—		(507		)	2,297		(507		)	2,297
Total held to maturity	$	(499	)	$	49,596	$	(631	)	$	8,312	$	(1,130	)	$	57,908



	Less Than 12 Months					12 Months or Longer					Total
December 31, 2016	Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value
Available for sale:
Corporate bonds	$	(377	)	$	22,529	$	—		$	—	$	(377	)	$	22,529
Municipal securities	(622		)	7,219		—			—		(622		)	7,219
Mortgage-backed securities	(1,047		)	44,420		(561		)	15,270		(1,608		)	59,690
Collateralized mortgage obligations	(437		)	55,435		(229		)	9,049		(666		)	64,484
Total available for sale	$	(2,483	)	$	129,603	$	(790	)	$	24,319	$	(3,273	)	$	153,922

Held to maturity:
Municipal securities	$	(3,889	)	$	98,943	$	—		$	—	$	(3,889	)	$	98,943
Mortgage-backed securities	(290		)	19,983		—			—		(290		)	19,983
Collateralized mortgage obligations	—			—		(521		)	2,350		(521		)	2,350
Total held to maturity	$	(4,179	)	$	118,926	$	(521	)	$	2,350	$	(4,700	)	$	121,276

The number of investment positions in an unrealized loss position totaled 100 and 177 at June 30, 2017 and December 31, 2016, respectively. The securities in a loss position were composed of tax-exempt municipal bonds, corporate bonds, collateralized mortgage obligations and mortgage backed securities. Management believes the unrealized loss on the remaining securities is a function of the movement of interest rates since the time of purchase. Based on evaluation of available evidence, including recent changes in interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment would be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified. The Company does not have the intent to sell these mortgage-backed securities and it is likely that it will not be required to sell the securities before their anticipated recovery. The Company does not consider these securities to be other-than-temporarily impaired at June 30, 2017.

Mortgage-backed securities and collateralized mortgage obligations are backed by pools of mortgages that are insured or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Association or the Government National Mortgage Association.

As of June 30, 2017, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of shareholders’ equity.

Securities with fair values of approximately $245,600 and $259,499 at June 30, 2017 and December 31, 2016, respectively, were pledged to secure public fund deposits and for other purposes as required or permitted by law.

The proceeds from sales of securities and the associated gains and losses are listed below for:



	Three Months Ended June 30,						Six Months Ended June 30,
	2017			2016			2017			2016
Proceeds	$	14,762		$	53,467		$	14,762		$	77,087
Gross gains	38			72			38			147
Gross losses	(13		)	(91		)	(13		)	(129		)

During the six months ended June 30, 2017 and 2016, the Company sold three held to maturity securities each year. The Company sold these municipal securities based upon internal credit analysis, under the belief that they had experienced significant deterioration in creditworthiness. The risk exposure presented by these municipalities had increased beyond acceptable levels, and the Company determined that it was reasonably possible that all amounts due would not be collected. The credit analysis determined that the municipalities had been significantly impacted by the significant decline in market oil prices due to the fact that their tax bases are heavily reliant on the energy industry relative to other sectors of the economy. Specifically, the revenues of these municipalities had been adversely impacted by the sustained low-level of oil prices. The Company believes the sale of these securities were merited and permissible under the applicable accounting guidelines because of the significant deterioration in the creditworthiness of the issuers.

Sale of securities held to maturity were as follows for:



	Three Months Ended June 30,					Six Months Ended June 30,
	2017			2016		2017			2016
Proceeds from sales	$	923		$	—	$	923		$	1,866
Amortized cost	907			—		907			1,842
Gross realized gains	16			—		16			24
Tax expense related to securities gains/losses	(4		)	—		(4		)	(7		)

The contractual maturities at June 30, 2017 of available for sale and held to maturity securities at carrying value and estimated fair value are shown below. The Company invests in mortgage-backed securities and collateralized mortgage obligations that have expected maturities that differ from their contractual maturities. These differences arise because borrowers and/or issuers may have the right to call or prepay their obligation with or without call or prepayment penalties.



	Available for Sale				Held to Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due within one year	$	—	$	—	$	2,831	$	2,838
Due after one year through five years	1,094		1,104		5,553		5,731
Due after five years through ten years	17,767		17,929		40,659		42,175
Due after ten years	7,793		7,493		98,978		99,616
Mortgage-backed securities	95,343		94,465		24,642		24,869
Collateralized mortgage obligations	124,833		125,242		9,585		9,298
	$	246,830	$	246,233	$	182,248	$	184,527