INVESTMENTS

12 Months Ended

Dec. 31, 2016

Note 3 – Investments

Investments available-for-sale

The amortized cost and estimated fair values of investments available-for-sale at December 31 are presented in the following table:

			2016								2015
					Gross		Gross		Estimated				Gross		Gross		Estimated
			Amortized		Unrealized		Unrealized		Fair		Amortized		Unrealized		Unrealized		Fair
(In thousands)			Cost		Gains		Losses		Value		Cost		Gains		Losses		Value
U.S. government agencies			$	124,314	$	32	$	(2,556)	$	121,790	$	109,602	$	132	$	(1,334)	$	108,400
State and municipal				281,090		7,180		(586)		287,684		156,402		8,305		-		164,707
Mortgage-backed				314,029		2,851		(4,169)		312,711		312,846		6,396		(2,546)		316,696
Corporate debt				9,100		34		-		9,134		-		-		-		-
Trust preferred				1,089		-		(77)		1,012		1,089		-		(66)		1,023
	Total debt securities			729,622		10,097		(7,388)		732,331		579,939		14,833		(3,946)		590,826
Marketable equity securities				1,223		-		-		1,223		1,223		-		-		1,223
		Total investments available-for-sale	$	730,845	$	10,097	$	(7,388)	$	733,554	$	581,162	$	14,833	$	(3,946)	$	592,049

Any unrealized losses in the U.S. government agencies, state and municipal or mortgage-backed securities at December 31, 2016 are the result of changes in interest rates. These declines are considered temporary in nature and will decline over time and recover as these securities approach maturity.

The mortgage-backed portfolio at December 31, 2016 is composed entirely of either the most senior tranches of GNMA, FNMA or FHLMC collateralized mortgage obligations ($106.2 million), or GNMA, FNMA or FHLMC mortgage-backed securities ($206.5 million). The Company does not intend to sell these securities and has sufficient liquidity to hold these securities for an adequate period of time, which may be maturity, to allow for any anticipated recovery in fair value.

During 2016, the Company transferred its investments held-to-maturity portfolio, which totaled $203.1 million, to the available-for-sale portfolio. At the time of the transfer, these investments had an unrealized gain of $4.6 million. The Company made this transfer to provide additional liquidity to fund future loan growth and other corporate activities.

At December 31, 2016 the trust preferred portfolio consisted of one pooled trust preferred security. The pooled trust preferred security, which is backed by debt issued by banks and thrifts, totals $1.1 million with a fair value of $1.0 million. The fair value of this security was determined by management through the use of a third party valuation specialist due to the limited trading activity for this security.

As a result of this evaluation, it was determined that the pooled trust preferred security had not incurred any credit-related other-than-temporary impairment (“OTTI”) for the year ended December 31, 2016. The unrealized loss on this security that is recognized in other comprehensive income (“OCI”) and is not expected to be sold and which the Company has the ability to hold until maturity, was $0.1 million at December 31, 2016.

The following table provides the activity of OTTI on investment securities due to credit losses recognized in earnings for the period indicated:

(In thousands)		OTTI Losses
Cumulative credit losses on investment securities, through December 31, 2014	$	531
Additions for credit losses not previously recognized		-
Cumulative credit losses on investment securities, through December 31, 2015		531
Additions for credit losses not previously recognized		-
Cumulative credit losses on investment securities, through December 31, 2016	$	531

Gross unrealized losses and fair values by length of time that the individual available-for-sale securities have been in an unrealized loss position at December 31 are presented in the following table:

		2016
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		securities		Fair Value		12 months		12 months		Losses
U.S. government agencies			12	$	96,788	$	2,556	$	-	$	2,556
State and municipal			53		48,010		516		70		586
Mortgage-backed			37		212,844		3,971		198		4,169
Trust preferred			1		1,012		-		77		77
	Total		103	$	358,654	$	7,043	$	345	$	7,388

		2015
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		securities		Fair Value		12 months		12 months		Losses
U.S. government agencies			7	$	78,555	$	1,020	$	314	$	1,334
State and municipal			-		-		-		-		-
Mortgage-backed			26		140,556		716		1,830		2,546
Trust preferred			1		1,023		-		66		66
	Total		34	$	220,134	$	1,736	$	2,210	$	3,946

The amortized cost and estimated fair values of debt securities available-for-sale by contractual maturity at December 31 are provided in the following table. The Company has allocated mortgage-backed securities into the four maturity groupings reflected in the following table using the expected average life of the individual securities based on statistics provided by independent third party industry sources. Expected maturities will differ from contractual maturities as borrowers may have the right to prepay obligations with or without prepayment penalties.

		2016				2015
				Estimated				Estimated
		Amortized		Fair		Amortized		Fair
(In thousands)		Cost		Value		Cost		Value
Due in one year or less		$	7,493	$	7,541	$	301	$	306
Due after one year through five years			156,953		162,233		157,710		160,257
Due after five years through ten years			282,468		282,713		168,136		174,677
Due after ten years			282,708		279,844		253,792		255,586
	Total debt securities available-for-sale	$	729,622	$	732,331	$	579,939	$	590,826

At December 31, 2016 and 2015, investments available-for-sale with a book value of $453.0 million and $233.2 million, respectively, were pledged as collateral for certain government deposits and for other purposes as required or permitted by law. The outstanding balance of no single issuer, except for U.S. government agency securities, exceeded ten percent of stockholders' equity at December 31, 2016 and 2015.

Investments held-to-maturity

The amortized cost and estimated fair values of investments held-to-maturity at December 31 are presented in the following table:

		2015
				Gross		Gross		Estimated
		Amortized		Unrealized		Unrealized		Fair
(In thousands)		Cost		Gains		Losses		Value
U.S. government agencies		$	56,460	$	-	$	(733)	$	55,727
State and municipal			149,537		4,297		(148)		153,686
Mortgage-backed			168		23		-		191
Corporate debt			2,100		-		-		2,100
	Total investments held-to-maturity	$	208,265	$	4,320	$	(881)	$	211,704

Gross unrealized losses and fair values by length of time that the individual held-to-maturity securities have been in a continuous unrealized loss position at December 31 are presented in the following tables:

		2015
						Continuous Unrealized
						Losses Existing for:
		Number								Total
		of				Less than		More than		Unrealized
(Dollars in thousands)		securities		Fair Value		12 months		12 months		Losses
U.S. government agencies			6	$	55,727	$	456	$	277	$	733
State and municipal			11		12,369		23		125		148
	Total		17	$	68,096	$	479	$	402	$	881

The Company does not intend to sell these securities and has sufficient liquidity to hold these securities to maturity, to allow for any anticipated recovery in fair value, and substantiates that the unrealized losses in the held-to-maturity portfolio are considered temporary in nature.

The amortized cost and estimated fair values of debt securities held-to-maturity by contractual maturity at December 31 are reflected in the following table. Expected maturities will differ from contractual maturities as borrowers may have the right to prepay obligations with or without prepayment penalties.

		2015
				Estimated
		Amortized		Fair
(In thousands)		Cost		Value
Due in one year or less		$	845	$	853
Due after one year through five years			19,217		20,041
Due after five years through ten years			163,125		165,620
Due after ten years			25,078		25,190
	Total debt securities held-to-maturity	$	208,265	$	211,704

At December 31, 2015, investments held-to-maturity with a book value of $194.3 million were pledged as collateral for certain government deposits and for other purposes as required or permitted by law. The outstanding balance of no single issuer, except for U.S. government agency securities, exceeded ten percent of stockholders' equity at December 31, 2015.

Equity securities

Other equity securities at the dates indicated are presented in the following table:

(In thousands)		2016		2015
Federal Reserve Bank stock		$	8,334	$	8,269
Federal Home Loan Bank of Atlanta stock			37,760		33,067
	Total equity securities	$	46,094	$	41,336

Securities gains

Gross realized gains and losses on all investments for the years ended December 31 are presented in the following table:

(In thousands)		2016		2015		2014
Gross realized gains from sales of investments available-for-sale		$	1,491	$	-	$	-
Net gains from calls of investments available-for-sale			440		18		2
Net gains from calls of investments held-to-maturity			1		18		3
	Net securities gains	$	1,932	$	36	$	5