NOTE 3 - SECURITIES

Securities have been classified in the financial statements as available for sale or held to maturity. The amortized cost of securities and their approximate fair values at September 30, 2016 and December 31, 2015 are as follows:

			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
September 30, 2016	Cost		Gains		Losses			Value
Available for sale securities:
U.S. Government agency obligations	$	189,313	$	1,374	$	(117	)	$	190,570
Mortgage-backed securities, residential		25,834		596		(17	)		26,413
Asset backed securities		13,111		33		(181	)		12,963
State and municipal		28,933		40		(109	)		28,864
Corporate bonds		27,323		277		—			27,600
SBA pooled securities		162		2		—			164
Total available for sale securities	$	284,676	$	2,322	$	(424	)	$	286,574

			Gross		Gross
	Amortized		Unrecognized		Unrecognized			Fair
	Cost		Gains		Losses			Value
Held to maturity securities:
CLO securities	$	29,316	$	1,595	$	(62	)	$	30,849

			Gross		Gross
(Dollars in thousands)	Amortized		Unrealized		Unrealized			Fair
December 31, 2015	Cost		Gains		Losses			Value
Available for sale securities:
U.S. Government agency obligations	$	90,533	$	518	$	(17	)	$	91,034
Mortgage-backed securities, residential		28,006		361		(27	)		28,340
Asset backed securities		17,957		24		(455	)		17,526
State and municipal		1,509		17		—			1,526
Corporate bonds		24,542		74		(57	)		24,559
SBA pooled securities		183		1		—			184
Total available for sale securities	$	162,730	$	995	$	(556	)	$	163,169

The amortized cost and estimated fair value of securities at September 30, 2016, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale Securities				Held to Maturity Securities
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	83,649	$	83,724	$	—	$	—
Due from one year to five years		135,401		136,797		—		—
Due from five years to ten years		5,443		5,449		8,454		9,011
Due after ten years		21,076		21,064		20,862		21,838
		245,569		247,034		29,316		30,849
Mortgage-backed securities, residential		25,834		26,413		—		—
Asset backed securities		13,111		12,963		—		—
SBA pooled securities		162		164		—		—
	$	284,676	$	286,574	$	29,316	$	30,849

For the three and nine months ended September 30, 2016, securities were sold resulting in proceeds of $19,982,000 and $24,327,000, respectively, gross gains of $5,000 and $10,000, respectively, and gross losses of $73,000 and $73,000, respectively. For the three and nine months ended September 30, 2015, securities were sold resulting in proceeds of $5,076,000 and $17,635,000, respectively, gross gains of $15,000 and $257,000, respectively, and no losses.

Securities with a carrying amount of approximately $191,801,000 and $100,034,000 at September 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits, customer repurchase agreements, and for other purposes required or permitted by law.

Information pertaining to securities with gross unrealized losses at September 30, 2016 and December 31, 2015, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are summarized as follows:

	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
September 30, 2016	Value		Losses			Value		Losses			Value		Losses
Available for sale securities:
U.S. Government agency obligations	$	81,449	$	(117	)	$	—	$	—		$	81,449	$	(117	)
Mortgage-backed securities, residential		2,169		(17	)		—		—			2,169		(17	)
Asset backed securities		—		—			8,019		(181	)		8,019		(181	)
State and municipal		23,506		(109	)		—		—			23,506		(109	)
Corporate bonds		—		—			—		—			—		—
SBA pooled securities		—		—			—		—			—		—
	$	107,124	$	(243	)	$	8,019	$	(181	)	$	115,143	$	(424	)

Held to maturity securities:
CLO securities	$	1,634	$	(62	)	$	—	$	—		$	1,634	$	(62	)


	Less than 12 Months					12 Months or More					Total
(Dollars in thousands)	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2015	Value		Losses			Value		Losses			Value		Losses
U.S. Government agency obligations	$	10,029	$	(17	)	$	—	$	—		$	10,029	$	(17	)
Mortgage-backed securities, residential		4,948		(27	)		—		—			4,948		(27	)
Asset backed securities		8,031		(416	)		4,605		(39	)		12,636		(455	)
State and municipal		—		—			—		—			—		—
Corporate bonds		10,434		(57	)		—		—			10,434		(57	)
SBA pooled securities		—		—			—		—			—		—
	$	33,442	$	(517	)	$	4,605	$	(39	)	$	38,047	$	(556	)

Management evaluates securities for other than temporary impairment at least on 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 security for a period of time sufficient to allow for any anticipated recovery in fair value.

As of September 30, 2016, management does not have the intent to sell any of the securities classified as available for sale with unrealized losses in the table above and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe that any of the securities are impaired due to reasons of credit quality. Accordingly, as of September 30, 2016, management believes that the unrealized losses detailed in the previous table are temporary and no other than temporary impairment loss has been recognized in the Company’s consolidated statements of income.