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INVESTMENT SECURITIES | 9 Months Ended
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Sep. 30, 2016
Investments, Debt and Equity Securities [Abstract] |
INVESTMENT SECURITIES |
NOTE 2 – INVESTMENT SECURITIES
Investment Portfolio Composition. The amortized cost and related market value of investment securities available-for-sale and
held-to-maturity were as follows:
| September 30, 2016 |  |  | December 31, 2015
| Amortized |  | Unrealized |  | Unrealized |  | Market |  | Amortized |  | Unrealized |  | Unrealized |  | Market
| Cost |  | Gains |  | Losses |  | Value |  | Cost |  | Gain |  | Losses |  | Value
Available for Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government Treasury | $ | 272,656 |  | $ | 1,029 |  | $ | - |  | $ | 273,685 |  | $ | 250,458 |  | $ | 101 |  | $ | 213 |  | $ | 250,346
U.S. Government Agency |  | 129,150 |  |  | 569 |  |  | 203 |  |  | 129,516 |  |  | 101,730 |  |  | 357 |  |  | 263 |  |  | 101,824
States and Political Subdivisions |  | 86,490 |  |  | 189 |  |  | 45 |  |  | 86,634 |  |  | 88,358 |  |  | 103 |  |  | 99 |  |  | 88,362
Mortgage-Backed Securities |  | 1,340 |  |  | 142 |  |  | - |  |  | 1,482 |  |  | 1,742 |  |  | 159 |  |  | - |  |  | 1,901
Equity Securities(1) |  | 8,822 |  |  | - |  |  | - |  |  | 8,822 |  |  | 8,595 |  |  | - |  |  | - |  |  | 8,595
Total | $ | 498,458 |  | $ | 1,929 |  | $ | 248 |  | $ | 500,139 |  | $ | 450,883 |  | $ | 720 |  | $ | 575 |  | $ | 451,028
Held to Maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government Treasury | $ | 129,323 |  | $ | 530 |  | $ | - |  | $ | 129,853 |  | $ | 134,554 |  | $ | 45 |  | $ | 160 |  | $ | 134,439
U.S. Government Agency |  | 1,904 |  |  | 1 |  |  | - |  |  | 1,905 |  |  | 10,043 |  |  | 7 |  |  | 5 |  |  | 10,045
States and Political Subdivisions |  | 9,983 |  |  | 69 |  |  | 1 |  |  | 10,051 |  |  | 15,693 |  |  | 38 |  |  | 7 |  |  | 15,724
Mortgage-Backed Securities |  | 48,718 |  |  | 366 |  |  | 64 |  |  | 49,020 |  |  | 27,602 |  |  | 4 |  |  | 407 |  |  | 27,199
Total | $ | 189,928 |  | $ | 966 |  | $ | 65 |  | $ | 190,829 |  | $ | 187,892 |  | $ | 94 |  | $ | 579 |  | $ | 187,407
Total Investment Securities | $ | 688,386 |  | $ | 2,895 |  | $ | 313 |  | $ | 690,968 |  | $ | 638,775 |  | $ | 814 |  | $ | 1,154 |  | $ | 638,435
(1) Includes Federal Home Loan Bank, Federal Reserve Bank, and FNBB, Inc. stock recorded at cost of $3.5 million, $4.8 million, and $0.5 million, respectively, at September 30, 2016 and $3.6 million, $4.8 million, and $0.2 million, respectively, at December 31, 2015. Securities with an amortized cost of $2 22.9 million and $370.1 million at September 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits and for other purposes. The Bank, as a member of the Federal Home Loan Bank of Atlanta (“FHLB”), is required to own capital stock in the FHLB based generally upon the balances of residential and commercial real estate loans, and FHLB advances. FHLB stock which is included in equity securities is pledged to secure FHLB advances. No ready ma rket exists for this stock, and it has no quoted market value; however, redemption of this stock has historically been at par value. Maturity Distribution. As of September 30, 2016, the Company's investment securities had the following maturity distribution bas ed on contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations. Mortgage-backed securities and certain amortizing U.S. government agency securities are shown separ ately because they are not due at a certain maturity date.
| Available for Sale |  | Held to Maturity
| Amortized |  | Market |  | Amortized |  | Market
(Dollars in Thousands) | Cost |  | Value |  | Cost |  | Value
Due in one year or less | $ | 146,612 |  | $ | 146,872 |  | $ | 60,424 |  | $ | 60,503
Due after one through five years |  | 252,653 |  |  | 253,644 |  |  | 80,786 |  |  | 81,305
Mortgage-Backed Securities |  | 1,340 |  |  | 1,482 |  |  | 48,718 |  |  | 49,021
U.S. Government Agency |  | 89,031 |  |  | 89,319 |  |  | - |  |  | -
Equity Securities |  | 8,822 |  |  | 8,822 |  |  | - |  |  | -
Total | $ | 498,458 |  | $ | 500,139 |  | $ | 189,928 |  | $ | 190,829
Unrealized Losses on Investment Securities. The following table summarizes the investment securities with unrealized losses aggregated by major security type and length of time in a continuous unrealized loss position:
| Less Than |  | Greater Than |  |  |  |  |  |
| 12 Months |  | 12 Months |  | Total
| Market |  | Unrealized |  | Market |  | Unrealized |  | Market |  | Unrealized
(Dollars in Thousands) | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
September 30, 2016 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available for Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government Agency | $ | 36,793 |  | $ | 153 |  | $ | 10,123 |  | $ | 50 |  | $ | 46,916 |  | $ | 203
States and Political Subdivisions |  | 28,831 |  |  | 44 |  |  | 298 |  |  | 1 |  |  | 29,129 |  |  | 45
Total |  | 65,624 |  |  | 197 |  |  | 10,421 |  |  | 51 |  |  | 76,045 |  |  | 248
Held to Maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and Political Subdivisions |  | 1,252 |  |  | 1 |  |  | - |  |  | - |  |  | 1,252 |  |  | 1
Mortgage-Backed Securities |  | 2,095 |  |  | 5 |  |  | 7,120 |  |  | 59 |  |  | 9,215 |  |  | 64
Total | $ | 3,347 |  | $ | 6 |  | $ | 7,120 |  | $ | 59 |  | $ | 10,467 |  | $ | 65
December 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Available for Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government Treasury | $ | 150,061 |  | $ | 213 |  | $ | - |  | $ | - |  | $ | 150,061 |  | $ | 213
U.S. Government Agency |  | 43,508 |  |  | 200 |  |  | 9,644 |  |  | 63 |  |  | 53,152 |  |  | 263
States and Political Subdivisions |  | 39,608 |  |  | 86 |  |  | 5,066 |  |  | 13 |  |  | 44,674 |  |  | 99
Total |  | 233,177 |  |  | 499 |  |  | 14,710 |  |  | 76 |  |  | 247,887 |  |  | 575
Held to Maturity |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government Treasury |  | 92,339 |  |  | 160 |  |  | - |  |  | - |  |  | 92,339 |  |  | 160
U.S. Government Agency |  | 5,006 |  |  | 5 |  |  | - |  |  | - |  |  | 5,006 |  |  | 5
States and Political Subdivisions |  | 3,791 |  |  | 7 |  |  | - |  |  | - |  |  | 3,791 |  |  | 7
Mortgage-Backed Securities |  | 13,267 |  |  | 185 |  |  | 11,889 |  |  | 222 |  |  | 22,156 |  |  | 407
Total | $ | 114,403 |  | $ | 357 |  | $ | 11,889 |  | $ | 222 |  | $ | 126,292 |  | $ | 579
Management evaluates securities for other than temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, the Company considers, (i) whether it has decided to sell the security, (ii) whether it is more likel y than not that the Company will have to sell the security before its market value recovers, and (iii) whether the present value of expected cash flows is sufficient to recover the entire amortized cost basis. When assessing a security’s expected cash flo ws, the Company considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost and (ii) the financial condition and near-term prospects of the issuer. In analyzing an issuer’s financial condition, mana gement considers whether the securities are issued by the federal government or its agencies, whether downgrades by rating agencies have occurred, regulatory issues, and analysts’ reports. At September 30, 2016, there were 165 positions (combined Available-for-Sale and Held-to-Maturity) with an unrealized loss totaling $0.3 million. Of the 165 positions, 69 were Ginnie Mae mortgage-backed securities (GNMA), U.S. Treasuries, or SBA securities, all of which carry the full faith and credit guarantee of the U.S. Government. SBA securities float monthly or quarterly to the prime rate and are uncapped. Of these 69 positions, there were 20 GNMA positions and 24 SBA positions in an unrealized loss position for longer than 12 months. Six agency positions were in an unrealized l oss position. There were 90 municipal bonds in an unrealized loss position that were pre-refunded, or rated “AA-“or better. These debt securities are in a loss position because they were acquired when the general level of interest rates was lower than that on September 30, 2016. The Company believes that the unrealized losses in these debt securities are temporary in nature and that the full principal will be collected as anticipated. Because the declines in the market value of these investments are attributable to changes in interest rates and not credit quality and because the Company has the present ability and intent to hold these investments until there is a recovery in fair value, which may be at maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2016.

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