Note

Investment Securities Available-for-Sale

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

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

December 31, 2015 (dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U. S. agency securities	$	56,775	$	477	$	277	$	56,975
Residential mortgage backed securities		299,709		692		3,160		297,241
Municipal bonds		114,253		4,131		3		118,381
Corporate bonds		15,090		-		152		14,938
Other equity investments		307		27		-		334
	$	486,134	$	5,327	$	3,592	$	487,869

In addition, at March 31, 2016, the Company held $17.7 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
March 31, 2016 (dollars in thousands)	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
U. S. agency securities	$	7,218	$	100	$	-	$	-	$	7,218	$	100
Residential mortgage backed securities		55,594		100		53,087		512		108,681		612
Municipal bonds		-		-		-		-		-		-
Corporate bonds		14,937		147		-		-		14,937		147
	$	77,749	$	347	$	53,087	$	512	$	130,836	$	859

	Less than 12 Months				12 Months or Greater				Total
December 31, 2015 (dollars in thousands)	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
U. S. agency securities	$	32,927	$	277	$	-	$	-	$	32,927	$	277
Residential mortgage backed securities		157,871		1,438		58,954		1,722		216,825		3,160
Municipal bonds		1,559		3		-		-		1,559		3
Corporate bonds		14,938		152		-		-		14,938		152
	$	207,295	$	1,870	$	58,954	$	1,722	$	266,249	$	3,592

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 3.5 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, 2016 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 maturity.

The amortized cost and estimated fair value of investments available-for-sale by contractual maturity are shown in the table 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.

	March 31, 2016				December 31, 2015
(dollars in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
U. S. agency securities maturing:
One year or less	$	36,534	$	36,613	$	31,436	$	31,361
After one year through five years		13,907		14,274		18,826		19,047
Five years through ten years		4,507		4,735		6,513		6,567
Residential mortgage backed securities		305,351		306,812		299,709		297,241
Municipal bonds maturing:
One year or less		4,423		4,438		4,450		4,478
After one year through five years		41,357		43,872		41,213		43,720
Five years through ten years		56,870		59,114		66,001		67,398
After ten years		2,190		2,485		2,589		2,785
Corporate bonds
After one year through five years		15,085		14,938		15,090		14,938
Other equity investments		310		328		307		334
	$	480,534	$	487,609	$	486,134	$	487,869

For the three months ended March 31, 2016, gross realized gains on sales of investments securities were $624 thousand and there were no gross realized losses on sales of investment securities. For the three months ended March 31, 2015, gross realized gains on sales of investment securities were $2.5 million and gross realized losses on sales of investment securities were $294 thousand.

Proceeds from sales and calls of investment securities for the three months ended March 31, 2016 were $15.7 million, and in 2015 were $65.7 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, 2016 was $425 million, which is well in excess of required amounts in order to operationally provide significant reserve amounts for new business. As of March 31, 2016 and December 31, 2015, there were no 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.