Note

Investment Securities Available-for-Sale

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

			Gross		Gross		Estimated
June 30, 2016	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		Value
U. S. agency securities	$	37,981	$	789	$	69	$	38,701
Residential mortgage backed securities		258,406		2,709		231		260,884
Municipal bonds		98,835		5,788		1		104,622
Corporate bonds		5,009		-		40		4,969
Other equity investments		310		26		-		336
	$	400,541	$	9,312	$	341	$	409,512

			Gross		Gross		Estimated
December 31, 2015	Amortized		Unrealized		Unrealized		Fair
(dollars in thousands)	Cost		Gains		Losses		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 June 30, 2016, the Company held $19.9 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
			Estimated				Estimated				Estimated
June 30, 2016	Number of		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Securities		Value		Losses		Value		Losses		Value		Losses
U. S. agency securities		5	$	6,798	$	69	$	-	$	-	$	6,798	$	69
Residential mortgage backed securities		20		14,956		33		23,512		198		38,468		231
Municipal bonds		1		2,500		1		-		-		2,500		1
Corporate bonds		2		3,702		30		1,267		10		4,969		40
		28	$	27,956	$	133	$	24,779	$	208	$	52,735	$	341

			Less than				12 Months
			12 Months				or Greater				Total
			Estimated				Estimated				Estimated
December 31, 2015	Number of		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Securities		Value		Losses		Value		Losses		Value		Losses
U. S. agency securities		13	$	32,927	$	277	$	-	$	-	$	32,927	$	277
Residential mortgage backed securities		92		157,871		1,438		58,954		1,722		216,825		3,160
Municipal bonds		2		1,559		3		-		-		1,559		3
Corporate bonds		4		14,938		152		-		-		14,938		152
		111	$	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 3.4 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 June 30, 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.

	June 30, 2016				December 31, 2015
	Amortized		Estimated		Amortized		Estimated
(dollars in thousands)	Cost		Fair Value		Cost		Fair Value
U. S. agency securities maturing:
One year or less	$	19,550	$	19,603	$	31,436	$	31,361
After one year through five years		18,431		19,098		18,826		19,047
Five years through ten years		-		-		6,513		6,567
Residential mortgage backed securities		258,406		260,884		299,709		297,241
Municipal bonds maturing:
One year or less		4,303		4,320		4,450		4,478
After one year through five years		36,708		38,945		41,213		43,720
Five years through ten years		56,747		60,109		66,001		67,398
After ten years		1,077		1,248		2,589		2,785
Corporate bonds
After one year through five years		5,009		4,969		15,090		14,938
Other equity investments		310		336		307		334
	$	400,541	$	409,512	$	486,134	$	487,869

For the six months ended June 30, 2016, gross realized gains on sales of investments securities were $1.3 million and gross realized losses on sales of investment securities were $184 thousand. For the six months ended June 30, 2015, gross realized gains on sales of investments 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 six months ended June 30, 2016 were $87.7 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 June 30, 2016 was $386 million, which is well in excess of required amounts in order to operationally provide significant reserve amounts for new business. As of June 30, 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.