INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2016

NOTE 2. INVESTMENT SECURITIES

The following table provides information on the amortized cost and estimated fair values of investment securities.


			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
Available-for-sale securities:
December 31, 2016
U.S. Treasury	$	-	$	-	$	-	$	-
U.S. Government agencies		34,320		56		162		34,214
Mortgage-backed		130,490		263		1,809		128,944
Equity		652		-		12		640
Total	$	165,462	$	319	$	1,983	$	163,798

December 31, 2015
U.S. Treasury	$	5,078	$	1	$	-	$	5,079
U.S. Government agencies		49,630		89		190		49,529
Mortgage-backed		156,939		639		662		156,916
Equity		637		4		-		641
Total	$	212,284	$	733	$	852	$	212,165

Held-to-maturity securities:
December 31, 2016
U.S. Government agencies	$	2,193	$	-	$	78	$	2,115
States and political subdivisions		1,615		76		-		1,691
Other Equity Securities (1)		3,000		-		-		3,000
Total	$	6,808	$	76	$	78	$	6,806

December 31, 2015
U.S. Government agencies	$	2,575	$	-	$	60	$	2,515
States and political subdivisions		1,616		112		-		1,728
Total	$	4,191	$	112	$	60	$	4,243

(1)

On December 15, 2016 the Company bought $3.0 million in subordinated notes from a local regional bank which it intends to hold to maturity of December 30, 2026.

The following table provides information about gross unrealized losses and fair value by length of time that the individual securities have been in a continuous unrealized loss position at December 31, 2016.


	Less than				More than
	12 Months				12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
December 31, 2016
Available-for-sale securities:
U.S. Government agencies	$	11,926	$	58	$	-	$	104	$	11,926	$	162
Mortgage-backed		100,237		1,546		9,208		263		109,445		1,809
Equity securities		640		12		-		-		640		12
Total	$	112,803	$	1,616	$	9,208	$	367	$	122,011	$	1,983

Held-to-maturity securities:
U.S. Government agencies	$	2,115	$	78	$	-	$	-	$	2,115	$	78

	Less than				More than
	12 Months				12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
December 31, 2015
Available-for-sale securities:
U.S. Government agencies	$	18,981	$	57	$	-	$	133	$	18,981	$	190
Mortgage-backed		43,881		328		21,263		334		65,144		662
Equity securities		-		-		-		-		-		-
Total	$	62,862	$	385	$	21,263	$	467	$	84,125	$	852

Held-to-maturity securities:
U.S. Government agencies	$	-	$	-	$	2,515	$	60	$	2,515	$	60

All of the securities with unrealized losses in the portfolio have modest duration risk, low credit risk, and minimal losses when compared to total amortized cost. The unrealized losses on debt securities that exist are the result of market changes in interest rates since original purchase. Because the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities before recovery of their amortized cost bases, which may be at maturity for debt securities, the Company considers the unrealized losses to be temporary.

The following table provides information on the amortized cost and estimated fair values of investment securities by maturity date at December 31, 2016.


	Available for sale				Held to maturity
	Amortized		Estimated		Amortized		Estimated
(Dollars in thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	15,018	$	15,027	$	210	$	210
Due after one year through five years		16,983		16,948		501		531
Due after five years through ten years		12,889		12,736		904		950
Due after ten years		119,920		118,447		2,193		2,115
		164,810		163,158		3,808		3,806
Equity securities		652		640		3,000		3,000
Total	$	165,462	$	163,798	$	6,808	$	6,806

The maturity dates for debt securities are determined using contractual maturity dates.

The following table sets forth the amortized cost and estimated fair values of securities which have been pledged as collateral for obligations to federal, state and local government agencies, and other purposes as required or permitted by law, or sold under agreements to repurchase. All pledged securities are in the available-for-sale investment portfolio.


	December 31, 2016				December 31, 2015
	Amortized		Estimated		Amortized		Estimated
(Dollars in thousands)	Cost		Fair Value		Cost		Fair Value
Pledged available-for-sale securities	$	140,042	$	138,875	$	121,142	$	121,207

There were no obligations of states or political subdivisions with carrying values, as to any issuer, exceeding 10% of stockholders’ equity at December 31, 2016 or 2015.

Proceeds from sales of investment securities were $4.0 million, $0, and $988 thousand for the years ended December 31, 2016, 2015, and 2014, respectively. Gross gains from sales of investment securities were $30 thousand, $0 and $23 thousand for the years ended December 31, 2016, 2015, and 2014, respectively. There were no gross losses in 2016, 2015 and 2014.

- Definition

The entire disclosure for investments in certain debt and equity securities.

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