(4.) INVESTMENT SECURITIES

The amortized cost and fair value of investment securities are summarized below (in thousands):


		Amortized		Unrealized		Unrealized		Fair
		Cost		Gains		Losses		Value
June 30, 2016
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	241,583	$	6,550	$	7	$	248,126
Mortgage-backed securities:
Federal National Mortgage Association		311,783		8,776		-		320,559
Federal Home Loan Mortgage Corporation		30,743		772		-		31,515
Government National Mortgage Association		17,390		737		14		18,113
Collateralized mortgage obligations:
Federal National Mortgage Association		363		-		1		362
Federal Home Loan Mortgage Corporation		77		-		1		76
Privately issued		-		784		-		784
Total mortgage-backed securities		360,356		11,069		16		371,409
Asset-backed securities		-		184		-		184
Total available for sale securities	$	601,939	$	17,803	$	23	$	619,719
Securities held to maturity:
State and political subdivisions		294,507		10,061		1		304,567
Mortgage-backed securities:
Federal National Mortgage Association		12,047		290		-		12,337
Government National Mortgage Association		25,978		307		4		26,281
Collateralized mortgage obligations:
Federal National Mortgage Association		54,246		525		11		54,760
Federal Home Loan Mortgage Corporation		76,655		1,038		2		77,691
Government National Mortgage Association		15,116		85		4		15,197
Total mortgage-backed securities		184,042		2,245		21		186,266
Total held to maturity securities	$	478,549	$	12,306	$	22	$	490,833


December 31, 2015
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	260,748	$	1,164	$	1,049	$	260,863
Mortgage-backed securities:
Federal National Mortgage Association		209,671		1,092		2,333		208,430
Federal Home Loan Mortgage Corporation		24,564		282		194		24,652
Government National Mortgage Association		26,465		943		4		27,404
Collateralized mortgage obligations:
Federal National Mortgage Association		16,998		90		154		16,934
Federal Home Loan Mortgage Corporation		5,175		1		91		5,085
Privately issued		-		809		-		809
Total mortgage-backed securities		282,873		3,217		2,776		283,314
Asset-backed securities		-		218		-		218
Total available for sale securities	$	543,621	$	4,599	$	3,825	$	544,395
Securities held to maturity:
State and political subdivisions		294,423		6,562		4		300,981
Mortgage-backed securities:
Federal National Mortgage Association		9,242		14		79		9,177
Government National Mortgage Association		25,607		33		159		25,481
Collateralized mortgage obligations:
Federal National Mortgage Association		56,791		-		818		55,973
Federal Home Loan Mortgage Corporation		80,570		-		1,120		79,450
Government National Mortgage Association		19,084		19		101		19,002
Total mortgage-backed securities		191,294		66		2,277		189,083
Total held to maturity securities	$	485,717	$	6,628	$	2,281	$	490,064

Investment securities with a total fair value of $856.5 million at June 30, 2016 were pledged and encumbered as collateral to secure public deposits and for other purposes required or permitted by law.

Sales and calls of securities available for sale were as follows (in thousands):


		Three months ended				Six months ended
		June 30,				June 30,
		2016		2015		2016		2015
Proceeds from sales	$	44,648	$	-	$	62,275	$	29,508
Gross realized gains		1,387		-		2,000		1,073
Gross realized losses		-		-		-		11

The scheduled maturities of securities available for sale and securities held to maturity at June 30, 2016 are shown below (in thousands).

Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.


		Amortized		Fair
		Cost		Value
Debt securities available for sale:
Due in one year or less	$	5,042	$	5,047
Due from one to five years		175,737		179,161
Due after five years through ten years		306,996		317,590
Due after ten years		114,164		117,921
	$	601,939	$	619,719
Debt securities held to maturity:
Due in one year or less	$	38,909	$	39,051
Due from one to five years		176,378		182,498
Due after five years through ten years		92,311		96,184
Due after ten years		170,951		173,100
	$	478,549	$	490,833

Unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (in thousands):


	Less than 12 months				12 months or longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Losses		Value		Losses		Value		Losses
June 30, 2016
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	9,997	$	3	$	1,637	$	4	$	11,634	$	7
Mortgage-backed securities:
Government National Mortgage Association		1,258		14		-		-		1,258		14
Collateralized mortgage obligations:
Federal National Mortgage Association		362		1		-		-		362		1
Federal Home Loan Mortgage Corporation		64		1		-		-		64		1
Total mortgage-backed securities		1,684		16		-		-		1,684		16
Total available for sale securities		11,681		19		1,637		4		13,318		23
Securities held to maturity:
State and political subdivisions		832		1		-		-		832		1
Mortgage-backed securities:
Government National Mortgage Association		-		-		1,635		4		1,635		4
Collateralized mortgage obligations:
Federal National Mortgage Association		4,119		11		-		-		4,119		11
Federal Home Loan Mortgage Corporation		1,196		2		-		-		1,196		2
Government National Mortgage Association		3,695		4		-		-		3,695		4
Total mortgage-backed securities		9,010		17		1,635		4		10,645		21
Total held to maturity securities		9,842		18		1,635		4		11,477		22
Total temporarily impaired securities	$	21,523	$	37	$	3,272	$	8	$	24,795	$	45
December 31, 2015
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	82,298	$	735	$	26,302	$	314	$	108,600	$	1,049
Mortgage-backed securities:
Federal National Mortgage Association		123,774		2,134		9,562		199		133,336		2,333
Federal Home Loan Mortgage Corporation		12,660		194		-		-		12,660		194
Government National Mortgage Association		1,405		4		-		-		1,405		4
Collateralized mortgage obligations:
Federal National Mortgage Association		7,778		154		-		-		7,778		154
Federal Home Loan Mortgage Corporation		4,998		91		-		-		4,998		91
Total mortgage-backed securities		150,615		2,577		9,562		199		160,177		2,776
Total available for sale securities		232,913		3,312		35,864		513		268,777		3,825
Securities held to maturity:
State and political subdivisions		3,075		4		-		-		3,075		4
Mortgage-backed securities:
Federal National Mortgage Association		5,666		79		-		-		5,666		79
Government National Mortgage Association		8,790		159		-		-		8,790		159
Collateralized mortgage obligations:
Federal National Mortgage Association		55,973		818		-		-		55,973		818
Federal Home Loan Mortgage Corporation		79,323		1,120		-		-		79,323		1,120
Government National Mortgage Association		14,559		101		-		-		14,559		101
Total mortgage-backed securities		164,311		2,277		-		-		164,311		2,277
Total held to maturity securities		167,386		2,281		-		-		167,386		2,281
Total temporarily impaired securities	$	400,299	$	5,593	$	35,864	$	513	$	436,163	$	6,106

The Company had 29 security positions in the investment portfolio in an unrealized loss position at June 30, 2016 compared to 174 at December 31, 2015. At June 30, 2016, the Company had positions in 6 investment securities with a fair value of $3.3 million and a total unrealized loss of $8 thousand that have been in a continuous unrealized loss position for more than 12 months. At June 30, 2016, there were a total of 23 securities positions in the Company's investment portfolio with a fair value of $21.5 million and a total unrealized loss of $37 thousand that had been in a continuous unrealized loss position for less than 12 months. At December 31, 2015, the Company had positions in 14 investment securities with a fair value of $35.9 million and a total unrealized loss of $513 thousand that had been in a continuous unrealized loss position for more than 12 months. At December 31, 2015, there were a total of 160 securities positions in the Company's investment portfolio with a fair value of $400.3 million and a total unrealized loss of $5.6 million that had been in a continuous unrealized loss position for less than 12 months. The unrealized loss on investment securities was predominantly caused by changes in market interest rates subsequent to purchase. The fair value of most of the investment securities in the Company's portfolio fluctuates as market interest rates change.

The Company reviews investment securities on an ongoing basis for the presence of other than temporary impairment ("OTTI") with formal reviews performed quarterly. When evaluating debt securities for OTTI, management considers many factors, including: (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, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intention to sell the debt security or whether it is more likely than not that it will be required to sell the debt security before its anticipated recovery. The assessment of whether OTTI exists involves a high degree of subjectivity and judgment and is based on the information then available to management. There was no impairment recorded during the six months ended June 30, 2016 and 2015.

Based on management's review and evaluation of the Company's debt securities as of June 30, 2016, the debt securities with unrealized losses were not considered to be other-than-temporarily impaired. As of June 30, 2016, the Company did not intend to sell any of the securities in a loss position and believes that it is not likely that it will be required to sell any such securities before the anticipated recovery of amortized cost. Accordingly, as of June 30, 2016, management has concluded that unrealized losses on its investment securities are temporary and no further impairment loss has been realized in the Company's consolidated statements of income.