(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
September 30, 2016
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	175,134	$	5,508	$	5	$	180,637
Mortgage-backed securities:
Federal National Mortgage Association		312,771		7,501		-		320,272
Federal Home Loan Mortgage Corporation		39,425		773		11		40,187
Government National Mortgage Association		16,332		672		15		16,989
Collateralized mortgage obligations:
Federal National Mortgage Association		328		-		1		327
Federal Home Loan Mortgage Corporation		73		-		1		72
Privately issued		-		816		-		816
Total mortgage-backed securities		368,929		9,762		28		378,663
Asset-backed securities		-		195		-		195
Total available for sale securities	$	544,063	$	15,465	$	33	$	559,495
Securities held to maturity:
State and political subdivisions		300,922		8,136		45		309,013
Mortgage-backed securities:
Federal National Mortgage Association		10,422		276		-		10,698
Federal Home Loan Mortgage Corporation		1,351		-		1		1,350
Government National Mortgage Association		25,402		366		1		25,767
Collateralized mortgage obligations:
Federal National Mortgage Association		75,287		426	105			75,608
Federal Home Loan Mortgage Corporation		98,439		942		128		99,253
Government National Mortgage Association		16,885		72		16		16,941
Total mortgage-backed securities		227,786		2,082		251		229,617
Total held to maturity securities	$	528,708	$	10,218	$	296	$	538,630


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 $939.3 million at September 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				Nine months ended
	September 30,				September 30,
		2016		2015		2016		2015
Proceeds from sales	$	23,497	$	8,112	$	85,772	$	37,620
Gross realized gains		426		286		2,426		1,359
Gross realized losses		-		-		-		11

The scheduled maturities of securities available for sale and securities held to maturity at September 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	$	105	$	105
Due from one to five years		153,605		156,094
Due after five years through ten years		268,354		277,631
Due after ten years		121,999		125,665
	$	544,063	$	559,495
Debt securities held to maturity:
Due in one year or less	$	42,584	$	42,684
Due from one to five years		178,401		183,536
Due after five years through ten years		92,745		95,657
Due after ten years		214,978		216,753
	$	528,708	$	538,630

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
September 30, 2016
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	-	$	-	$	1,515	$	5	$	1,515	$	5
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation		4,992		11		-		-		4,992		11
Government National Mortgage Association		1,171		15		-		-		1,171		15
Collateralized mortgage obligations:
Federal National Mortgage Association		326		1		-		-		326		1
Federal Home Loan Mortgage Corporation		73		1		-		-		73		1
Total mortgage-backed securities		6,562		28		-		-		6,562		28
Total available for sale securities		6,562		28		1,515		5		8,077		33
Securities held to maturity:
State and political subdivisions		12,710		45		-		-		12,710		45
Mortgage-backed securities:
Federal Home Loan Mortgage Corporation		1,349		1		-		-		1,349		1
Government National Mortgage Association		1,630		1		-		-		1,630		1
Collateralized mortgage obligations:
Federal National Mortgage Association		26,315		89		3,600		16		29,915		105
Federal Home Loan Mortgage Corporation		27,838		127		496		1		28,334		128
Government National Mortgage Association		6,677		14		1,510		2		8,187		16
Total mortgage-backed securities		63,809		232		5,606		19		69,415		251
Total held to maturity securities		76,519		277		5,606		19		82,125		296
Total temporarily impaired securities	$	83,081	$	305	$	7,121	$	24	$	90,202	$	329

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 78 security positions in the investment portfolio in an unrealized loss position at September 30, 2016 compared to 174 at December 31, 2015. At September 30, 2016, the Company had positions in 17 investment securities with a fair value of $7.1 million and a total unrealized loss of $24 thousand that have been in a continuous unrealized loss position for more than 12 months. At September 30, 2016, there were a total of 61 securities positions in the Company's investment portfolio with a fair value of $83.1 million and a total unrealized loss of $305 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: (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) whether the market decline was affected by macroeconomic conditions and (iv) 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 nine months ended September 30, 2016 and 2015.

Based on management's review and evaluation of the Company's debt securities as of September 30, 2016, the debt securities with unrealized losses were not considered to be other-than-temporarily impaired. As of September 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 September 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.