(3.) INVESTMENT SECURITIES

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


		Amortized		Unrealized		Unrealized		Fair
		Cost		Gains		Losses		Value
December 31, 2016
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	187,325	$	512	$	1,569	$	186,268
Mortgage-backed securities:
Federal National Mortgage Association		288,949		897		4,413		285,433
Federal Home Loan Mortgage Corporation		30,182		114		807		29,489
Government National Mortgage Association		15,473		316		15		15,774
Collateralized mortgage obligations:
Federal National Mortgage Association		16,921		74		125		16,870
Federal Home Loan Mortgage Corporation		5,142		-		65		5,077
Privately issued		-		824		-		824
Total mortgage-backed securities		356,667		2,225		5,425		353,467
Asset-backed securities		-		191		-		191
Total available for sale securities	$	543,992	$	2,928	$	6,994	$	539,926
Securities held to maturity:
State and political subdivisions		305,248		2,127		1,616		305,759
Mortgage-backed securities:
Federal National Mortgage Association		10,362		1		124		10,239
Federal Home Loan Mortgage Corporation		3,290		-		150		3,140
Government National Mortgage Association		24,575		18		182		24,411
Collateralized mortgage obligations:
Federal National Mortgage Association		83,929		21		1,573		82,377
Federal Home Loan Mortgage Corporation		101,025		80		1,827		99,278
Government National Mortgage Association		14,909		40		162		14,787
Total mortgage-backed securities		238,090		160		4,018		234,232
Total held to maturity securities	$	543,338	$	2,287	$	5,634	$	539,991


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
December 31, 2015 (continued)
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 $907.7 million and $781.7 million at December 31, 2016 and 2015, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

During the year ended December 31, 2015, the Company transferred $165.2 million of available for sale mortgage backed securities to the held to maturity category, reflecting the Company's intent to hold those securities to maturity. Transfers of investment securities into the held to maturity category from the available for sale category are made at fair value at the date of transfer. The related $1.1 million of unrealized holding losses are retained in accumulated other comprehensive income and in the carrying value of the held to maturity securities. These amounts will be amortized as an adjustment to interest income over the remaining life of the securities. This will offset the impact of amortization of the net premium created in the transfers. There were no gains or losses recognized as a result of these transfers.

Interest and dividends on securities for the years ended December 31 are summarized as follows (in thousands):


		2016		2015		2014
Taxable interest and dividends	$	17,025	$	16,123	$	13,304
Tax-exempt interest and dividends		5,892		5,752		5,298
Total interest and dividends on securities	$	22,917	$	21,875	$	18,602

Sales and calls of securities available for sale for the years ended December 31 were as follows (in thousands):


		2016		2015		2014
Proceeds from sales	$	95,261	$	54,277	$	81,600
Gross realized gains		2,695		2,000		2,043
Gross realized losses		-		12		2

The scheduled maturities of securities available for sale and securities held to maturity at December 31, 2016 are shown below. Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations (in


		Amortized		Fair
		Cost		Value
Debt securities available for sale:
Due in one year or less	$	127	$	127
Due from one to five years		149,249		149,428
Due after five years through ten years		277,147		274,529
Due after ten years		117,469		115,842
	$	543,992	$	539,926
Debt securities held to maturity:
Due in one year or less	$	48,132	$	48,188
Due from one to five years		176,150		177,962
Due after five years through ten years		93,849		92,396
Due after ten years		225,207		221,445
	$	543,338	$	539,991

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 as of December 31 are summarized 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
December 31, 2016
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	113,261	$	1,566	$	1,458	$	3	$	114,719	$	1,569
Mortgage-backed securities:
Federal National Mortgage Association		211,491		4,413		-		-		211,491		4,413
Federal Home Loan Mortgage Corporation		24,360		807		-		-		24,360		807
Government National Mortgage Association		1,111		15		-		-		1,111		15
Collateralized mortgage obligations:
Federal National Mortgage Association		8,119		125		-		-		8,119		125
Federal Home Loan Mortgage Corporation		5,077		65		-		-		5,077		65
Total mortgage-backed securities		250,158		5,425		-		-		250,158		5,425
Total available for sale securities		363,419		6,991		1,458		3		364,877		6,994
Securities held to maturity:
State and political subdivisions		82,644		1,616		-		-		82,644		1,616
Mortgage-backed securities:
Federal National Mortgage Association		9,253		124		-		-		9,253		124
Federal Home Loan Mortgage Corporation		3,141		150		-		-		3,141		150
Government National Mortgage Association		10,736		182		-		-		10,736		182
Collateralized mortgage obligations:
Federal National Mortgage Association		72,734		1,560		3,107		13		75,841		1,573
Federal Home Loan Mortgage Corporation		92,256		1,825		430		2		92,686		1,827
Government National Mortgage Association		8,675		161		531		1		9,206		162
Total mortgage-backed securities		196,795		4,002		4,068		16		200,863		4,018
Total held to maturity securities		279,439		5,618		4,068		16		283,507		5,634
Total temporarily impaired securities	$	642,858	$	12,609	$	5,526	$	19	$	648,384	$	12,628

	Less than 12 months				12 months or longer				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
		Value		Losses		Value		Losses		Value		Losses
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 total number of security positions in the investment portfolio in an unrealized loss position at December 31, 2016 was 463 compared to 152 at December 31, 2015. At December 31, 2016, the Company had positions in 9 investment securities with a fair value of $5.5 million and a total unrealized loss of $19 thousand that have been in a continuous unrealized loss position for more than 12 months. At December 31, 2016, there were a total of 454 securities positions in the Company's investment portfolio with a fair value of $642.9 million and a total unrealized loss of $12.6 million that had been in a continuous unrealized loss position for less than 12 months. At December 31, 2015, the Company had positions in 10 investment securities with a fair value of $35.9 million and a total unrealized loss of $513 thousand that have been in a continuous unrealized loss position for more than 12 months. At December 31, 2015, there were a total of 142 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 available to management. No impairment was recorded during the years ended December 31, 2016, 2015 and 2014.

Based on management's review and evaluation of the Company's debt securities as of December 31, 2016, the debt securities with unrealized losses were not considered to be OTTI. As of December 31, 2016, the Company does not have the intent 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 December 31, 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.