(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
March 31, 2017
Securities available for sale:
U.S. Government agency and government
sponsored enterprises	$	190,793	$	595	$	1,173	$	190,215
Mortgage-backed securities:
Federal National Mortgage Association		303,388		842		4,008		300,222
Federal Home Loan Mortgage Corporation		34,362		106		808		33,660
Government National Mortgage Association		14,598		313		18		14,893
Collateralized mortgage obligations:
Federal National Mortgage Association		308		-		2		306
Federal Home Loan Mortgage Corporation		59		-		1		58
Privately issued		-		819		-		819
Total mortgage-backed securities		352,715		2,080		4,837		349,958
Asset-backed securities		-		233		-		233
Total available for sale securities	$	543,508	$	2,908	$	6,010	$	540,406
Securities held to maturity:
State and political subdivisions		307,894		3,723		892		310,725
Mortgage-backed securities:
Federal National Mortgage Association		10,290		-		121		10,169
Federal Home Loan Mortgage Corporation		3,270		-		154		3,116
Government National Mortgage Association		27,151		-		256		26,895
Collateralized mortgage obligations:
Federal National Mortgage Association		85,474		21		1,433		84,062
Federal Home Loan Mortgage Corporation		98,029		75		1,791		96,313
Government National Mortgage Association		13,273		34		149		13,158
Total mortgage-backed securities		237,487		130		3,904		233,713
Total held to maturity securities	$	545,381	$	3,853	$	4,796	$	544,438


December 31, 2016
Securities available for sale:
U.S. Government agency 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

Investment securities with a total fair value of $937.3 million at March 31, 2017 were pledged 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
		March 31,
		2017		2016
Proceeds from sales	$	12,350	$	17,627
Gross realized gains		206		613
Gross realized losses		-		-

The scheduled maturities of securities available for sale and securities held to maturity at March 31, 2017 are shown below (in thousands). Actual expected 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	$	27	$	27
Due from one to five years		145,749		145,749
Due after five years through ten years		302,203		300,102
Due after ten years		95,529		94,528
	$	543,508	$	540,406
Debt securities held to maturity:
Due in one year or less	$	51,256	$	51,326
Due from one to five years		176,638		179,806
Due after five years through ten years		91,549		91,059
Due after ten years		225,938		222,247
	$	545,381	$	544,438

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
March 31, 2017
Securities available for sale:
U.S. Government agency and government
sponsored enterprises	$	96,026	$	1,171	$	1,412	$	2	$	97,438	$	1,173
Mortgage-backed securities:
Federal National Mortgage Association		220,754		4,008		-		-		220,754		4,008
Federal Home Loan Mortgage Corporation		28,799		808		-		-		28,799		808
Government National Mortgage Association		-		-		1,053		18		1,053		18
Collateralized mortgage obligations:
Federal National Mortgage Association		252		1		55		1		307		2
Federal Home Loan Mortgage Corporation		59		1		-		-		59		1
Total mortgage-backed securities		249,864		4,818		1,108		19		250,972		4,837
Total available for sale securities		345,890		5,989		2,520		21		348,410		6,010
Securities held to maturity:
State and political subdivisions		47,118		892		-		-		47,118		892
Mortgage-backed securities:
Federal National Mortgage Association		10,169		121		-		-		10,169		121
Federal Home Loan Mortgage Corporation		3,116		154		-		-		3,116		154
Government National Mortgage Association		24,982		256		-		-		24,982		256
Collateralized mortgage obligations:
Federal National Mortgage Association		67,013		1,420		2,700		13		69,713		1,433
Federal Home Loan Mortgage Corporation		87,601		1,789		672		2		88,273		1,791
Government National Mortgage Association		8,042		148		305		1		8,347		149
Total mortgage-backed securities		200,923		3,888		3,677		16		204,600		3,904
Total held to maturity securities		248,041		4,780		3,677		16		251,718		4,796
Total temporarily impaired securities	$	593,931	$	10,769	$	6,197	$	37	$	600,128	$	10,806

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

The total number of security positions in the investment portfolio in an unrealized loss position at March 31, 2017 was 360 compared to 463 at December 31, 2016. At March 31, 2017, the Company had positions in 15 investment securities with a fair value of $6.2 million and a total unrealized loss of $37 thousand that have been in a continuous unrealized loss position for more than 12 months. At March 31, 2017, there were a total of 345 securities positions in the Company's investment portfolio with a fair value of $593.9 million and a total unrealized loss of $10.8 million that had been in a continuous unrealized loss position for less than 12 months. 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 had 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. 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 three months ended March 31, 2017 and 2016.

Based on management's review and evaluation of the Company's debt securities as of March 31, 2017, the debt securities with unrealized losses were not considered to be OTTI. As of March 31, 2017, 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 March 31, 2017, 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.