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2. Investment Securities

12 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment securities available for sale at December 31, 2015 and 2014 are as follows:

(Dollars in thousands)
		December 31, 2015
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value
Mortgage-backed securities		$	76,406				1,526				45				77,887
U.S. Government
sponsored enterprises			38,173				399				155				38,417
State and political subdivisions			141,500				6,817				72				148,245
Corporate bonds			1,928				-				22				1,906
Trust preferred securities			750				-				-				750
Equity securities			748				577				-				1,325
Total		$	259,505				9,319				294				268,530

(Dollars in thousands)
		December 31, 2014
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value
Mortgage-backed securities		$	88,496				1,766				52				90,210
U.S. Government
sponsored enterprises			33,766				418				136				34,048
State and political subdivisions			145,938				6,534				226				152,246
Corporate bonds			2,469				16				18				2,467
Trust preferred securities			750				-				-				750
Equity securities			748				630				-				1,378
Total		$	272,167				9,364				432				281,099

The current fair value and associated unrealized losses on investments in debt securities with unrealized losses at December 31, 2015 and 2014 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position.

(Dollars in thousands)
		December 31, 2015
		Less than 12 Months								12 Months or More								Total
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
Mortgage-backed securities		$	7,891				45				-				-				7,891				45
U.S. Government
sponsored enterprises			3,074				13				10,828				142				13,902				155
State and political subdivisions			2,198				4				3,930				68				6,128				72
Corporate bonds			1,500				22				-				-				1,500				22
Total		$	14,663				84				14,758				210				29,421				294

(Dollars in thousands)
		December 31, 2014
		Less than 12 Months								12 Months or More								Total
		Fair Value				Unrealized Losses				Fair Value				Unrealized Losses				Fair Value				Unrealized Losses
Mortgage-backed securities		$	436				1				2,963				51				3,399				52
U.S. Government
sponsored enterprises			2,996				4				9,850				132				12,846				136
State and political subdivisions			567				1				14,998				225				15,565				226
Corporate bonds			-				-				525				18				525				18
Total		$	3,999				6				28,336				426				32,335				432

At December 31, 2015, unrealized losses in the investment securities portfolio relating to debt securities totaled $294,000. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the December 31, 2015 tables above, eight out of 172 securities issued by state and political subdivisions contained unrealized losses, 12 out of 80 securities issued by U.S. Government sponsored enterprises, including mortgage-backed securities, contained unrealized losses, and two out of three securities issued by corporations contained unrealized losses. These unrealized losses are considered temporary because of acceptable financial condition and results of operations on each security and the repayment sources of principal and interest on U.S. Government sponsored enterprises, including mortgage-backed securities, are government backed.

The Company periodically evaluates its investments for any impairment which would be deemed other-than-temporary. No investment impairments were deemed other-than-temporary in 2015, 2014 or 2013.

The amortized cost and estimated fair value of investment securities available for sale at December 31, 2015, by contractual maturity, are shown below. Expected maturities of mortgage-backed securities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

December 31, 2015
(Dollars in thousands)
		Amortized Cost				Estimated Fair Value
Due within one year		$	3,666				3,647
Due from one to five years			57,322				60,001
Due from five to ten years			106,136				109,829
Due after ten years			15,227				15,841
Mortgage-backed securities			76,406				77,887
Equity securities			748				1,325
Total		$	259,505				268,530

No securities available for sale were sold during the year ended December 31, 2015. During 2014, proceeds from sales of securities available for sale were $20.2 million and resulted in gross gains of $291,000 and gross losses of $25,000. During 2013, proceeds from sales of securities available for sale were $17.5 million and resulted in gross gains of $738,000 and gross losses of $124,000.

Securities with a fair value of approximately $91.0 million and $89.9 million at December 31, 2015 and 2014, respectively, were pledged to secure public deposits, Federal Home Loan Bank of Atlanta ("FHLB") borrowings and for other purposes as required by law.

GAAP establishes a framework for measuring fair value and expands disclosures about fair value measurements. There is a three-level fair value hierarchy for fair value measurements. Level 1 inputs are quoted prices in active markets for identical assets or liabilities that a company has the ability to access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The table below presents the balance of securities available for sale, which are measured at fair value on a recurring basis by level within the fair value hierarchy as of December 31, 2015 and 2014.

(Dollars in thousands)
		December 31, 2015
		Fair Value Measurements				Level 1 Valuation				Level 2 Valuation				Level 3 Valuation
Mortgage-backed securities		$	77,887				-				77,887				-
U.S. Government
sponsored enterprises		$	38,417				-				38,417				-
State and political subdivisions		$	148,245				-				148,245				-
Corporate bonds		$	1,906				-				1,906				-
Trust preferred securities		$	750				-				-				750
Equity securities		$	1,325				1,325				-				-

(Dollars in thousands)
		December 31, 2014
		Fair Value Measurements				Level 1 Valuation				Level 2 Valuation				Level 3 Valuation
Mortgage-backed securities		$	90,210				-				90,210				-
U.S. Government
sponsored enterprises		$	34,048				-				34,048				-
State and political subdivisions		$	152,246				-				152,246				-
Corporate bonds		$	2,467				-				2,467				-
Trust preferred securities		$	750				-				-				750
Equity securities		$	1,378				1,378				-				-

Fair values of investment securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges when available. If quoted prices are not available, fair value is determined using matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities.

The following is an analysis of fair value measurements of investment securities available for sale using Level 3, significant unobservable inputs, for the year ended December 31, 2015.

(Dollars in thousands)
		Investment Securities Available for Sale
		Level 3 Valuation
Balance, beginning of period		$	750
Change in book value			-
Change in gain/(loss) realized and unrealized			-
Purchases/(sales and calls)			-
Transfers in and/or (out) of Level 3			-
Balance, end of period		$	750

Change in unrealized gain/(loss) for assets still held in Level 3		$	-