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Investments

6 Months Ended

Jun. 30, 2017

Investments, Debt and Equity Securities [Abstract]

Investments

2. Investments

A summary of investment securities available-for-sale is as follows:

(Dollars in thousands)		As of June 30, 2017
						Gross				Gross
		Amortized				unrealized				unrealized				Estimated
		cost				gains				losses				fair value

U. S. treasury securities		$	4,993			$	24			$	(1	)		$	5,016
U. S. federal agency obligations			21,377				45				(40	)			21,382
Municipal obligations, tax exempt			177,419				2,485				(661	)			179,243
Municipal obligations, taxable			62,031				828				(81	)			62,778
Agency mortgage-backed securities			112,095				368				(623	)			111,840
Certificates of deposit			9,224				-				-				9,224
Common stocks			178				181				-				359
Total		$	387,317			$	3,931			$	(1,406	)		$	389,842

(Dollars in thousands)		As of December 31, 2016
						Gross				Gross
		Amortized				unrealized				unrealized				Estimated
		cost				gains				losses				fair value

U. S. treasury securities		$	6,005			$	10			$	-			$	6,015
U. S. federal agency obligations			27,140				48				(49	)			27,139
Municipal obligations, tax exempt			163,632				696				(2,666	)			161,662
Municipal obligations, taxable			71,371				463				(271	)			71,563
Agency mortgage-backed securities			109,427				171				(1,222	)			108,376
Certificates of deposit			9,700				-				-				9,700
Common stocks			458				650				-				1,108
Total		$	387,733			$	2,038			$	(4,208	)		$	385,563

The tables above show that some of the securities in the available-for-sale investment portfolio had unrealized losses, or were temporarily impaired, as of June 30, 2017 and December 31, 2016. This temporary impairment represents the estimated amount of loss that would be realized if the securities were sold on the valuation date. Securities which were temporarily impaired are shown below, along with the length of time in a continuous unrealized loss position.

(Dollars in thousands)						As of June 30, 2017
						Less than 12 months								12 months or longer								Total
		No. of				Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		securities				value				losses				value				losses				value				losses
U.S. treasury securities			1			$	2,994			$	(1	)		$	-			$	-			$	2,994			$	(1	)
U.S. federal agency obligations			12				14,825				(36	)			995				(4	)			15,820				(40	)
Municipal obligations, tax exempt			113				41,363				(566	)			4,587				(95	)			45,950				(661	)
Municipal obligations, taxable			40				15,167				(81	)			-				-				15,167				(81	)
Agency mortgage-backed securities			38				54,970				(593	)			1,320				(30	)			56,290				(623	)
Total			204			$	129,319			$	(1,277	)		$	6,902			$	(129	)		$	136,221			$	(1,406	)

(Dollars in thousands)						As of December 31, 2016
						Less than 12 months								12 months or longer								Total
		No. of				Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		securities				value				losses				value				losses				value				losses
U. S. federal agency obligations			9				15,056				(49	)			-				-				15,056				(49	)
Municipal obligations, tax exempt			275				97,842				(2,666	)			-				-				97,842				(2,666	)
Municipal obligations, taxable			66				26,184				(271	)			-				-				26,184				(271	)
Agency mortgage-backed securities			58				83,011				(1,222	)			-				-				83,011				(1,222	)
Total			408			$	222,093			$	(4,208	)		$	-			$	-			$	222,093			$	(4,208	)

The Company’s U.S. treasury portfolio consists of securities issued by the United States Department of the Treasury. The receipt of principal and interest on U.S. treasury securities is guaranteed by the full faith and credit of the U.S. government. Based on these factors, along with the Company’s intent to not sell the security and its belief that it was more likely than not that the Company will not be required to sell the security before recovery of their cost basis, the Company believed that the U.S. treasury security identified in the table above was temporarily impaired as of June 30, 2017.

The Company’s U.S. federal agency portfolio consists of securities issued by the government-sponsored agencies of Federal Home Loan Mortgage Corporation (“FHLMC”), Federal National Mortgage Association (“FNMA”) and Federal Home Loan Bank (“FHLB”). The receipt of principal and interest on U.S. federal agency obligations is guaranteed by the respective government-sponsored agency guarantor, such that the Company believes that its U.S. federal agency obligations do not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and its belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the U.S. federal agency obligations identified in the tables above were temporarily impaired as of June 30, 2017 and December 31, 2016.

The Company’s portfolio of municipal obligations consists of both tax-exempt and taxable general obligations securities issued by various municipalities. As of June 30, 2017, the Company did not intend to sell and it was more likely than not that the Company will not be required to sell its municipal obligations in an unrealized loss position until the recovery of their costs. Due to the issuers’ continued satisfaction of the securities’ obligations in accordance with their contractual terms and the expectation that they will continue to do so, the evaluation of the fundamentals of the issuers’ financial condition and other objective evidence, the Company believed that the municipal obligations identified in the tables above were temporarily impaired as of June 30, 2017 and December 31, 2016.

The Company’s agency mortgage-backed securities portfolio consists of securities underwritten to the standards of and guaranteed by the government-sponsored agencies of FHLMC, FNMA and the Government National Mortgage Association (“GNMA”). The receipt of principal, at par, and interest on agency mortgage-backed securities is guaranteed by the respective government-sponsored agency guarantor, such that the Company believed that its agency mortgage-backed securities did not expose the Company to credit-related losses. Based on these factors, along with the Company’s intent to not sell the securities and the Company’s belief that it was more likely than not that the Company will not be required to sell the securities before recovery of their cost basis, the Company believed that the agency mortgage-backed securities identified in the tables above were temporarily impaired as of June 30, 2017 and December 31, 2016.

The table below sets forth amortized cost and fair value of investment securities at June 30, 2017. The table includes scheduled principal payments and estimated prepayments, based on observable market inputs, for agency mortgage-backed securities. Actual maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without prepayment penalties. Securities with no maturity are listed separately.

(Dollars in thousands)		Amortized				Estimated
		cost				fair value
Due in less than one year		$	30,111			$	30,139
Due after one year but within five years			182,277				182,573
Due after five years but within ten years			90,785				92,095
Due after ten years			83,966				84,676
Common stocks			178				359
Total		$	387,317			$	389,842

Sales proceeds and gross realized gains and losses on sales of available-for-sale securities are as follows:

(Dollars in thousands)		Three months ended June 30,								Six months ended June 30,
		2017				2016				2017				2016

Sales proceeds		$	1,917			$	11,801			$	13,459			$	13,617

Realized gains		$	177			$	296			$	348			$	312
Realized losses			-				(11	)			(24	)			(15	)
Net realized losses		$	177			$	285			$	324			$	297

Securities with carrying values of $230.0 million and $224.3 million were pledged to secure public funds on deposit, repurchase agreements and as collateral for borrowings at June 30, 2017 and December 31, 2016, respectively. Except for U.S. federal agency obligations, no investment in a single issuer exceeded 10% of consolidated stockholders’ equity.