Note D—Investment Securities

The amortized cost, gross unrealized gains and losses and fair values of the Company’s investment securities classified as available-for-sale and held-to-maturity are summarized as follows (in thousands):


Available-for-sale	December 31, 2015
		Gross	Gross
	Amortized	unrealized	unrealized	Fair
	cost	gains	losses	value
U.S. Government agency securities	$ 29,315	$ 18	$ (95)	$ 29,238
Federally insured student loan securities	118,651	28	(3,530)	115,149
Tax-exempt obligations of states and political subdivisions	94,572	2,665	(74)	97,163
Taxable obligations of states and political subdivisions	95,802	2,370	(476)	97,696
Residential mortgage-backed securities	451,432	1,540	(2,865)	450,107
Commercial mortgage-backed securities	58,512	361	(570)	58,303
Commercial loan obligation securities	70,573	-	(81)	70,492
Foreign debt securities	57,375	65	(308)	57,132
Corporate and other debt securities	95,354	188	(724)	94,818
	$ 1,071,586	$ 7,235	$ (8,723)	$ 1,070,098


Held-to-maturity	December 31, 2015
		Gross	Gross
	Amortized	unrealized	unrealized	Fair
	cost	gains	losses	value
Other debt securities - single issuers	$ 17,934	$ 569	$ (3,456)	$ 15,047
Other debt securities - pooled	75,656	938	(42)	76,552
	$ 93,590	$ 1,507	$ (3,498)	$ 91,599


Available-for-sale	December 31, 2014
		Gross	Gross
	Amortized	unrealized	unrealized	Fair
	cost	gains	losses	value
U.S. Government agency securities	$ 16,519	$ 42	$ -	$ 16,561
Federally insured student loan securities	125,789	613	(390)	$ 126,012
Tax-exempt obligations of states and political subdivisions	535,622	16,027	(380)	$ 551,269
Taxable obligations of states and political subdivisions	58,868	2,614	(103)	$ 61,379
Residential mortgage-backed securities	419,503	3,504	(878)	$ 422,129
Commercial mortgage-backed securities	123,519	1,220	(1,500)	$ 123,239
Foreign debt securities	67,094	130	(346)	$ 66,878
Corporate and other debt securities	126,610	225	(663)	$ 126,172
	$ 1,473,524	$ 24,375	$ (4,260)	$ 1,493,639


Held-to-maturity	December 31, 2014
		Gross	Gross
	Amortized	unrealized	unrealized	Fair
	cost	gains	losses	value
Other debt securities - single issuers	$ 17,882	$ 531	$ (3,820)	$ 14,593
Other debt securities - pooled	75,883	1,438	-	$ 77,321
	$ 93,765	$ 1,969	$ (3,820)	$ 91,914

The amortized cost and fair value of the Company’s investment securities at December 31, 2015, by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Available-for-sale		Held-to-maturity
	Amortized	Fair	Amortized	Fair
	cost	value	cost	value
Due before one year	$ 71,697	$ 71,786	$ -	$ -
Due after one year through five years	204,707	204,012	7,016	7,490
Due after five years through ten years	338,966	338,005	-	-
Due after ten years	456,216	456,295	86,574	84,109
	$ 1,071,586	$ 1,070,098	$ 93,590	$ 91,599

At December 31, 2015 and 2014, investment securities with a fair value of approximately $19.2 million and $25.7 million, respectively, were pledged to secure securities sold under repurchase agreements as required or permitted by law. At December 31, 2015 and 2014, investment securities with a fair value of approximately $453.4 million and $0, respectively, were pledged to secure a line of credit at FHLB. Gross gains on sales of securities were $15.0 million, $657,000 and $2.1 million for the years ended December 31, 2015, 2014 and 2013, respectively. Gross losses on sales of securities were $543,000, $207,000 and $182,000 for the years ended December 31, 2015, 2014 and 2013, respectively.

Available-for-sale securities fair values are based on a fair market value supplied by a third-party market data provider. Held-to-maturity securities fair values are based on the present value of cash flows, which discounts expected cash flows from principal and interest using yield to maturity at the measurement date, when market information is not available. The Company periodically reviews its investment portfolio to determine whether unrealized losses are other than temporary, based on evaluations of the creditworthiness of the issuers/guarantors as well as the underlying collateral if applicable, in addition to the continuing performance of the securities. The Company recognized other-than-temporary impairment charges of $0 in 2015, $0 in 2014 and $20,000 in 2013 for securities in its held-to-maturity portfolio. The amount of the credit impairment was calculated by estimating the discounted cash flows for those securities.

Investments in FHLB and Atlantic Central Bankers Bank stock are recorded at cost and amounted to $1.1 million at December 31, 2015 and $1.0 million at December 31, 2014.

The table below indicates the length of time individual securities had been in a continuous unrealized loss position at December 31, 2015 (in thousands):


Available-for-sale		Less than 12 months		12 months or longer		Total
	Number of securities	Fair Value	Unrealized losses	Fair Value	Unrealized losses	Fair Value	Unrealized losses
Description of Securities
U.S. Government agency securities	3	$ 16,500	$ (95)	$ -	$ -	$ 16,500	$ (95)
Federally insured student loan securities	18	39,880	(1,832)	64,883	(1,698)	104,763	(3,530)
Tax-exempt obligations of states and
political subdivisions	31	1,510	(22)	18,976	(52)	20,486	(74)
Taxable obligations of states and
political subdivisions	30	40,310	(450)	7,023	(26)	47,333	(476)
Residential mortgage-backed securities	63	200,820	(2,155)	71,043	(710)	271,863	(2,865)
Commercial mortgage-backed securities	37	25,899	(233)	17,539	(337)	43,438	(570)
Commercial loan obligation securities	5	56,638	(81)	13,855	-	70,493	(81)
Foreign debt securities	51	24,274	(245)	18,272	(63)	42,546	(308)
Corporate and other debt securities	75	50,073	(687)	10,761	(37)	60,834	(724)
Total temporarily impaired
investment securities	313	$ 455,904	$ (5,800)	$ 222,352	$ (2,923)	$ 678,256	$ (8,723)


Held-to-maturity		Less than 12 months		12 months or longer		Total
	Number of securities	Fair Value	Unrealized losses	Fair Value	Unrealized losses	Fair Value	Unrealized losses
Description of Securities
Single issuers	1	$ -	$ -	$ 5,558	$ (3,456)	$ 5,558	$ (3,456)
Pooled	1	25,563	(42)	-	-	25,563	(42)
Total temporarily impaired
investment securities	2	$ 25,563	$ (42)	$ 5,558	$ (3,456)	$ 31,121	$ (3,498)

The table below indicates the length of time individual securities had been in a continuous unrealized loss position at December 31, 2014 (in thousands):


Available-for-sale		Less than 12 months		12 months or longer		Total
	Number of securities	Fair Value	Unrealized losses	Fair Value	Unrealized losses	Fair Value	Unrealized losses
Description of Securities
Federally insured student loan securities	9	$ 28,435	$ (169)	$ 34,274	$ (221)	$ 62,709	$ (390)
Tax-exempt obligations of states and
political subdivisions	97	21,458	(134)	46,412	(245)	67,870	(379)
Taxable obligations of states and
political subdivisions	24	499	(1)	21,088	(102)	21,587	(103)
Residential mortgage-backed securities	29	43,946	(231)	67,023	(647)	110,969	(878)
Commercial mortgage-backed securities	30	41,231	(883)	47,549	(617)	88,780	(1,500)
Foreign debt securities	53	24,681	(203)	14,943	(144)	39,624	(347)
Corporate and other debt securities	61	62,984	(568)	16,609	(95)	79,593	(663)
Total temporarily impaired
investment securities	303	$ 223,234	$ (2,189)	$ 247,898	$ (2,071)	$ 471,132	$ (4,260)


Held-to-maturity		Less than 12 months		12 months or longer		Total
	Number of securities	Fair Value	Unrealized losses	Fair Value	Unrealized losses	Fair Value	Unrealized losses
Description of Securities
Single issuers	1	-	-	5,144	(3,820)	5,144	(3,820)
Total temporarily impaired
investment securities	1	$ -	$ -	$ 5,144	$ (3,820)	$ 5,144	$ (3,820)

The following table provides additional information related to the Company’s single issuer trust preferred securities as of December 31, 2015:


Single issuer	Book value	Fair value	Unrealized gain/(loss)	Credit rating
Security A	$ 1,904	$ 2,000	$ 96	Not rated
Security B	9,014	5,558	(3,456)	Not rated

Class: All of the above are trust preferred securities.

The following table provides additional information related to our pooled trust preferred securities as of December 31, 2015:

Pooled issue

Class

Book value

Fair value

Unrealized gain/(loss)

Credit rating

Excess subordination

Pool A (7 performing issuers)

Mezzanine

$ 52

$ -

CAA3

* There is no excess subordination for these securities.

The Company has evaluated the securities in the above tables as of December 31, 2015 and has concluded that none of these securities has impairment that is other-than-temporary. The Company evaluates whether an other than temporary impairment exists by considering primarily the following factors: (a) the length of time and extent to which the fair value has been less than the amortized cost of the security, (b) changes in the financial condition, credit rating and near-term prospects of the issuer, (c) whether the issuer is current on contractually obligated interest and principal payments, (d) changes in the financial condition of the security’s underlying collateral and (e) the payment structure of the security. If other than temporary impairment is determined, the Company estimates expected future cash flows to determine the credit loss amount with a quantitative and qualitative process that incorporates information received from third-party sources along with internal assumptions and judgments regarding the future performance of the security. Based upon this evaluation, the Company concluded that most of the securities that are in an unrealized loss position are in a loss position because of changes in interest rates after the securities were purchased. The securities that have been in an unrealized loss position for 12 months or longer include other securities whose market values are sensitive to interest rates and changes in credit quality. The Company’s unrealized loss for the debt securities, which includes two single issuer trust preferred securities and one pooled trust preferred security, is primarily related to general market conditions and the resultant lack of liquidity in the market. The severity of the impairments in relation to the carrying amounts of the individual investments is consistent with market developments. The Company’s analysis for each investment is performed at the security level. As a result of its review, the Company concluded that other-than-temporary impairment did not exist due to the Company’s ability and intention to hold these securities to recover their amortized cost basis.