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INVESTMENT SECURITIES
 6 Months Ended
Jun. 30, 2017
Investments, Debt and Equity Securities [Abstract]  
INVESTMENT SECURITIES
NOTE 2 – INVESTMENT SECURITIES
Investment Portfolio Composition. The amortized cost and related market value of investment securities available-for-sale and
held-to-maturity were as follows:
June 30, 2017December 31, 2016
AmortizedUnrealizedUnrealizedMarketAmortizedUnrealizedUnrealizedMarket
CostGainsLossesValueCostGainLossesValue
Available for Sale
U.S. Government Treasury$277,718$55$808$276,965$286,867$262$851$286,278
U.S. Government Agency142,400774280142,894131,489495344131,640
States and Political Subdivisions99,8991557699,97895,1972338194,839
Mortgage-Backed Securities1,246116-1,3621,312118-1,430
Equity Securities(1)8,487--8,4878,547--8,547
Total $529,750$1,100$1,164$529,686$523,412$898$1,576$522,734
Held to Maturity
U.S. Government Treasury$83,246$1$166$83,081$119,131$107$81$119,157
States and Political Subdivisions7,3512527,3748,1751388,138
Mortgage-Backed Securities66,4777149366,05550,0592963749,451
Total $157,074$97$661$156,510$177,365$137$756$176,746
Total Investment Securities$686,824$1,197$1,825$686,196$700,777$1,035$2,332$699,480

(1) Includes Federal Home Loan Bank, Federal Reserve Bank, and FNBB, Inc. stock recorded at cost of $3.2 million, $4.8 million, and $0.5 million, respectively, at June 30, 2017 and $3.3 million, $4.8 million, and $0.5 million, respectively, at December 31, 2016.

Securities with an amortized cost of $249.4 million and $332.7 million at June 30, 2017 and December 31, 2016, respectively, were pledged to secure public deposits and for other purposes.

The Bank, as a member of the Federal Home Loan Bank of Atlanta (“FHLB”), is required to own capital stock in the FHLB based generally upon the balances of residential and commercial real estate loans, and FHLB advances.  FHLB stock which is included in equity securities is pledged to secure FHLB advances.  No ready market exists for this stock, and it has no quoted market value; however, redemption of this stock has historically been at par value.

As a member of the Federal Reserve Bank of Atlanta, the Bank is required to maintain stock in the Federal Reserve Bank of Atlanta based on a specified ratio relative to the Bank’s capital. Federal Reserve Bank stock is carried at cost and may be sold back to the Federal Reserve Bank at its carrying value.

Maturity Distribution. At June 30, 2017, the Company's investment securities had the following maturity distribution based on contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations. Mortgage-backed securities and certain amortizing U.S. government agency securities are shown separately because they are not due at a certain maturity date.

Available for SaleHeld to Maturity
(Dollars in Thousands)Amortized CostMarket ValueAmortized CostMarket Value
Due in one year or less$164,458  $164,400  $48,640  $48,584
Due after one through five years  252,755    251,947    41,957    41,871
Mortgage-Backed Securities1,2461,36266,47766,055
U.S. Government Agency  102,804    103,490    -    -
Equity Securities  8,487    8,487    -    -
Total $529,750  $529,686  $157,074  $156,510

Unrealized Losses on Investment Securities. The following table summarizes the investment securities with unrealized losses aggregated by major security type and length of time in a continuous unrealized loss position:

  Less ThanGreater Than
12 Months12 MonthsTotal
MarketUnrealizedMarketUnrealizedMarketUnrealized
(Dollars in Thousands)ValueLossesValueLossesValueLosses
June 30, 2017
Available for Sale
U.S. Government Treasury$221,874  $808  $-  $-  $221,874  $808
U.S. Government Agency46,2602019,6087955,868280
States and Political Subdivisions37,984  69  1,063  7  39,047  76
Mortgage-Backed Securities  -    -    3    -    3    -
Total 306,118  1,078  10,674  86  316,792  1,164
Held to Maturity
U.S. Government Treasury  78,091  166  -  -  78,091    166
States and Political Subdivisions1,0652--1,0652
Mortgage-Backed Securities  34,840    441    4,067    52    38,907    493
Total $113,996  $609  $4,067  $52  $118,063  $661
December 31, 2016
Available for Sale 
U.S. Government Treasury$116,704  $851  $-  $-  $116,704  $851
U.S. Government Agency48,5203106,6993455,219344
States and Political Subdivisions  81,521    380    294    1    81,815    381
Mortgage-Backed Securities3---3-
Total 246,748  1,541  6,993  35  253,741  1,576
Held to Maturity
U.S. Government Treasury  35,210    81    -    -    35,210    81
States and Political Subdivisions7,49138--7,49138
Mortgage-Backed Securities36,7105994,0103840,720637
Total $79,411  $718  $4,010  $38  $83,421  $756

Management evaluates securities for other than temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, the Company considers, (i) whether it has decided to sell the security, (ii) whether it is more likely than not that the Company will have to sell the security before its market value recovers, and (iii) whether the present value of expected cash flows is sufficient to recover the entire amortized cost basis. When assessing a security’s expected cash flows, the Company considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost and (ii) the financial condition and near-term prospects of the issuer. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by rating agencies have occurred, regulatory issues, and analysts’ reports.

At June 30, 2017, there were 281 positions (combined Available-for-Sale and Held-to-Maturity) with an unrealized loss totaling $1.8 million. Included were 142 positions comprised of Ginnie Mae mortgage-backed securities (54), U.S. Treasuries (61), and SBA securities (27) with an unrealized loss totaling $1.5 million. Each of these positions carries the full faith and credit guarantee of the U.S. Government. SBA securities float monthly or quarterly to the prime rate and are uncapped. Of these 142 positions, there were 13 GNMA positions and six SBA positions in an unrealized loss position for longer than 12 months, with unrealized losses of $52,000 and $15,000, respectively. There were 25 agency positions with an unrealized loss of $0.2 million. Two of these 25 positions were in an unrealized loss position for longer than 12 months, and have unrealized losses of $64,000. The remaining 114 positions in an unrealized loss position were municipal bonds that were pre-refunded, or rated “AA-“or better, with unrealized losses of $78,000. Of these 114 positions, three were in an unrealized loss position greater than 12 months, with an unrealized loss of $7,000. Because the declines in the market value of these investments are attributable to changes in interest rates and not credit quality and because the Company has the present ability and intent to hold these investments until there is a recovery in fair value, which may be at maturity, the Company does not consider these investments to be other-than-temporarily impaired at June 30, 2017.