INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2017

Investments, Debt and Equity Securities [Abstract]

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:
	2017									2016
	Amortized		Unrealized		Unrealized		Market		Amortized		Unrealized		Unrealized		Market
(Dollars in Thousands)	Cost		Gains		Losses		Value		Cost		Gain		Losses		Value
Available for Sale
U.S. Government Treasury	$	237,505	$	-	$	2,164	$	235,341	$	286,867	$	262	$	851	$	286,278
U.S. Government Agency		144,324		727		407		144,644		131,489		495		344		131,640
States and Political Subdivisions		91,533		2		378		91,157		95,197		23		381		94,839
Mortgage-Backed Securities		1,102		83		-		1,185		1,312		118		-		1,430
Equity Securities⁽¹⁾		8,584		-		-		8,584		8,547		-		-		8,547
Total	$	483,048	$	812	$	2,949	$	480,911	$	523,412	$	898	$	1,576	$	522,734

Held to Maturity
U.S. Government Treasury	$	98,256	$	-	$	441	$	97,815	$	119,131	$	107	$	81	$	119,157
States and Political Subdivisions		6,996		-		41		6,955		8,175		1		38		8,138
Mortgage-Backed Securities		111,427		22		1,212		110,237		50,059		29		637		49,451
Total	$	216,679	$	22	$	1,694	$	215,007	$	177,365	$	137	$	756	$	176,746

Total Investment Securities	$	699,727	$	834	$	4,643	$	695,918	$	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 $3.1 million, $4.8 million, and $0.8 million, respectively, at December 31, 2017 and Federal Home Loan Bank, Federal Reserve Bank and FNBB, Inc. stock at $3.3 million, $4.8 million and $0.5 million , respectively, at December 31, 2016.

Securities with an amortized cost of $328.1 million and $332.7 million at December 31, 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 other 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.

Investment Sales. There were no sales of investment securities for each of the last three years.

Maturity Distribution. At December 31, 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 since they are not due at a certain maturity date.

	Available for Sale				Held to Maturity
	Amortized		Market		Amortized		Market
(Dollars in Thousands)	Cost		Value		Cost		Value
Due in one year or less	$	107,977	$	107,740	$	63,381	$	63,271
Due after one through five years		258,193		255,593		41,871		41,499
Mortgage-Backed Securities		1,102		1,185		111,427		110,237
U.S. Government Agency		107,192		107,809		-		-
Equity Securities		8,584		8,584		-		-
Total	$	483,048	$	480,911	$	216,679	$	215,007

Unrealized Losses. The following table summarizes the investment securities with unrealized losses at December 31, aggregated by major security type and length of time in a continuous unrealized loss position:

	Less Than 12 Months				Greater Than 12 Months				Total
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in Thousands)	Value		Losses		Value		Losses		Value		Losses
December 31, 2017
Available for Sale
U.S. Government Treasury	$	155,443	$	963	$	79,900	$	1,201	$	235,343	$	2,164
U.S. Government Agency		45,737		150		25,757		257		71,494		407
States and Political Subdivisions		82,999		320		5,549		58		88,548		378
Mortgage-Backed Securities		2		-		-		-		2		-
Total		284,181		1,433		111,206		1,516		395,387		2,949

Held to Maturity
U.S. Government Treasury		77,861		298		14,939		143		92,800		441
States and Political Subdivisions		6,955		41		-		-		6,955		41
Mortgage-Backed Securities		56,030		469		30,216		743		86,246		1,212
Total	$	140,846	$	808	$	45,155	$	886	$	186,001	$	1,694

December 31, 2016
Available for Sale
U.S. Government Treasury	$	116,704	$	851	$	-	$	-	$	116,704	$	851
U.S. Government Agency		48,520		310		6,699		34		55,219		344
States and Political Subdivisions		81,521		380		294		1		81,815		381
Mortgage-Backed Securities		3		-		-		-		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 Subdivisions		7,491		38		-		-		7,491		38
Mortgage-Backed Securities		36,710		599		4,010		38		40,720		637
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 December 31, 2017, there were 532 positions (combined AFS and HTM) with unrealized losses totaling $4.6 million. 67 of these positions were U.S. government treasury securities guaranteed by the U.S. government. 159 of these positions were U.S. government agency and mortgage-backed securities issued by U.S. government sponsored entities. The remaining 306 securities are direct obligations of the US Government (23) and municipal bonds (283). Municipal bonds are relatively short-term in nature (less than 5 years), and hold a minimum rating of A+, with over 70% of the municipal bond portfolio pre-refunded with US Treasury securities. Because the declines in the market value of these securities 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 December 31, 2017.