INVESTMENT SECURITIES

3 Months Ended

Mar. 31, 2018

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:
	March 31, 2018									December 31, 2017
	Amortized		Unrealized		Unrealized		Market		Amortized		Unrealized		Unrealized		Market
	Cost		Gains		Losses		Value		Cost		Gain		Losses		Value
Available for Sale
U.S. Government Treasury	$	240,933	$	5	$	3,361	$	237,577	$	237,505	$	-	$	2,164	$	235,341
U.S. Government Agency		149,074		667		670		149,071		144,324		727		407		144,644
States and Political Subdivisions		76,486		-		343		76,143		91,533		2		378		91,157
Mortgage-Backed Securities		1,082		77		-		1,159		1,102		83		-		1,185
Equity Securities⁽¹⁾		7,886		-		-		7,886		8,584		-		-		8,584
Total	$	475,461	$	749	$	4,374	$	471,836	$	483,048	$	812	$	2,949	$	480,911

Held to Maturity
U.S. Government Treasury	$	78,184	$	-	$	664	$	77,520	$	98,256	$	-	$	441	$	97,815
States and Political Subdivisions		6,940		-		42		6,898		6,996		-		41		6,955
Mortgage-Backed Securities		140,428		39		2,675		137,792		111,427		22		1,212		110,237
Total	$	225,552	$	39	$	3,381	$	222,210	$	216,679	$	22	$	1,694	$	215,007

Total Investment Securities	$	701,013	$	788	$	7,755	$	694,046	$	699,727	$	834	$	4,643	$	695,918

⁽¹⁾ Includes Federal Home Loan Bank and Federal Reserve Bank stock, recorded at cost of $3.1 million, $4.8 million, respectively, at March 31, 2018 and 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.

Securities with an amortized cost of $328.3 million and $328.1 million at March 31, 2018 and December 31, 2017, 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.

Maturity Distribution. At March 31, 2018, 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 Sale				Held to Maturity
(Dollars in Thousands)	Amortized Cost		Market Value		Amortized Cost		Market Value
Due in one year or less	$	85,838	$	85,522	$	43,838	$	43,763
Due after one through five years		265,050		261,329		41,286		40,655
Mortgage-Backed Securities		1,082		1,159		140,428		137,792
U.S. Government Agency		115,605		115,940		-		-
Equity Securities		7,886		7,886		-		-
Total	$	475,461	$	471,836	$	225,552	$	222,210

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 Than				Greater Than
	12 Months				12 Months				Total
	Market		Unrealized		Market		Unrealized		Market		Unrealized
(Dollars in Thousands)	Value		Losses		Value		Losses		Value		Losses
March 31, 2018
Available for Sale
U.S. Government Treasury	$	139,880	$	1,820	$	87,734	$	1,541	$	227,614	$	3,361
U.S. Government Agency		55,536		376		28,120		294		83,656		670
States and Political Subdivisions		68,011		289		5,532		54		73,543		343
Mortgage-Backed Securities		2		-		-		-		2		-
Total		263,429		2,485		121,386		1,889		384,815		4,374

Held to Maturity
U.S. Government Treasury		47,622		454		29,898		210		77,520		664
States and Political Subdivisions		6,633		42		-		-		6,633		42
Mortgage-Backed Securities		94,379		1,560		28,226		1,115		122,605		2,675
Total	$	148,634	$	2,056	$	58,124	$	1,325	$	206,758	$	3,381

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

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 available-for-sale (“AFS”) and held-to-maturity (“HTM”) 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 March 31, 2018, there were 538 positions (combined AFS and HTM) with unrealized losses totaling $7.8 million. 63 of these positions were U.S. government treasury securities guaranteed by the U.S. government. 236 of these positions were U.S. government agency and mortgage-backed securities issued by U.S. government sponsored entities, with the remaining 239 positions being municipal 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 March 31, 2018.