NOTE D — SECURITIES

The amortized cost and fair value of securities available for sale and held for investment at September 30, 2015 and December 31, 2014 are summarized as follows:

	September 30, 2015
	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	3,832	$	97	$	0	$	3,929
Mortgage-backed securities of U.S. Government Sponsored Entities		117,458		1,281		(247)		118,492
Collateralized mortgage obligations of U.S. Government Sponsored Entities		257,486		1,158		(2,737)		255,907
Private mortgage backed securities		32,494		17		(295)		32,216
Private collateralized mortgage obligations		82,183		782		(777)		82,188
Collateralized loan obligations		124,464		37		(1,054)		123,447
Obligations of state and political subdivisions		32,277		818		(58)		33,037
Corporate and other debt securities		40,015		94		(191)		39,918
Private commercial mortgage backed securities		39,256		54		(283)		39,027
	$	729,465	$	4,338	$	(5,642)	$	728,161
SECURITIES HELD FOR INVESTMENT
Mortgage-backed securities of U.S. Government Sponsored Entities	$	65,787	$	2,126	$	0	$	67,913
Collateralized mortgage obligations of U.S. Government Sponsored Entities		93,646		1,652		(27)		95,271
Collateralized loan obligations		41,300		111		(465)		40,946
Private collateralized mortgage obligations		8,314		0		(82)		8,232
	$	209,047	$	3,889	$	(574)	$	212,362

	December 31, 2014
	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	3,876	$	23	$	0	$	3,899
Mortgage-backed securities of U.S. Government Sponsored Entities		123,981		1,501		(423)		125,059
Collateralized mortgage obligations of U.S. Government Sponsored Entities		352,483		1,075		(6,077)		347,481
Private mortgage backed securities		29,967		291		0		30,258
Private collateralized mortgage obligations		85,175		688		(728)		85,135
Collateralized loan obligations		127,397		0		(2,172)		125,225
Obligations of state and political subdivisions		23,511		810		(3)		24,318
	$	746,390	$	4,388	$	(9,403)	$	741,375

SECURITIES HELD FOR INVESTMENT
Mortgage-backed securities of U.S. Government Sponsored Entities	$	67,535	$	812	$	0	$	68,347
Collateralized mortgage obligations of U.S. Government Sponsored Entities		114,541		695		(280)		114,956
Collateralized loan obligations		25,828		0		(343)		25,485
	$	207,904	$	1,507	$	(623)	$	208,788

Proceeds from sales of securities during the nine month period ended September 30, 2015 were $60.3 million, with gross gains of $632,000 and gross losses of $472,000. Proceeds from sales of securities during the nine month period ended September 30, 2014 were $16.4 million with gross gains of $361,000 and no gross losses.

On May 31, 2014 management identified $158.8 million of investment securities available for sale and transferred them into held for investment. The unrealized holding losses at the date of transfer totaled $3.1 million. For those securities that were transferred into the held for investment category from the available for sale category, the unrealized holding losses at the date of the transfer will continue to be reported in other comprehensive income, and will be amortized over the remaining life of the security as an adjustment of yield in a manner consistent with the amortization of a discount. The amortization of unrealized holding losses reported in equity will offset the effect on interest income of the amortization of the discount. As of September 30, 2015, the remaining unrealized holding losses totaled $2.4 million.

Securities at September 30, 2015 with a carrying and fair value of $125.0 million and $124.3 million, respectively, were pledged as collateral for other public and trust deposits. Securities with a carrying value and fair value of $148.6 were pledged as collateral for repurchase agreements.

The amortized cost and fair value of securities at September 30, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because prepayments of the underlying collateral for these securities may occur, due to the right to call or repay obligations with or without call or prepayment penalties.

	Held for Investment				Available for Sale
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Due in less than one year	$	0	$	0	$	225	$	225
Due after one year through five years		0		0		42,560		42,307
Due after five years through ten years		41,300		40,946		106,746		106,247
Due after ten years		0		0		11,042		11,634
		41,300		40,946		160,573		160,413
Mortgage-backed securities of U.S. Government Sponsored Entities		65,787		67,913		117,458		118,492
Collateralized mortgage obligations of U.S. Government Sponsored Entities		93,646		95,271		257,486		255,907
Private mortgage backed securities		0		0		32,494		32,216
Private collateralized mortgage obligations		8,314		8,232		82,183		82,188
Corporate and other debt securities		0		0		40,015		39,918
Private commercial mortgage backed securities		0		0		39,256		39,027
	$	209,047	$	212,362	$	729,465	$	728,161

The estimated fair value of a security is determined based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flows analyses, using observable market data where available. The tables below indicate the amount of securities with unrealized losses and period of time for which these losses were outstanding at September 30, 2015 and December 31, 2014, respectively.

	September 30, 2015
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Mortgage-backed securities of
U.S. Government Sponsored Entities	$	26,443	$	(127)	$	12,366	$	(120)	$	38,809	$	(247)
Collateralized mortgage obligations of
U.S. Government Sponsored Entities		43,963		(136)		146,322		(2,628)		190,285		(2,764)
Private mortage backed securities		16,724		(295)		3,287		0		20,011		(295)
Private collateralized mortgage obligations		20,939		(323)		33,203		(536)		54,142		(859)
Collateralized loan obligations		87,328		(828)		47,245		(691)		134,573		(1,519)
Obligations of state and political subdivisions		10,716		(58)		0		0		10,716		(58)
Corporate and other debt securities		22,455		(191)		0		0		22,455		(191)
Private commercial mortgage backed
securities		31,578		(283)		0		0		31,578		(283)
Total temporarily impaired securities	$	260,146	$	(2,241)	$	242,423	$	(3,975)	$	502,569	$	(6,216)

	December 31, 2014
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	100	$	0	$	0	$	0	$	100	$	0
Mortgage-backed securties of U.S. Government Sponsored Entities		36,890		(153)		21,640		(271)		58,530		(424)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		100,148		(833)		170,400		(5,523)		270,548		(6,356)
Private collaterlized mortgage obligations		61,554		(914)		10,091		(157)		71,645		(1,071)
Collateralized loan obligations		100,714		(1,769)		24,511		(403)		125,225		(2,172)
Obligations of state and political subdivisions		1,734		(3)		0		0		1,734		(3)
Total temporarily impaired securities	$	301,040	$	(3,672)	$	226,642	$	(6,354)	$	527,682	$	(10,026)

The two tables above include securities held to maturity that were transferred from available for sale to held to maturity on May 31, 2014. Those securities had unrealized losses of $3.1 million at the date of transfer. The fair value of those securities in an unrealized loss position for less than 12 months at September 30, 2015 and December 31, 2014 is $10.3 million and $11.6 million, respectively. The unrealized losses on those securities in an unrealized loss position for less than 12 months at September 30, 2015 and December 31, 2014 is $27,000 and $159,000, respectively. None of these securities were in an unrealized loss position for more than twelve months at September 30, 2015 and December 31, 2014, respectively.

At September 30, 2015, approximately $1.4 million of the unrealized losses pertain to private label securities secured by collateral originated in 2005 and prior. Their fair value is $105.7 million and is attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The collateral underlying these mortgage investments are 30- and 15-year fixed and 10/1 adjustable rate mortgage loans with low loan to values and subordination. Based on its assessment of these securities, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At September 30, 2015, the Company also had $3.0 million of unrealized losses on collateralized mortgage obligations and mortgage backed securities of government sponsored entities having a fair value of $229.1 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At September 30, 2015, the Company also had $1.5 million of unrealized losses on collateralized loan obligations having a fair value of $134.6 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase. Management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

Also, as of September 30, 2015, management does not intend to sell securities that are in unrealized loss positions and it is not more likely than not that the Company will be required to sell these securities before recovery of the amortized cost basis. Therefore, management does not consider any investment to be other-than-temporarily impaired at September 30, 2015.