NOTE D — SECURITIES

The amortized cost, unrealized gains and losses, and fair value of securities available for sale and held to maturity at June 30, 2017 and December 31, 2016 are summarized as follows:

	June 30, 2017
	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	$	10,907	$	300	$	0	$	11,207
Mortgage backed securities of U.S. Government Sponsored Entities		291,482		1,250		(2,632)		290,100
Collateralized mortgage obligations of U.S. Government Sponsored Entities		217,634		614		(3,951)		214,297
Commercial mortgage backed securities of U.S. Government Sponsored Entities		22,304		506		(9)		22,801
Private mortgage backed securities		32,860		864		(92)		33,632
Private collateralized mortgage obligations		55,828		616		(488)		55,956
Collateralized loan obligations		222,725		455		(41)		223,139
Obligations of state and political subdivisions		62,847		938		(385)		63,400
Corporate and other debt securities		70,930		676		(168)		71,438
Private commercial mortgage backed securities		30,780		189		(195)		30,774
	$	1,018,297	$	6,408	$	(7,961)	$	1,016,744

SECURITIES HELD TO MATURITY
Mortgage backed securities of U.S. Government Sponsored Entities	$	183,877	$	1,413	$	(959)	$	184,331
Collateralized mortgage obligations of U.S. Government Sponsored Entities		135,596		461		(1,564)		134,493
Commercial mortgage backed securities of U.S. Government Sponsored Entities		17,420		585		0		18,005
Collateralized loan obligations		54,325		378		0		54,703
Private collateralized mortgage obligations		5,878		8		(61)		5,825
	$	397,096	$	2,845	$	(2,584)	$	397,357

	December 31, 2016
	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	$	12,073	$	255	$	0	$	12,328
Mortgage backed securities of U.S. Government Sponsored Entities		287,726		585		(4,823)		283,488
Collateralized mortgage obligations of U.S. Government Sponsored Entities		238,805		314		(5,065)		234,054
Commercial mortgage backed securities of U.S. Government Sponsored Entities		22,351		222		(28)		22,545
Private mortgage backed securities		32,780		0		(791)		31,989
Private collateralized mortgage obligations		67,542		563		(816)		67,289
Collateralized loan obligations		124,716		838		(665)		124,889
Obligations of state and political subdivisions		63,161		622		(895)		62,888
Corporate and other debt securities		74,121		257		(517)		73,861
Private commercial mortgage backed securities		37,534		111		(473)		37,172
	$	960,809	$	3,767	$	(14,073)	$	950,503

SECURITIES HELD TO MATURITY
Mortgage backed securities of U.S. Government Sponsored Entities	$	159,941	$	704	$	(1,243)	$	159,402
Collateralized mortgage obligations of U.S. Government Sponsored Entities		147,208		386		(2,630)		144,964
Commercial mortgage backed securities of U.S. Government Sponsored Entities		17,375		233		(74)		17,534
Collateralized loan obligations		41,547		430		(314)		41,663
Private collateralized mortgage obligations		6,427		0		(109)		6,318
	$	372,498	$	1,753	$	(4,370)	$	369,881

Proceeds from sales of securities during the three and six month period ended June 30, 2017 were $3.8 million, with gross gains of $21,000 and no gross losses. Proceeds from sales of securities during the three month period ended June 30, 2016 were $1.7 million, with gross gains of $47,000 and no gross losses. Proceeds from sales of securities during the six month period ended June 30, 2016 were $12.1 million, with gross gains of $147,000 and gross losses of $11,000.

In 2014, approximately $158.8 million of investment securities available for sale were transferred into held to maturity. The unrealized holding losses at the date of transfer totaled $3.1 million. The unrealized holding losses at the date of the transfer are amortized over the remaining life of these securities as an adjustment of yield in a manner consistent with the amortization of a discount. The amortization of unrealized holding losses reported in other comprehensive income will offset the effect on interest income of the amortization of the discount. At June 30, 2017, the remaining unrealized holding losses totaled $1.6 million.

Securities at June 30, 2017 with a fair value of $183.3 million were pledged as collateral for United States Treasury deposits, other public deposits and trust deposits. Securities with a fair value of $167.6 million were pledged as collateral for repurchase agreements at June 30, 2017.

The amortized cost and fair value of securities available for sale and held to maturity at June 30, 2017, 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. Securities not due at a single maturity date are shown separately.

	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Due in less than one year	$	0	$	0	$	10,076	$	10,318
Due after one year through five years		3,600		3,600		85,126		85,641
Due after five years through ten years		50,725		51,103		233,030		234,071
Due after ten years		0		0		28,636		28,605
		54,325		54,703		356,868		358,635
Mortgage backed securities of U.S. Government Sponsored Entities		183,877		184,331		291,482		290,100
Collateralized mortgage obligations of U.S. Government Sponsored Entities		135,596		134,493		217,634		214,297
Commercial mortgage backed securities of U.S. Government Sponsored Entities		17,420		18,005		22,304		22,801
Private mortgage backed securities		0		0		32,860		33,632
Private collateralized mortgage obligations		5,878		5,825		55,828		55,956
Other debt securities		0		0		10,541		10,549
Private commercial mortgage backed securities		0		0		30,780		30,774
	$	397,096	$	397,357	$	1,018,297	$	1,016,744

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 flow analyses, using observable market data where available. The tables below indicate the amount of securities with unrealized losses and the period of time for which these losses were outstanding at June 30, 2017 and December 31, 2016, respectively.

	June 30, 2017
	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	$	205,658	$	(2,975)	$	48,199	$	(616)	$	253,857	$	(3,591)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		87,147		(1,438)		168,324		(4,077)		255,471		(5,515)
Commercial mortgage backed securities of U.S. Government Sponsored Entities		3,119		(9)		0		0		3,119		(9)
Private mortgage backed securities		0		0		6,864		(153)		6,864		(153)
Private collateralized mortgage obligations		0		0		26,129		(488)		26,129		(488)
Collateralized loan obligations		9,966		(34)		9,973		(7)		19,939		(41)
Obligations of state and political subdivisions		15,716		(287)		2,916		(98)		18,632		(385)
Corporate and other debt securities		12,873		(164)		2,388		(4)		15,261		(168)
Private commercial mortgage backed securities		11,126		(185)		1,965		(10)		13,091		(195)
Total temporarily impaired securities	$	345,605	$	(5,092)	$	266,758	$	(5,453)	$	612,363	$	(10,545)

	December 31, 2016
	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	$	327,759	$	(5,991)	$	5,387	$	(75)	$	333,146	$	(6,066)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		234,175		(5,599)		58,912		(2,096)		293,087		(7,695)
Commercial mortgage backed securities of U.S. Government Sponsored Entities		7,934		(102)		0		0		7,934		(102)
Private mortgage backed securities		0		0		36,848		(900)		36,848		(900)
Private collateralized mortgage obligations		1,460		0		38,417		(816)		39,877		(816)
Collateralized loan obligations		8,152		(41)		51,694		(938)		59,846		(979)
Obligations of state and political subdivisions		39,321		(895)		0		0		39,321		(895)
Corporate and other debt securities		33,008		(517)		0		0		33,008		(517)
Private commercial mortgage backed securities		12,667		(306)		7,139		(167)		19,806		(473)
Total temporarily impaired securities	$	664,476	$	(13,451)	$	198,397	$	(4,992)	$	862,873	$	(18,443)

The two tables above include securities held to maturity that were transferred from available for sale into held to maturity during 2014. Those securities had unrealized losses of $3.1 million at the date of transfer, and at June 30, 2017, the unamortized balance was $1.6 million. The fair value of those securities in an unrealized loss position for less than twelve months at June 30, 2017 and December 31, 2016 was $7.4 million and $22.8 million, respectively. The unrealized losses on those securities in an unrealized loss position for less than twelve months at June 30, 2017 and December 31, 2016 was $0.1 million and $0.4 million, respectively. The fair value of those securities in an unrealized loss position for more than twelve months at June 30, 2017 and December 31, 2016 was $7.4 million and none, respectively. The unrealized losses on those securities in an unrealized loss position for more than twelve months at June 30, 2017 and December 31, 2016 was $0.1 million and none, respectively.

At June 30, 2017, unrealized losses on mortgage backed securities, collateralized mortgage obligations and commercial mortgage backed securities of U.S. government sponsored entities having a fair value of $512.4 million totaled $9.1 million, which was 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 our 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 rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At June 30, 2017, private label securities secured by seasoned residential collateral with a fair value of $33.0 million had approximately $0.6 million in unrealized losses. This was 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, subordination and historically have had minimal foreclosures and losses. 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 rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At June 30, 2017, remaining securities categories had unrealized losses of $0.7 million and summed to a fair value of $66.9 million. Management believes that unrealized losses on these remaining debt security holdings are a function of changes in investment spreads and interest movements and not change in credit quality. Management expects to recover the entire amortized cost basis of these securities.

As of June 30, 2017, 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 June 30, 2017.

Included in other assets is $36.4 million of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. At June 30, 2017, the Company had not identified events or changes in circumstances which may have a significant adverse effect on the ability to redeem these holdings.

The Company also holds 211,330 shares of Visa Class B stock which, following resolution of Visa litigation, will be converted to Visa Class A shares (the conversion rate is 1.6483 shares of Class A stock for each share of Class B stock) for a total of 348,335 shares of Visa Class A stock. Our holdings are related to prior ownership in Visa’s network while Visa operated as a cooperative (11,330 shares), and by acquisition via auctions (200,000 shares) for $6.2 million conducted by the FDIC during the first quarter of 2017. These holdings are reported in other assets in the Consolidated Balance Sheets at the Company’s cost of $6.2 million.