Annual report pursuant to Section 13 and 15(d)

DEBT SECURITIES

v3.6.0.2
DEBT SECURITIES
 12 Months Ended
Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]  
DEBT SECURITIES
NOTE 3.
DEBT SECURITIES
 
The amortized cost and fair values of available-for-sale and held-to-maturity debt securities at December 31, 2016 and 2015 are summarized as follows:
 
 
 
 
 
Gross
 
Gross
 
 
 
 
 
Amortized
 
Unrealized
 
Unrealized
 
Market
 
 
 
Cost
 
Gain
 
Loss
 
Value
 
 
 
(In Thousands)
 
December 31, 2016
 
 
 
Securities Available for Sale
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government sponsored agencies
 
$
45,998
 
$
382
 
$
(126)
 
$
46,254
 
Mortgage-backed securities
 
 
228,843
 
 
1,515
 
 
(3,168)
 
 
227,190
 
State and municipal securities
 
 
139,504
 
 
1,120
 
 
(694)
 
 
139,930
 
Corporate debt
 
 
8,985
 
 
16
 
 
-
 
 
9,001
 
Total
 
$
423,330
 
$
3,033
 
$
(3,988)
 
$
422,375
 
Securities Held to Maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
 
19,164
 
 
321
 
 
(245)
 
 
19,240
 
State and municipal securities
 
 
5,888
 
 
315
 
 
(12)
 
 
6,191
 
Corporate debt
 
 
37,512
 
 
374
 
 
(15)
 
 
37,871
 
Total
 
$
62,564
 
$
1,010
 
$
(272)
 
$
63,302
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities Available for Sale
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government sponsored agencies
 
$
44,581
 
$
569
 
$
(141)
 
$
45,009
 
Mortgage-backed securities
 
 
135,363
 
 
1,945
 
 
(354)
 
 
136,954
 
State and municipal securities
 
 
143,403
 
 
2,731
 
 
(101)
 
 
146,033
 
Corporate debt
 
 
14,902
 
 
67
 
 
(27)
 
 
14,942
 
Total
 
$
338,249
 
$
5,312
 
$
(623)
 
$
342,938
 
Securities Held to Maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
 
 
21,666
 
 
368
 
 
(332)
 
 
21,702
 
State and municipal securities
 
 
5,760
 
 
449
 
 
(1)
 
 
6,208
 
Total
 
$
27,426
 
$
817
 
$
(333)
 
$
27,910
 
 
All mortgage-backed debt securities are with government sponsored enterprises (GSEs) such as Federal National Mortgage Association, Government National Mortgage Association, Federal Home Loan Bank, and Federal Home Loan Mortgage Corporation.
 
At year-end 2016 and 2015, there were no holdings of debt securities of any issuer, other than the U.S. government and its agencies, in an amount greater than 10% of stockholders’ equity.
 
The amortized cost and fair value of debt securities as of December 31, 2016 and 2015 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
 
 
December 31, 2016
 
December 31, 2015
 
 
 
Amortized Cost
 
Market Value
 
Amortized Cost
 
Market Value
 
 
 
(In Thousands)
 
Debt securities available for sale
 
 
 
 
 
 
 
 
 
 
 
 
 
Due within one year
 
$
28,270
 
$
28,400
 
$
16,770
 
$
16,868
 
Due from one to five years
 
 
152,347
 
 
153,003
 
 
153,880
 
 
156,311
 
Due from five to ten years
 
 
13,870
 
 
13,782
 
 
32,236
 
 
32,805
 
Mortgage-backed securities
 
 
228,843
 
 
227,190
 
 
135,363
 
 
136,954
 
 
 
$
423,330
 
$
422,375
 
$
338,249
 
$
342,938
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt securities held to maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
Due from one to five years
 
$
250
 
$
250
 
$
-
 
$
-
 
Due from five to ten years
 
 
34,251
 
 
34,617
 
 
627
 
 
659
 
Due after ten years
 
 
8,899
 
 
9,195
 
 
5,133
 
 
5,549
 
Mortgage-backed securities
 
 
19,164
 
 
19,240
 
 
21,666
 
 
21,702
 
 
 
$
62,564
 
$
63,302
 
$
27,426
 
$
27,910
 
 
The following table shows the gross unrealized losses and fair value of debt securities, aggregated by category and length of time that securities have been in a continuous unrealized loss position at December 31, 2016 and 2015. In estimating other-than-temporary impairment losses, management considers, among other things, the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer and the intent and ability of the Company to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. The unrealized losses shown in the following table are primarily due to increases in market rates over the yields available at the time of purchase of the underlying securities and not credit quality. Because the Company does not intend to sell these securities and it is more likely than not that the Company will not be required to sell the securities before recovery of their amortized cost basis, which may be maturity, the Company does not consider these securities to be other-than-temporarily impaired at December 31, 2016. There were no other-than-temporary impairments for the years ended December 31, 2016, 2015 and 2014.
 
 
 
Less Than Twelve Months
 
Twelve Months or More
 
Total
 
 
 
Gross
 
 
 
Gross
 
 
 
Gross
 
 
 
 
 
Unrealized
 
 
 
Unrealized
 
 
 
Unrealized
 
 
 
 
 
Losses
 
Fair Value
 
Losses
 
Fair Value
 
Losses
 
Fair Value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In Thousands)
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government sponsored agencies
 
$
(126)
 
$
10,865
 
$
-
 
$
-
 
$
(126)
 
$
10,865
 
Mortgage-backed securities
 
 
(3,413)
 
 
174,225
 
 
-
 
 
-
 
 
(3,413)
 
 
174,225
 
State and municipal securities
 
 
(698)
 
 
64,502
 
 
(8)
 
 
1,021
 
 
(706)
 
 
65,523
 
Corporate debt
 
 
(15)
 
 
3,034
 
 
-
 
 
-
 
 
(15)
 
 
3,034
 
Total
 
$
(4,252)
 
$
252,626
 
$
(8)
 
$
1,021
 
$
(4,260)
 
$
253,647
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury and government sponsored agencies
 
$
(141)
 
$
3,886
 
$
-
 
$
-
 
$
(141)
 
$
3,886
 
Mortgage-backed securities
 
 
(354)
 
 
56,609
 
 
(332)
 
 
11,712
 
 
(686)
 
 
68,321
 
State and municipal securities
 
 
(55)
 
 
15,464
 
 
(47)
 
 
4,531
 
 
(102)
 
 
19,995
 
Corporate debt
 
 
(27)
 
 
2,961
 
 
-
 
 
-
 
 
(27)
 
 
2,961
 
Total
 
$
(577)
 
$
78,920
 
$
(379)
 
$
16,243
 
$
(956)
 
$
95,163
 
 
At December 31, 2016, 5 of the Company’s 795 debt securities were in an unrealized loss position for more than 12 months.
 
The following table summarizes information about sales of debt securities available for sale.
 
 
 
Years Ended December 31,
 
 
 
2016
 
2015
 
2014
 
 
 
(In Thousands)
 
Sale proceeds
 
$
6,085
 
$
16,738
 
$
173
 
Gross realized gains
 
$
4
 
$
29
 
$
3
 
Gross realized losses
 
 
(7)
 
 
-
 
 
-
 
Net realized gain (loss)
 
$
(3)
 
$
29
 
$
3
 
 
The carrying value of debt securities pledged to secure public funds on deposits and for other purposes as required by law as of December 31, 2016 and 2015 was $246.0 million and $245.5 million, respectively.
 
Equity securities include (1) a restricted investment in Federal Home Loan Bank of Atlanta stock for membership requirement and to secure available lines of credit, (2) an investment in First National Bankers Bank stock, (3) an investment in a Community Reinvestment Act (“CRA”)-qualified mutual fund, and (4) an investment in common stock of a bank holding company that was acquired in the Metro Bancshares acquisition. The amount of investment in the Federal Home Loan Bank of Atlanta stock was $30,000 and $4.0 million at December 31, 2016 and 2015, respectively. The Company terminated its membership in the Federal Home Loan Bank of Atlanta effective November 11, 2016. The small amount of stock that remains outstanding relates to the principal reducing borrowing. The amount of investment in the First National Bankers Bank stock was $400,000 at December 31, 2016 and 2015. The amount of investment in the CRA-qualified mutual fund was $500,000 at December 31, 2016 and 2015. The amount of the investment in common stock of the bank holding company was $100,000 at December 31, 2016 and 2015.