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Securities
 9 Months Ended
Sep. 30, 2015
SECURITIES  
SECURITIES

6. SECURITIES

The amortized cost and fair value of securities as of the dates set forth were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2015

 

 

Amortized Cost

 

Gross Unrealized Gains

 

Gross Unrealized Losses

 

Fair Value

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of the U.S. Treasury and other U.S. government agencies or sponsored enterprises

    

$
95,055

    

$
101

    

$
(3)

    

$
95,153

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises

 

 
81,890

 

 
2,106

 

 
(16)

 

 
83,980

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises

 

 
25,827

 

 
79

 

 
(159)

 

 
25,747

Total

 

$
202,772

 

$
2,286

 

$
(178)

 

$
204,880

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises

 

$
16,053

 

$
421

 

$
(112)

 

$
16,362

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises

 

 
28,625

 

 
99

 

 
(185)

 

 
28,539

Total

 

$
44,678

 

$
520

 

$
(297)

 

$
44,901

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

 

Amortized Cost

 

Gross Unrealized Gains

 

Gross Unrealized Losses

 

Fair Value

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of the U.S. Treasury and other U.S. government agencies or sponsored enterprises

    

$
57,108

    

$
21

    

$
(85)

    

$
57,044

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises

 

 
100,002

 

 
2,022

 

 
(108)

 

 
101,916

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises

 

 
28,821

 

 
74

 

 
(290)

 

 
28,605

Total

 

$
185,931

 

$
2,117

 

$
(483)

 

$
187,565

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises

 

$
16,823

 

$
485

 

$
(123)

 

$
17,185

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises

 

 
33,890

 

 
87

 

 
(437)

 

 
33,540

Total

 

$
50,713

 

$
572

 

$
(560)

 

$
50,725

 

Expected maturities of securities will differ from contractual maturities because the underlying borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The following table sets forth, as of the date indicated, contractual maturities of securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2015

 

 

Available-for-sale

 

Held-to-maturity

 

 

Amortized Cost

 

Fair Value

 

Amortized Cost

 

Fair Value

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Due in one year or less

    

$
72,066

    

$
72,093

    

$

 -

    

$

 -

Due after one year through five years

 

 
22,989

 

 
23,060

 

 

 -

 

 

 -

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises

 

 
81,890

 

 
83,980

 

 
16,053

 

 
16,362

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises

 

 
25,827

 

 
25,747

 

 
28,625

 

 
28,539

Total

 

$
202,772

 

$
204,880

 

$
44,678

 

$
44,901

There were no sales of securities during the three or nine months ended September 30, 2015 or 2014.

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into available-for-sale or held-for-maturity and applying the appropriate OTTI model. Investment securities classified as available-for-sale or held-to-maturity are evaluated for OTTI under ASC 320, Investments—Debt and Equity Securities.

In determining OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs, the amount of the other-than-temporary impairment recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss.

As of September 30, 2015, the Company does not intend to sell any debt securities classified as held-to-maturity and management believes that the Company more likely than not will not be required to sell any debt securities that are in a loss position before their anticipated recovery, at which time the Company will receive full value for the securities. Furthermore, as of September 30, 2015, management does not have the intent to sell any of its securities classified as available-for-sale that are in a loss position and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of September 30, 2015, management believes any impairment in the Company’s securities is temporary and no impairment loss has been realized in the Company’s consolidated statements of income.

Declines in the fair value of individual securities below their cost that are other-than-temporary would result in writedowns, as a realized loss, to their fair value. In evaluating other-than-temporary impairment losses, management considers several factors including the severity and the duration that the fair value has been less than cost, the credit quality of the issuer, and whether it is more likely than not that the Company will be required to sell the security before a recovery in value. The Company has not realized any losses due to other-than-temporary impairment of securities as of September 30, 2015.

Securities with unrealized losses segregated by length of continuous unrealized loss position as of the dates set forth were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2015

 

 

Less than 12 Months

 

12 Months or More

 

 

Amortized Cost

 

Gross Unrealized Losses

 

Fair Value

 

Amortized Cost

 

Gross Unrealized Losses

 

Fair Value

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of the U.S. Treasury and other U.S. government agencies or sponsored enterprises

    

$
10,010

    

$
(3)

    

$
10,007

    

$

 -

    

$

 -

    

$

 -

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises

 

 
4,008

 

 
(16)

 

 
3,992

 

 

 -

 

 

 -

 

 

 -

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises

 

 

 -

 

 

 -

 

 

 -

 

 
6,977

 

 
(159)

 

 
6,818

Total

 

$
14,018

 

$
(19)

 

$
13,999

 

$
6,977

 

$
(159)

 

$
6,818

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises

 

$
1,690

 

$
(34)

 

$
1,656

 

$
2,590

 

$
(78)

 

$
2,512

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises

 

 
6,903

 

 
(36)

 

 
6,867

 

 
13,453

 

 
(149)

 

 
13,304

Total

 

$
8,593

 

$
(70)

 

$
8,523

 

$
16,043

 

$
(227)

 

$
15,816

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2014

 

 

Less than 12 Months

 

12 Months or More

 

 

Amortized Cost

 

Gross Unrealized Losses

 

Fair Value

 

Amortized Cost

 

Gross Unrealized Losses

 

Fair Value

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale:

 

 

 

 

 

 

 

 

 

 

 

            

 

 

 

 

 

            

Obligations of the U.S. Treasury and other U.S. government agencies or sponsored enterprises

    

$
37,049

    

$
(85)

    

$
36,964

    

$

 -

    

$

 -

    

$

 -

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises

 

 
20,403

 

 
(53)

 

 
20,350

 

 
4,440

 

 
(56)

 

 
4,384

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises

 

 
3,514

 

 

 -

 

 
3,514

 

 
12,559

 

 
(289)

 

 
12,270

Total

 

$
60,966

 

$
(138)

 

$
60,828

 

$
16,999

 

$
(345)

 

$
16,654

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises

 

$

 -

 

$

 -

 

$

 -

 

$
4,564

 

$
(122)

 

$
4,442

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises

 

 
12,414

 

 
(92)

 

 
12,322

 

 
13,988

 

 
(346)

 

 
13,642

Total

 

$
12,414

 

$
(92)

 

$
12,322

 

$
18,552

 

$
(468)

 

$
18,084

The Company did not own securities of any one issuer (other than the U.S. government and its agencies or sponsored enterprises) for which the aggregate adjusted cost exceeds 10% of the consolidated shareholders’ equity at September 30, 2015 or December 31, 2014.

Securities with an amortized cost of $15.5 million and $17.7 million and fair value of $15.6 million and $17.9 million were pledged and available to be sold under repurchase agreements at September 30, 2015 and December 31, 2014, respectively. Securities with an amortized cost of $103.4 million and $55.0 million and fair value of $103.6 million and $54.8 million were pledged to various Federal Reserve Districts related to deposits of bankruptcy trustees at September 30, 2015 and December 31, 2014, respectively. In addition, securities with an amortized cost of $515 thousand and $669 thousand and fair value of $540 thousand and $701 thousand were pledged as collateral for the Company’s derivative instruments at September 30, 2015 and December 31, 2014, respectively.