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SECURITIES
 6 Months Ended
Jun. 30, 2018
Investments, Debt and Equity Securities [Abstract]  
SECURITIES
SECURITIES
The amortized cost and fair value of securities as of the dates set forth were as follows:
 
 
June 30, 2018
 
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
 
(Dollars in thousands)
Available-for-sale:
 
 
 
 
 
 
 
 
SBA guaranteed securities
 
$
99,125

 
$
74

 
$
(1,982
)
 
$
97,217

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential
 
227,164

 
—

 
(7,095
)
 
220,069

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: commercial
 
65,823

 
—

 
(2,823
)
 
63,000

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential
 
211,291

 
—

 
(7,035
)
 
204,256

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: commercial
 
35,990

 
—

 
(1,341
)
 
34,649

Corporate debt securities
 
15,913

 
53

 
(61
)
 
15,905

Obligations of municipal subdivisions
 
236

 
1

 
—

 
237

Total
 
$
655,542

 
$
128

 
$
(20,337
)
 
$
635,333

 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 
 
 
 
 
 
 
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential
 
$
11,352

 
$
25

 
$
(389
)
 
$
10,988

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: commercial
 
2,488

 
—

 
(90
)
 
2,398

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential
 
44,499

 
60

 
(138
)
 
44,421

Obligations of municipal subdivisions
 
6,191

 
—

 
(5
)
 
6,186

Total
 
$
64,530

 
$
85

 
$
(622
)
 
$
63,993

 
Securities with fair value of $50.0 million were transferred from available-for-sale to held-to-maturity classification during the quarter ended March 31, 2018. The related unrealized loss at the date of transfer of $2.2 million remained in accumulated other comprehensive income and will be amortized over the remaining term of the securities. The net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive income as of June 30, 2018 totaled $2.1 million.

 
 
December 31, 2017
 
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
 
(Dollars in thousands)
Available-for-sale:
 
 
 
 
 
 
 
 
SBA guaranteed securities
 
$
104,111

 
$
129

 
$
(948
)
 
$
103,292

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential
 
250,580

 
297

 
(1,701
)
 
249,176

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: commercial
 
65,986

 
—

 
(500
)
 
65,486

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential
 
234,881

 
—

 
(6,434
)
 
228,447

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: commercial
 
36,151

 
—

 
(472
)
 
35,679

Corporate debt securities
 
5,789

 
5

 
—

 
5,794

Obligations of municipal subdivisions
 
6,672

 
—

 
(45
)
 
6,627

CRA qualified investment fund
 
11,337

 
—

 
(299
)
 
11,038

Total
 
$
715,507

 
$
431

 
$
(10,399
)
 
$
705,539

 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 

 
 

 
 

 
 

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential
 
$
10,841

 
$
61

 
$
(170
)
 
$
10,732

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential
 
2,434

 
—

 
(20
)
 
2,414

Total
 
$
13,275

 
$
61

 
$
(190
)
 
$
13,146


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. Securities not due at a single maturity date are shown separately.  The following table sets forth, as of the date indicated, contractual maturities of securities:
 
 
June 30, 2018
 
 
Available-for-sale
 
Held-to-maturity
 
 
Amortized Cost
 
Fair Value
 
Amortized Cost
 
Fair Value
 
 
(Dollars in thousands)
Due in one year or less
 
$
—

 
$
—

 
$
—

 
$
—

Due after one year through five years
 
4,913

 
4,871

 
—

 
—

Due after five years through ten years
 
11,236

 
11,271

 
—

 
—

Due after ten years
 
—

 
—

 
6,191

 
6,186

 
 
16,149

 
16,142

 
6,191

 
6,186

 
 
 
 
 
 
 
 
 
Mortgage-backed securities and collateralized mortgage obligations
 
540,268

 
521,974

 
58,339

 
57,807

SBA guaranteed securities
 
99,125

 
97,217

 
—

 
—

Total
 
$
655,542

 
$
635,333

 
$
64,530

 
$
63,993



There were twenty-nine and thirty-one sales of securities classified as available-for-sale during the six months ended June 30, 2018 and 2017, respectively. During the six months ended June 30, 2018, proceeds of $24.4 million were received from sales of securities classified as available-for-sale.  The sales resulted in a net gain of $66 thousand, which is comprised of $172 thousand in gross realized gains, offset by $106 thousand in gross realized losses. During the six months ended June 30, 2017, proceeds of $279.2 million were received from sales of securities classified as available-for-sale.  The sales resulted in a net gain of $294 thousand, which is comprised of $777 thousand in gross realized gains, offset by $483 thousand in gross realized losses. 

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 two general segments and applying the appropriate OTTI model. Investment securities classified as available-for-sale or held-to-maturity are evaluated for OTTI under FASB 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 June 30, 2018, 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 June 30, 2018, 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 June 30, 2018, 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 June 30, 2018.
Securities with unrealized losses segregated by length of continuous unrealized loss position as of the dates set forth were as follows:
 
 
June 30, 2018
 
 
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:
 
 
 
 
 
 
 
 
 
 
 
 
SBA guaranteed securities
 
$
89,688

 
$
(1,892
)
 
$
87,796

 
$
4,979

 
$
(90
)
 
$
4,889

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential
 
227,164

 
(7,095
)
 
220,069

 
—

 
—

 
—

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: commercial
 
52,887

 
(2,340
)
 
50,547

 
12,936

 
(483
)
 
12,453

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential
 
72,794

 
(1,481
)
 
71,313

 
138,497

 
(5,554
)
 
132,943

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: commercial
 
35,990

 
(1,341
)
 
34,649

 
—

 
—

 
—

Corporate debt securities
 
8,913

 
(61
)
 
8,852

 
—

 
—

 
—

Total
 
$
487,436

 
$
(14,210
)
 
$
473,226

 
$
156,412

 
$
(6,127
)
 
$
150,285

 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential
 
$
3,893

 
$
(78
)
 
$
3,815

 
$
6,017

 
$
(311
)
 
$
5,706

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: commercial
 
2,488

 
(90
)
 
2,398

 
—

 
—

 
—

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential
 
42,531

 
(138
)
 
42,393

 
—

 
—

 
—

Municipal bonds
 
6,191

 
(5
)
 
6,186

 
—

 
—

 
—

Total
 
$
55,103

 
$
(311
)
 
$
54,792

 
$
6,017

 
$
(311
)
 
$
5,706


 
 
December 31, 2017
 
 
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:
 
 
 
 
 
 
 
            
 
 
 
            
SBA guaranteed securities
 
$
76,603

 
$
(948
)
 
$
75,655

 
$
—

 
$
—

 
$
—

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential
 
192,105

 
(1,608
)
 
190,497

 
9,152

 
(93
)
 
9,059

Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: commercial
 
65,986

 
(500
)
 
65,486

 
—

 
—

 
—

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential
 
210,034

 
(6,183
)
 
203,851

 
9,037

 
(251
)
 
8,786

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: commercial
 
36,151

 
(472
)
 
35,679

 
—

 
—

 
—

Obligations of municipal subdivisions
 
6,436

 
(45
)
 
6,391

 
—

 
—

 
—

CRA qualified investment fund
 
—

 
—

 
—

 
11,337

 
(299
)
 
11,038

Total
 
$
587,315

 
$
(9,756
)
 
$
577,559

 
$
29,526

 
$
(643
)
 
$
28,883

 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities issued by U.S. government agencies or sponsored enterprises: residential
 
$
1,086

 
$
(9
)
 
$
1,077

 
$
6,265

 
$
(161
)
 
$
6,104

Collateralized mortgage obligations issued by U.S. government agencies or sponsored enterprises: residential
 
2,434

 
(20
)
 
2,414

 
—

 
—

 
—

Total
 
$
3,520

 
$
(29
)
 
$
3,491

 
$
6,265

 
$
(161
)
 
$
6,104



The average loss on securities in an unrealized loss position was 2.97% and 1.69% of the amortized cost basis at June 30, 2018 and December 31, 2017, respectively. There were nineteen and eighteen securities in an unrealized loss position of greater than 12 months at June 30, 2018 and December 31, 2017, respectively.

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 June 30, 2018 or December 31, 2017.

Securities with an amortized cost of $5.4 million and $6.3 million and fair value of $5.2 million and $6.3 million were pledged and available to be sold under repurchase agreements at June 30, 2018 and December 31, 2017, respectively. Securities with an amortized cost of $74.4 million and $55.7 million and fair value of $73.4 million and $55.5 million were pledged to various Federal Reserve Districts related to deposits of bankruptcy trustees at June 30, 2018 and December 31, 2017, respectively. In addition, securities with an amortized cost of $3.3 million and $3.4 million and fair value of $3.2 million and $3.3 million were pledged as collateral for the Company’s derivative instruments at June 30, 2018 and December 31, 2017, respectively.