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Securities
 12 Months Ended
Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract]  
Securities
Securities
(In Thousands, Except Number of Securities)
The amortized cost and fair value of securities held to maturity were as follows as of the dates presented:
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
December 31, 2017
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
—

 
$
—

 
$
—

 
$
—

Obligations of states and political subdivisions
—

 
—

 
—

 
—

 
$
—

 
$
—

 
$
—

 
$
—

December 31, 2016
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
14,101

 
$
4

 
$
(187
)
 
$
13,918

Obligations of states and political subdivisions
342,181

 
8,572

 
(1,778
)
 
348,975

 
$
356,282

 
$
8,576

 
$
(1,965
)
 
$
362,893


In light of the ongoing fiscal uncertainty in many state and local governments, and the fact that the Company’s held to maturity portfolio has historically consisted primarily of municipal securities, the Company analyzes its exposure to potential losses in its security portfolio on at least a quarterly basis. Management reviews the underlying credit rating and analyzes the financial condition of the respective issuers. Although the Company’s analysis of its securities portfolio in the third quarter of 2017 showed that the municipal securities held by the Company had not experienced significant deterioration as of the date of such analysis, the Company transferred all held to maturity securities to available for sale during the third quarter of 2017. This transfer gives management the flexibility to quickly liquidate any municipal securities should further analysis reveal more significant deterioration than has been experienced to date. At the date of transfer, the securities transferred had a carrying value of $365,941, which included an unrealized gain of $13,219. At transfer, the unrealized gain was included in the carrying value of the securities portfolio and in accumulated other comprehensive loss presented in the Consolidated Balance Sheet.
The amortized cost and fair value of securities available for sale were as follows as of the dates presented:
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
December 31, 2017
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
3,554

 
$
40

 
$
(30
)
 
$
3,564

Obligations of states and political subdivisions
228,589

 
6,161

 
(269
)
 
234,481

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
196,121

 
888

 
(3,059
)
 
193,950

Government agency collateralized mortgage obligations
180,258

 
133

 
(3,752
)
 
176,639

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
31,015

 
389

 
(234
)
 
31,170

Government agency collateralized mortgage obligations
5,019

 
1

 
(14
)
 
5,006

Trust preferred securities
12,442

 
—

 
(3,054
)
 
9,388

Other debt securities
17,106

 
260

 
(76
)
 
17,290

 
$
674,104

 
$
7,872

 
$
(10,488
)
 
$
671,488

 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
December 31, 2016
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
$
2,066

 
$
92

 
$
—

 
$
2,158

Residential mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
414,019

 
1,941

 
(6,643
)
 
409,317

Government agency collateralized mortgage obligations
171,362

 
831

 
(3,367
)
 
168,826

Commercial mortgage backed securities:
 
 
 
 
 
 
 
Government agency mortgage backed securities
50,628

 
696

 
(461
)
 
50,863

Government agency collateralized mortgage obligations
2,528

 
38

 
(16
)
 
2,550

Trust preferred securities
23,749

 
—

 
(5,360
)
 
18,389

Other debt securities
22,053

 
310

 
(218
)
 
22,145

Other equity securities
—

 
—

 
—

 
—

 
$
686,405

 
$
3,908

 
$
(16,065
)
 
$
674,248


Securities sold during the twelve months ended December 31, 2017, all of which were securities available for sale, were as follows:
 
Carrying Value
 
Net Proceeds
 
Gain/(Loss)
Obligations of other U.S. Government agencies and corporations
$
11,088

 
$
10,974

 
$
(114
)
Obligations of states and political subdivisions
110,019

 
112,199

 
2,180

Residential mortgage backed securities:
 
 
 
 
 
Government agency mortgage backed securities
264,924

 
263,217

 
(1,707
)
Government agency collateralized mortgage obligations
72,153

 
71,781

 
(372
)
Commercial mortgage backed securities:
 
 
 
 
 
Government agency mortgage backed securities
14,104

 
14,082

 
(22
)
Government agency collateralized mortgage obligations
6,289

 
6,289

 
—

Trust preferred securities
9,346

 
9,403

 
57

Other debt securities
7,269

 
7,395

 
126

 
$
495,192

 
$
495,340

 
$
148


Included in the table above are certain securities acquired from Metropolitan sold shortly after acquisition. These securities had an aggregate carrying value of $36,021 at the time of sale, and the Company received net proceeds of $36,021, resulting in no gain or loss on the sale.
Also included in the table above are certain securities sold by the Company during the fourth quarter of 2017 in an effort to manage its consolidated assets below $10,000,000 at December 31, 2017, in order to delay the adverse impact of the Durbin Amendment to the Dodd-Frank Act, which applies to banking institutions with assets over $10,000,000 at year-end. The Durbin Amendment, among other things, imposes limitations on the amount of debit card interchange fees certain banking institutions may collect. Securities sold to achieve this strategy had an aggregate carrying value of $446,880 on the dates of sale, and the Company collected net proceeds of $446,971, resulting in a $91 net gain on the sales.
During the twelve months ended December 31, 2016 and 2015, the Company sold securities with a carrying value at the time of sale of $2,842 and $1,117, respectively, for net proceeds of $4,028 and $1,213, respectively, resulting in a gain of $1,186 and $96, respectively. Also in 2015, the Company sold certain investments acquired from Heritage shortly after acquisition with an aggregate carrying value of $7,231 at the time of sale for net proceeds of $7,231, resulting in no gain or loss on the sale.
Gross realized gains and gross realized losses on sales of securities available for sale were as follows for the periods presented:
 
Year Ended December 31,
 
2017
 
2016
 
2015
Gross gains on sales of securities available for sale
$
2,497

 
$
1,257

 
$
96

Gross losses on sales of securities available for sale
(2,349
)
 
(71
)
 
—

Gain on sales of securities available for sale, net
$
148

 
$
1,186

 
$
96


At December 31, 2017 and 2016, securities with a carrying value of approximately $217,867 and $642,447, respectively, were pledged to secure government, public, trust, and other deposits. Securities with a carrying value of $25,888 and $24,426 were pledged as collateral for short-term borrowings and derivative instruments at December 31, 2017 and 2016, respectively.
The amortized cost and fair value of securities at December 31, 2017 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.
 
Available for Sale
 
Amortized
Cost
 
Fair
Value
Due within one year
$
23,584

 
$
23,843

Due after one year through five years
71,430

 
73,379

Due after five years through ten years
81,302

 
83,212

Due after ten years
75,410

 
74,292

Residential mortgage backed securities:
 
 
 
Government agency mortgage backed securities
196,121

 
193,950

Government agency collateralized mortgage obligations
180,258

 
176,639

Commercial mortgage backed securities:
 
 
 
Government agency mortgage backed securities
31,015

 
31,170

Government agency collateralized mortgage obligations
5,019

 
5,006

Other debt securities
9,965

 
9,997

 
$
674,104

 
$
671,488


The following table presents the gross unrealized losses and fair value of investment securities, aggregated by investment category and the length of time the investments have been in a continuous unrealized loss position, as of the dates presented:
 
Less than 12 Months
 
12 Months or More
 
Total
 
#
 
Fair
Value
 
Unrealized
Losses
 
#
 
Fair
Value
 
Unrealized
Losses
 
#
 
Fair
Value
 
Unrealized
Losses
Held to Maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
4
 
$
11,915

 
$
(187
)
 
0
 
$
—

 
$
—

 
4
 
$
11,915

 
$
(187
)
Obligations of states and political subdivisions
102
 
83,362

 
(1,778
)
 
0
 
—

 
—

 
102
 
83,362

 
(1,778
)
Total
106
 
$
95,277

 
$
(1,965
)
 
0
 
$
—

 
$
—

 
106
 
$
95,277

 
$
(1,965
)
 
Less than 12 Months
 
12 Months or More
 
Total
 
#
 
Fair
Value
 
Unrealized
Losses
 
#
 
Fair
Value
 
Unrealized
Losses
 
#
 
Fair
Value
 
Unrealized
Losses
Available for Sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
1
 
$
497

 
$
(3
)
 
2
 
$
1,999

 
$
(27
)
 
3
 
$
2,496

 
$
(30
)
Obligations of states and political subdivisions
23
 
11,860

 
(59
)
 
12
 
7,728

 
(210
)
 
35
 
$
19,588

 
$
(269
)
Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
29
 
64,595

 
(659
)
 
44
 
89,414

 
(2,400
)
 
73
 
154,009

 
(3,059
)
Government agency collateralized mortgage obligations
33
 
102,509

 
(1,470
)
 
29
 
62,406

 
(2,282
)
 
62
 
164,915

 
(3,752
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
2
 
5,629

 
(17
)
 
3
 
5,872

 
(217
)
 
5
 
11,501

 
(234
)
Government agency collateralized mortgage obligations
1
 
4,986

 
(14
)
 
0
 
—

 
—

 
1
 
4,986

 
(14
)
Trust preferred securities
0
 
—

 
—

 
2
 
9,388

 
(3,054
)
 
2
 
9,388

 
(3,054
)
Other debt securities
2
 
756

 
(12
)
 
2
 
6,308

 
(64
)
 
4
 
7,064

 
(76
)
Other equity securities

 
—

 
—

 
0
 
—

 
—

 
0
 
—

 
—

Total
91
 
$
190,832

 
$
(2,234
)
 
94
 
$
183,115

 
$
(8,254
)
 
185
 
$
373,947

 
$
(10,488
)
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of other U.S. Government agencies and corporations
0
 
$
—

 
$
—

 
0
 
$
—

 
$
—

 
0
 
$
—

 
$
—

Residential mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
131
 
298,400

 
(6,042
)
 
5
 
11,504

 
(601
)
 
136
 
309,904

 
(6,643
)
Government agency collateralized mortgage obligations
40
 
97,356

 
(1,845
)
 
14
 
33,786

 
(1,522
)
 
54
 
131,142

 
(3,367
)
Commercial mortgage backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency mortgage backed securities
9
 
21,933

 
(453
)
 
2
 
1,101

 
(8
)
 
11
 
23,034

 
(461
)
Government agency collateralized mortgage obligations
1
 
1,729

 
(16
)
 
0
 
—

 
—

 
1
 
1,729

 
(16
)
Trust preferred securities
0
 
—

 
—

 
3
 
18,389

 
(5,360
)
 
3
 
18,389

 
(5,360
)
Other debt securities
3
 
7,946

 
(208
)
 
2
 
2,475

 
(10
)
 
5
 
10,421

 
(218
)
Other equity securities
0
 
—

 
—

 
0
 
—

 
—

 
0
 
—

 
—

Total
184
 
$
427,364

 
$
(8,564
)
 
26
 
$
67,255

 
$
(7,501
)
 
210
 
$
494,619

 
$
(16,065
)

The Company does not intend to sell any of the securities in an unrealized loss position, and it is not more likely than not that the Company will be required to sell any such security prior to the recovery of its amortized cost basis, which may be maturity. Furthermore, even though a number of these securities have been in a continuous unrealized loss position for a period greater than twelve months, the Company is collecting principal and interest payments from the respective issuers as scheduled. As such, the Company did not record any other-than-temporary impairment for the years ended December 31, 2017 or 2016.
The Company holds investments in pooled trust preferred securities that had a cost basis of $12,442 and $23,749 and a fair value of $9,388 and $18,389 at December 31, 2017 and 2016, respectively. During 2017, the Company sold one of its pooled trust preferred securities. As of December 31, 2017, the investments in pooled trust preferred securities consisted of two securities representing interests in various tranches of trusts collateralized by debt issued by over 160 financial institutions. Management’s determination of the fair value of each of its holdings in pooled trust preferred securities is based on the current credit ratings, the known deferrals and defaults by the underlying issuing financial institutions and the degree to which future deferrals and defaults would be required to occur before the cash flow for the Company’s tranches is negatively impacted. In addition, management continually monitors key credit quality and capital ratios of the issuing institutions. This determination is further supported by quarterly valuations, which are performed by third parties, of each security obtained by the Company. The Company does not intend to sell the investments, and it is not more likely than not that the Company will be required to sell the investments, before recovery of the investments’ amortized cost, which may be at maturity. At December 31, 2017, management did not, and does not currently, believe such securities will be settled at a price less than the amortized cost of the investment, but the Company previously concluded that it was probable that there had been an adverse change in estimated cash flows for both remaining trust preferred securities and recognized credit related impairment losses on these securities in 2010 and 2011. For the years ended December 31, 2017, 2016 and 2015, the Company determined the pooled trust preferred securities and their estimated cash flow were fairly valued, and no additional impairment was recognized during these periods.
The following table provides information regarding the Company’s investments in pooled trust preferred securities at December 31, 2017:
Name
 
Single/
Pooled
 
Class/
Tranche
 
Amortized
Cost
 
Fair
Value
 
Unrealized
Loss
 
Lowest
Credit
Rating
 
Issuers
Currently
in Deferral
or Default
XXIII
 
Pooled
 
B-2
 
$
8,310

 
$
6,086

 
$
(2,224
)
 
BB
 
16%
XXVI
 
Pooled
 
B-2
 
4,132

 
3,302

 
(830
)
 
Ba1
 
19%
 
 
 
 
 
 
$
12,442

 
$
9,388

 
$
(3,054
)
 
 
 
 

The following table provides a summary of the cumulative credit related losses recognized in earnings for which a portion of OTTI has been recognized in other comprehensive income:
 
2017
 
2016
Balance at January 1
$
(3,337
)
 
$
(3,337
)
Additions related to credit losses for which OTTI was not previously recognized
—

 
—

Increases in credit loss for which OTTI was previously recognized
—

 
—

Reductions for securities sold during the period
$
3,076

 
$
—

Balance at December 31
$
(261
)
 
$
(3,337
)