3. INVESTMENT SECURITIES

Securities Available for Sale

Securities held for indefinite periods of time are classified as available for sale and carried at estimated fair value. The amortized cost and estimated fair values of securities available for sale are summarized as follows.


	June 30, 2018
			Gross		Gross		Estimated		Cumulative
	Amortized		Unrealized		Unrealized		Fair		OTTI in
	Cost		Gains		Losses		Value		AOCI ⁽¹⁾
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	144,867	$	8	$	1,060	$	143,815	$	0
State and political subdivisions		276,516		897		5,233		272,180		0
Residential mortgage-backed securities
Agency		913,926		766		24,562		890,130		0
Non-agency		4,306		487		0		4,793		86
Commercial mortgage-backed securities
Agency		513,212		127		11,936		501,403		0
Asset-backed securities		166,355		342		566		166,131		0
Trust preferred collateralized debt obligations		6,177		91		450		5,818		2,586
Single issue trust preferred securities		8,742		234		738		8,238		0
Other corporate securities		69,261		174		1,016		68,419		0

Total	$	2,103,362	$	3,126	$	45,561	$	2,060,927	$	2,672


	December 31, 2017
			Gross		Gross		Estimated		Cumulative
	Amortized		Unrealized		Unrealized		Fair		OTTI in
	Cost		Gains		Losses		Value		AOCI ⁽¹⁾
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	114,735	$	385	$	362	$	114,758	$	0
State and political subdivisions		303,101		3,197		2,429		303,869		0
Residential mortgage-backed securities
Agency		821,857		2,096		9,360		814,593		0
Non-agency		4,969		543		0		5,512		86
Commercial mortgage-backed securities
Agency		457,107		1,059		3,309		454,857		0
Asset-backed securities		109,829		148		7		109,970		0
Trust preferred collateralized debt obligations		37,856		542		4,129		34,269		20,770
Single issue trust preferred securities		13,417		368		1,225		12,560		0
Other corporate securities		28,101		407		18		28,490		0
Marketable equity securities		9,712		179		13		9,878		0

Total	$	1,900,684	$	8,924	$	20,852	$	1,888,756	$	20,856

(1)	Non-credit related other-than-temporary impairment in accumulated other comprehensive income. Amounts are before-tax.

The following is a summary of securities available-for-sale which were in an unrealized loss position at June 30, 2018 and December 31, 2017.


	Less than 12 months				12 months or longer
	Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses
June 30, 2018
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	116,482	$	964	$	22,771	$	97
State and political subdivisions		137,435		1,710		57,150		3,524
Residential mortgage-backed securities
Agency		664,630		16,051		190,576		8,511
Non-agency		0		0		0		0
Commercial mortgage-backed securities
Agency		415,526		10,289		69,225		1,647
Asset-backed securities		75,437		566		0		0
Trust preferred collateralized debt obligations		0		0		2,050		450
Single issue trust preferred securities		0		0		4,980		737
Other corporate securities		51,304		1,015		0		0

Total	$	1,460,814	$	30,595	$	346,752	$	14,966


	Less than 12 months				12 months or longer
	Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses
December 31, 2017
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	36,678	$	230	$	22,920	$	132
State and political subdivisions		82,896		566		59,432		1,863
Residential mortgage-backed securities
Agency		460,414		4,621		182,482		4,739
Non-agency		0		0		0		0
Commercial mortgage-backed securities
Agency		282,858		2,386		70,763		923
Asset-backed securities		27,931		7		0		0
Trust preferred collateralized debt obligations		0		0		28,629		4,129
Single issue trust preferred securities		0		0		4,485		1,225
Other corporate securities		6,975		18		0		0
Marketable equity securities		0		0		363		13

Total	$	897,752	$	7,828	$	369,074	$	13,024

The following table shows the proceeds from maturities, sales and calls of available for sale securities and the gross realized gains and losses on sales and calls of those securities that have been included in earnings as a result of those sales and calls. Gains or losses on sales and calls of available for sale securities were recognized by the specific identification method. The realized losses relate to sales of securities within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries.


	Three Months Ended June 30				Six Months Ended June 30
	2018		2017		2018		2017
Proceeds from sales and calls	$	75,157	$	468,506	$	174,860	$	567,304
Gross realized gains		58		845		1,221		1,059
Gross realized losses		85		82		1,397		82

At June 30, 2018, gross unrealized losses on available for sale securities were $45,561 on 668 securities of a total portfolio of 858 available for sale securities. Securities in an unrealized loss position at June 30, 2018 consisted primarily of state and political subdivision securities, and agency commercial and residential mortgage-backed securities. The state and political subdivisions securities relate to securities issued by various municipalities. The agency commercial and residential mortgage-backed securities relate to commercial and residential properties and provide a guaranty of full and timely payments of principal and interest by the issuing agency.

In determining whether or not a security is other-than-temporarily impaired (OTTI), management considered the severity and the duration of the loss in conjunction with United’s positive intent and the more likely than not ability to hold these securities to recovery of their cost basis or maturity.

State and political subdivisions

United’s state and political subdivisions portfolio relates to securities issued by various municipalities located throughout the United States. The total amortized cost of available for sale state and political subdivision securities was $276,516 at June 30, 2018. As of June 30, 2018, approximately 75% of the portfolio was supported by the general obligation of the issuing municipality, which allows for the securities to be repaid by any means available to the municipality. The majority of the portfolio was rated AA or higher, and less than one percent of the portfolio was rated below investment grade as of June 30, 2018. In addition to monitoring the credit ratings of these securities, management also evaluates the financial performance of the underlying issuers on an ongoing basis. Based upon management’s analysis and judgment, it was determined that none of the state and political subdivision securities were other-than-temporarily impaired at June 30, 2018.

Agency mortgage-backed securities

United’s agency mortgage-backed securities portfolio relates to securities issued by Fannie Mae, Freddie Mac, and Ginnie Mae. The total amortized cost of available for sale agency mortgage-backed securities was $1,427,138 at June 30, 2018. Of the $1,427,138 amount, $513,212 was related to agency commercial mortgage-backed securities and $913,926 was related to agency residential mortgage-backed securities. Each of the agency mortgage-backed securities provides a guarantee of full and timely payments of principal and interest by the issuing agency. Based upon management’s analysis and judgment, it was determined that none of the agency mortgage-backed securities were other-than-temporarily impaired at June 30, 2018.

Non-agency residential mortgage-backed securities

United’s non-agency residential mortgage-backed securities portfolio relates to securities of various private label issuers. The total amortized cost of available for sale non-agency residential mortgage-backed securities was $4,306 at June 30, 2018. Of the $4,306 amount, $250 was rated above investment grade and $4,056 was rated below investment grade. The entire portfolio of the non-agency residential mortgage-backed securities are either the senior or super-senior tranches of their respective structure. Based upon management’s analysis and judgment, it was determined that none of the non-agency mortgage-backed securities were other-than-temporarily impaired at June 30, 2018.

Single issue trust preferred securities

The majority of United’s single issue trust preferred portfolio consists of obligations from large cap banks (i.e. banks with market capitalization in excess of $10 billion). Management reviews each issuer’s current and projected earnings trends, asset quality, capitalization levels, and other key factors. Upon completing the review for the second quarter of 2018, it was determined that none of the single issue trust preferred securities were other-than-temporarily impaired. All single issue trust preferred securities are currently receiving interest payments. The amortized cost of available for sale single issue trust preferred securities as of June 30, 2018 consisted of $3,024 in investment grade bonds and $5,718 in unrated bonds. The investment grade bonds were rated BBB-. All of the unrated bonds were in an unrealized loss position for twelve months or longer as of June 30, 2018.

Trust preferred collateralized debt obligations (Trup Cdos)

The total amortized cost balance of United’s Trup Cdo portfolio was $6,177 as of June 30, 2018. For any securities in an unrealized loss position, the Company first assesses its intentions regarding any sale of securities as well as the likelihood that it would be required to sell prior to recovery of the amortized cost. As of June 30, 2018, the Company has determined that it does not intend to sell any Trup Cdo and that it is not more likely than not that the Company will be required to sell such securities before recovery of their amortized cost.

To determine a net realizable value and assess whether other-than-temporary impairment existed, management performed detailed cash flow analysis to determine whether, in management’s judgment, it was more likely that United would not recover the entire amortized cost basis of the security. Except for the debt securities that have already been deemed to be other-than-temporarily impaired, management does not believe any other individual security with an unrealized loss as of June 30, 2018 is other-than-temporarily impaired.

Corporate securities

As of June 30, 2018, United’s Corporate securities portfolio had a total amortized cost balance of $69,261. The majority of the portfolio consisted of debt issuances of corporations representing a variety of industries, including financial institutions. Of the $69,261, 70% was investment grade rated and 30% was unrated. For corporate securities, management has evaluated the near-term prospects of the investment in relation to the severity and duration of any impairment and based on that evaluation, management determined that no corporate securities were other-than-temporarily impaired at June 30, 2018.

Below is a progression of the credit losses on securities which United has recorded other-than-temporary charges. These charges were recorded through earnings and other comprehensive income.


	Three Months Ended June 30				Six Months Ended June 30
	2018		2017		2018			2017
Balance of cumulative credit losses at beginning of period	$	3,199	$	22,162	$	18,060		$	22,162
Reductions for securities sold or paid off during the period		0		0		(14,861	)		0

Balance of cumulative credit losses at end of period	$	3,199	$	22,162	$	3,199		$	22,162

The amortized cost and estimated fair value of securities available for sale at June 30, 2018 and December 31, 2017 by contractual maturity are shown as follows. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties.


	June 30, 2018				December 31, 2017
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	68,381	$	68,272	$	50,311	$	50,212
Due after one year through five years		510,595		503,142		386,039		384,585
Due after five years through ten years		447,739		435,727		400,129		398,208
Due after ten years		1,076,647		1,053,786		1,054,493		1,045,873
Marketable equity securities		0		0		9,712		9,878

Total	$	2,103,362	$	2,060,927	$	1,900,684	$	1,888,756

Securities Held to Maturity

The amortized cost and estimated fair values of securities held to maturity are summarized as follows:


	June 30, 2018
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	5,132	$	181	$	0	$	5,313
State and political subdivisions		5,798		9		0		5,807
Residential mortgage-backed securities
Agency		21		3		0		24
Single issue trust preferred securities		9,407		0		863		8,544
Other corporate securities		20		0		0		20

Total	$	20,378	$	193	$	863	$	19,708


	December 31, 2017
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	$	5,187	$	308	$	0	$	5,495
State and political subdivisions		5,797		10		0		5,807
Residential mortgage-backed securities
Agency		23		3		0		26
Single issue trust preferred securities		9,401		0		731		8,670
Other corporate securities		20		0		0		20

Total	$	20,428	$	321	$	731	$	20,018

Even though the market value of the held-to-maturity investment portfolio is less than its cost, the unrealized loss has no impact on the net worth or regulatory capital requirements of United. As of June 30, 2018, the Company’s largest held-to-maturity single-issue trust preferred exposure was to SunTrust Bank ($7,430). The two held-to-maturity single-issue trust preferred exposures with at least one rating below investment grade included SunTrust Bank ($7,430) and Royal Bank of Scotland ($976).

There were no gross realized gains or losses on calls and sales of held to maturity securities included in earnings for the second quarter and first six months of 2018 and 2017.

The amortized cost and estimated fair value of debt securities held to maturity at June 30, 2018 and December 31, 2017 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because the issuers may have the right to call or prepay obligations without penalties.


	June 30, 2018				December 31, 2017
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	2,000	$	2,000	$	0	$	0
Due after one year through five years		7,290		7,478		9,344		9,660
Due after five years through ten years		8,092		7,610		5,663		5,343
Due after ten years		2,996		2,620		5,421		5,015

Total	$	20,378	$	19,708	$	20,428	$	20,018

Equity securities at fair value

Equity securities consist mainly of equity securities of financial institutions and mutual funds within a rabbi trust for the payment of benefits under a deferred compensation plan for certain key officers of United and its subsidiaries. The fair value of United’s equity securities was $9,664 at June 30, 2018. Prior to the adoption of ASU No. 2016-01 on January 1, 2018, equity securities were included in available for sale securities.


	Three Months Ended June 30, 2018			Six Months Ended June 30, 2018
Net gains (losses) recognized during the period	$	(28	)	$	(64	)
Net gains (losses) recognized during the period on equity securities sold		(4	)		(2	)
Unrealized gains recognized during the period on equity securities still held at period end		11			50
Unrealized losses recognized during the period on equity securities still held at period end		35			112

Other investment securities

During the second quarter of 2018, United evaluated all of its cost method investments to determine if certain events or changes in circumstances during the second quarter of 2018 had a significant adverse effect on the fair value of any of its cost method securities. United determined that there was no individual security that experienced an adverse event during the second quarter. There were no other events or changes in circumstances during the second quarter which would have an adverse effect on the fair value of its cost method securities.

The carrying value of securities pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law, approximated $1,735,336 and $1,403,565 at June 30, 2018 and December 31, 2017, respectively.