Securities

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Securities

Note D

Securities

The amortized cost and fair value of secuities available for sale and held for investment at December 31, 2014 and December 31, 2013 are summarized as follows:

	December 31, 2014
	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	3,876	$	23	$	0	$	3,899
Mortgage-backed securities of U.S. Government Sponsored Entities		123,981		1,501		(423)		125,059
Collateralized mortgage obligations of U.S. Government Sponsored Entities		352,483		1,075		(6,077)		347,481
Private mortgage-backed securities		29,967		291		0		30,258
Private collateralized mortgage obligations		85,175		688		(728)		85,135
Collateralized loan obligations		127,397		0		(2,172)		125,225
Obligations of state and political subdivisions		23,511		810		(3)		24,318
	$	746,390	$	4,388	$	(9,403)	$	741,375
SECURITIES HELD FOR INVESTMENT
Mortgage-backed securities of U.S. Government Sponsored Entities	$	67,535	$	812	$	0	$	68,347
Collateralized mortgage obligations of U.S. Government Sponsored Entities		114,541		695		(280)		114,956
Collateralized loan obligations		25,828		0		(343)		25,485
	$	207,904	$	1,507	$	(623)	$	208,788

	December 31, 2013
	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	100	$	0	$	0	$	100
Mortgage-backed securities of U.S. Government Sponsored Entities		129,468		1,456		(4,189)		126,735
Collateralized mortgage obligations of U.S. Government Sponsored Entities		383,392		776		(14,747)		369,421
Private mortgage-backed securities		29,800		0		(226)		29,574
Private collateralized mortgage obligations		76,520		731		(413)		76,838
Collateralized loan obligations		32,592		0		(413)		32,179
Obligations of state and political subdivisions		6,586		193		(15)		6,764
	$	658,458	$	3,156	$	(20,003)	$	641,611
SECURITIES HELD FOR INVESTMENT
Mortgage-backed securities of U.S. Government Sponsored Entities	$	0	$	0	$	0	$	0
Collateralized mortgage obligations of U.S. Government Sponsored Entities		0		0		0		0
Collateralized loan obligations		0		0		0		0
	$	0	$	0	$	0	$	0

Proceeds from sales of securities during 2014 were $21,514,000  with gross gains of $456,000 and gross losses of $0. Proceeds from sales of securities during 2013 were $67,330,000 with gross gains of $792,000 and gross losses of $373,000. Proceeds from sales of securities during 2012 were $256,102,000 with gross gains of $7,833,000 and gross losses of $214,000.

Securities with a carrying and fair value of $107,660,000 and $107,500,000, respectively, at December 31, 2014, were pledged as collateral for United States Treasury deposits, other public deposits and trust deposits. Securities with a carrying and fair value of $232,677,000 and $227,620,000, respectively, were pledged as collateral for repurchase agreements.

On May 31, 2014, management identified $158.8 million of investment securities available for sale and transferred them to held for investment. The unrealized holding losses at the date of transfer totaled $3.1 million. The securities that were transferred into the held for investment category from the available for sale category, the unrealized losses at the date of transfers will continue to be reported in other comprehensive income, and will be amortized over the remaining life of the secuiruty as an adjustment of yield consistent with the amortization of a discount. The amortization of unrealized holding losses reported in equity will offset the effect or interest income of the amortization of the discount.

 

The amortized cost and fair value of securities at December 31, 2014, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.

	Held for Investment				Available for Sale
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(In thousands)				(In thousands)
Due in less than one year	$	0	$	0	$	0	$	0
Due after one year through five years		0		0		842		847
Due after five years through ten years		0		0		24,239		24,178
Due after ten years		0		0		129,703		128,417
		0		0		154,784		153,442
Mortgage-backed securities of U.S. Government Sponsored Entities		67,535		68,347		123,981		125,059
Collateralized mortgage obligations of U.S. Government Sponsored Entities		114,541		114,956		352,483		347,481
Private mortgage-backed securities		0		0		29,967		30,258
Collateralized loan obligations		25,828		25,485		85,175		85,135
	$	207,904	$	208,788	$	746,390	$	741,375

The estimated fair value of a security is determined based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flows analyses, using observable market data where available. The tables below indicate the amount of securities with unrealized losses and period of time for which these losses were outstanding at December 31, 2014 and December 31, 2013, respectively.

	December 31, 2014
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	100	$	0	$	0	$	0	$	100	$	0
Mortgage-backed securities of U.S. Government Sponsored Entities		36,890		(153)		21,640		(271)		58,530		(424)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		100,148		(833)		170,400		(5,523)		270,548		(6,356)
Private collateralized mortgage obligations		61,554		(914)		10,091		(157)		71,645		(1,071)
Collateralized loan obligations		100,714		(1,769)		24,511		(403)		125,225		(2,172)
Obligations of state and political subdivisions		1,734		(3)		0		0		1,734		(3)
Total temporarily impaired securities	$	301,140	$	(3,672)	$	226,642	$	(6,354)	$	527,782	$	(10,026)

	December 31, 2013
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
Mortgage-backed securities of U.S. Government Sponsored Entities	$	33,425	$	(2,045)	$	35,043	$	(2,144)	$	68,468	$	(4,189)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		287,312		(12,450)		45,657		(2,297)		332,969		(14,747)
Private mortgage-backed securities		29,574		(226)		0		0		29,574		(226)
Private collateralized mortgage obligations		47,653		(413)		0		0		47,653		(413)
Collateralized loan obligations		32,179		(413)		0		0		32,179		(413)
Obligations of state and political subdivisions		502		(14)		125		(1)		627		(15)
Total temporarily impaired securities	$	430,645	$	(15,561)	$	80,825	$	(4,442)	$	511,470	$	(20,003)

At December 31, 2014, approximately $1.1 million of the unrealized losses pertain to private label securities secured by collateral originated in 2005 and prior. Their fair value is $71.6 million and is attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The collateral underlying these mortgage investments are 30- and 15-year fixed and 10/1 adjustable rate mortgage loans with low loan to values, subordination and historically have had minimal foreclosures and losses. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At December 31, 2014, the Company also had $6.8 million of unrealized losses on collateralized mortgage obligations and mortgage backed securities of government sponsored entities having a fair value of $329.1 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Based on its assessment of these factors , management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At December 31, 2014, the Company also had $2.2 million of unrealized losses on collateralized loan obligations having a fair value of $125.2 million that were attributable to a combination of factors, including relative changes in interest rates, spreads and interest movements since the time of purchase. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

As of December 31, 2014, management does not intend to sell securities that are in unrealized loss positions and it is not more likely than not that the Company will be required to sell these securities before recovery of the amortized cost basis. Therefore, management does not consider any investment to be other-than-temporarily impaired at December 31, 2014.

Included in other assets is $16.3 million of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. At December 31, 2014, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $16.3 million of cost method investment securities.