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Securities
 12 Months Ended
Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]  
Securities
Note D
Securities
 
The amortized cost and fair value of securities available for sale and held to maturity at December 31, 2016 and December 31, 2015 are summarized as follows:
 
 
 
December 31, 2016
 
 
 
 
 
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
 
$
12,073
 
$
255
 
$
0
 
$
12,328
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
 
287,726
 
 
585
 
 
(4,823)
 
 
283,488
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
238,805
 
 
314
 
 
(5,065)
 
 
234,054
 
Commercial mortgage backed securities of U.S. Government Sponsored Entities
 
 
22,351
 
 
222
 
 
(28)
 
 
22,545
 
Private mortgage backed securities
 
 
32,780
 
 
0
 
 
(791)
 
 
31,989
 
Private collateralized mortgage obligations
 
 
67,542
 
 
563
 
 
(816)
 
 
67,289
 
Collateralized loan obligations
 
 
124,716
 
 
838
 
 
(665)
 
 
124,889
 
Obligations of state and political subdivisions
 
 
63,161
 
 
622
 
 
(895)
 
 
62,888
 
Corporate and other debt securities
 
 
74,121
 
 
257
 
 
(517)
 
 
73,861
 
Private commercial mortgage backed securities
 
 
37,534
 
 
111
 
 
(473)
 
 
37,172
 
 
 
$
960,809
 
$
3,767
 
$
(14,073)
 
$
950,503
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SECURITIES HELD TO MATURITY
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
$
159,941
 
$
704
 
$
(1,243)
 
$
159,402
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
147,208
 
 
386
 
 
(2,630)
 
 
144,964
 
Commercial mortgage backed securities of U.S. Government Sponsored Entities
 
 
17,375
 
 
233
 
 
(74)
 
 
17,534
 
Collateralized loan obligations
 
 
41,547
 
 
430
 
 
(314)
 
 
41,663
 
Private mortgage backed securities
 
 
6,427
 
 
0
 
 
(109)
 
 
6,318
 
 
 
$
372,498
 
$
1,753
 
$
(4,370)
 
$
369,881
 
 
 
 
December 31, 2015
 
 
 
 
 
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
 
$
3,833
 
$
78
 
$
0
 
$
3,911
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
 
192,224
 
 
847
 
 
(1,322)
 
 
191,749
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
242,620
 
 
470
 
 
(4,900)
 
 
238,190
 
Private mortgage-backed securities
 
 
32,558
 
 
0
 
 
(766)
 
 
31,792
 
Private collateralized mortgage obligations
 
 
77,965
 
 
700
 
 
(708)
 
 
77,957
 
Collateralized loan obligations
 
 
124,477
 
 
0
 
 
(1,894)
 
 
122,583
 
Obligations of state and political subdivisions
 
 
39,119
 
 
882
 
 
(110)
 
 
39,891
 
Corporate and other debt securities
 
 
44,652
 
 
37
 
 
(416)
 
 
44,273
 
Private commercial mortgage backed securities
 
 
41,127
 
 
13
 
 
(720)
 
 
40,420
 
 
 
$
798,575
 
$
3,027
 
$
(10,836)
 
$
790,766
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SECURITIES HELD TO MATURITY
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
$
64,993
 
$
574
 
$
(16)
 
$
65,551
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
89,265
 
 
581
 
 
(406)
 
 
89,440
 
Collateralized loan obligations
 
 
41,300
 
 
0
 
 
(1,360)
 
 
39,940
 
Private mortgage backed securities
 
 
7,967
 
 
0
 
 
(85)
 
 
7,882
 
 
 
$
203,525
 
$
1,155
 
$
(1,867)
 
$
202,813
 
 
Proceeds from sales of securities during 2016 were $40.4 million with gross gains of $454,000 and gross losses of $86,000. Proceeds from sales of securities during 2015 were $60.3 million with gross gains of $633,000 and gross losses of $472,000. Proceeds from sales of securities during 2014 were $21.5 million with gross gains of $456,000 and no gross losses.
 
In 2014, approximately $158.8 million of investment securities available for sale were transferred into held to maturity. The unrealized holding losses at the date of transfer totaled $3.1 million for the securities transferred into the held to maturity category from available for sale, the unrealized holding losses at the date of transfer will continue to be reported in other comprehensive income, and will be amortized over the remaining life of these security 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. As of December 31, 2016, the remaining unrealized holding losses totaled $1.8 million.
 
Securities at December 31, 2016 with a fair value of $193.8 million were pledged as collateral for United States Treasury deposits, other public deposits and trust deposits. Securities with fair value of $204.2 were pledged as collateral for repurchase agreements.
 
The amortized cost and fair value of securities at December 31, 2016, 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. Securities not due at a single maturity date are shown separately.
 
 
 
Held to Maturity
 
Available for Sale
 
 
 
Amortized
 
Fair
 
Amortized
 
Fair
 
 
 
Cost
 
Value
 
Cost
 
Value
 
 
 
(In thousands)
 
Due in less than one year
 
$
0
 
$
0
 
$
8,848
 
$
9,044
 
Due after one year through five years
 
 
0
 
 
0
 
 
83,308
 
 
83,154
 
Due after five years through ten years
 
 
41,547
 
 
41,663
 
 
139,611
 
 
140,167
 
Due after ten years
 
 
0
 
 
0
 
 
31,415
 
 
30,709
 
 
 
 
41,547
 
 
41,663
 
 
263,182
 
 
263,074
 
Mortgage-backed securities of U.S. Government Sponsored Entities
 
 
159,941
 
 
159,402
 
 
287,726
 
 
283,488
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
147,208
 
 
144,964
 
 
238,805
 
 
234,054
 
Commercial mortgage backed securities of U.S. Government Sponsored Entities
 
 
17,375
 
 
17,534
 
 
22,351
 
 
22,545
 
Private mortgage-backed securities
 
 
0
 
 
0
 
 
32,780
 
 
31,989
 
Private collateralized mortgage obligations
 
 
6,427
 
 
6,318
 
 
67,542
 
 
67,289
 
Other debt securities
 
 
0
 
 
0
 
 
10,889
 
 
10,892
 
Private commercial mortgage backed securities
 
 
0
 
 
0
 
 
37,534
 
 
37,172
 
 
 
$
372,498
 
$
369,881
 
$
960,809
 
$
950,503
 
 
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, 2016 and December 31, 2015, respectively. 
 
 
 
December 31, 2016
 
 
 
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
 
$
327,759
 
$
(5,991)
 
$
5,387
 
$
(75)
 
$
333,146
 
$
(6,066)
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
234,175
 
 
(5,599)
 
 
58,912
 
 
(2,096)
 
 
293,087
 
 
(7,695)
 
Commercial mortgage backed securities of U.S. Government Sponsored Entities
 
 
7,934
 
 
(102)
 
 
0
 
 
0
 
 
7,934
 
 
(102)
 
Private mortgage backed securities
 
 
0
 
 
0
 
 
36,848
 
 
(900)
 
 
36,848
 
 
(900)
 
Private collateralized mortgage obligations
 
 
1,460
 
 
0
 
 
38,417
 
 
(816)
 
 
39,877
 
 
(816)
 
Collateralized loan obligations
 
 
8,152
 
 
(41)
 
 
51,694
 
 
(938)
 
 
59,846
 
 
(979)
 
Obligations of state and political subdivisions
 
 
39,321
 
 
(895)
 
 
0
 
 
0
 
 
39,321
 
 
(895)
 
Corporate and other debt securities
 
 
33,008
 
 
(517)
 
 
0
 
 
0
 
 
33,008
 
 
(517)
 
Private commercial mortgage backed securities
 
 
12,667
 
 
(306)
 
 
7,139
 
 
(167)
 
 
19,806
 
 
(473)
 
Total temporarily impaired securities
 
$
664,476
 
$
(13,451)
 
$
198,397
 
$
(4,992)
 
$
862,873
 
$
(18,443)
 
   
 
 
December 31, 2015
 
 
 
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
 
$
112,236
 
$
(1,082)
 
$
14,508
 
$
(256)
 
$
126,744
 
$
(1,338)
 
Collateralized mortgage obligations of U.S. Government Sponsored Entities
 
 
97,512
 
 
(973)
 
 
147,266
 
 
(4,333)
 
 
244,778
 
 
(5,306)
 
Private mortgage-backed securities
 
 
31,792
 
 
(766)
 
 
0
 
 
0
 
 
31,792
 
 
(766)
 
Private collateralized mortgage obligations
 
 
19,939
 
 
(321)
 
 
31,533
 
 
(472)
 
 
51,472
 
 
(793)
 
Collateralized loan obligations
 
 
101,601
 
 
(1,642)
 
 
60,922
 
 
(1,612)
 
 
162,523
 
 
(3,254)
 
Obligations of state and political subdivisions
 
 
11,570
 
 
(110)
 
 
0
 
 
0
 
 
11,570
 
 
(110)
 
Corporate and other debt securities
 
 
31,342
 
 
(416)
 
 
0
 
 
0
 
 
31,342
 
 
(416)
 
Private commercial mortgage-backed securities
 
 
37,838
 
 
(720)
 
 
0
 
 
0
 
 
37,838
 
 
(720)
 
Total temporarily impaired securities
 
$
443,830
 
$
(6,030)
 
$
254,229
 
$
(6,673)
 
$
698,059
 
$
(12,703)
 
 
The two tables above include securities held to maturity that were transferred from available for sale into held to maturity in 2014. Those securities had unrealized losses of $3.1 million at the date of transfer, and at December 31, 2016, the unamortized balance was $1.8 million. The fair value of those securities in an unrealized loss position for less than 12 months at December 31, 2016 and December 31, 2015 is $22.8 and $38.9 million respectively. The unrealized losses on those securities in an unrealized loss position for less than 12 months at December 31, 2016 and December 31, 2015 is $0.4 and $0.4 million, respectively. None of these securities were in an unrealized loss position for more than twelve months at December 31, 2016 and December 31, 2015, respectively.
 
At December 31, 2016, approximately $1.7 million of the unrealized losses pertain to private label securities secured by seasoned residential collateral. Their fair value is $76.7 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, 2016, the Company also had $13.9 million of unrealized losses on mortgage backed securities of government sponsored entities having a fair value of $634.2 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, 2016, the Company also had $1.0 million of unrealized losses on collateralized loan obligations having a fair value of $59.9 million that were attributable to a combination of factors, including relative changes in interest rates 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 believes the collateralized loan obligations provide a strong credit enhancement even under severe stress scenarios. Management expects to recover the entire amortized cost basis of these securities.
 
At December 31, 2016, remaining securities categories has unrealized losses of $1.8 million and summed to a fair value of $92.1 million. 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
 
As of December 31, 2016 the company does not intend to sell nor is it anticipated that it would be required to sell any of its investment securities that have losses. Therefore, management does not consider any investment to be other-than-temporarily impaired at December 31, 2016.
 
Included in other assets is $35.9 million of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. At December 31, 2016, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $35.9 million of cost method investment securities.
 
The company also holds 11,330 shares of Visa Class B stock, which following resolution of Visa litigation will be converted to Visa Class A shares (the conversion rate presently is 1.6483 shares of Class A stock for each share of Class B stock) for a total of 18,675 shares of Visa Class A stock. Our ownership is related to prior ownership in Visa's network, while Visa operated as a cooperative. This ownership is recorded on our financial records at zero basis.