SECURITIES

3 Months Ended

Mar. 31, 2017

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 March 31, 2017 and December 31, 2016 are summarized as follows:

	March 31, 2017
	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations
of U.S. Government Sponsored Entities	$	11,366	$	273	$	0	$	11,639
Mortgage-backed securities of U.S.
Government Sponsored Entities		290,933		706		(3,847)		287,792
Collateralized mortgage obligations of
U.S. Government Sponsored Entities		228,035		385		(4,778)		223,642
Commercial mortgage backed securities of
U.S. Government Sponsored Entities		22,328		369		(21)		22,676
Private mortgage backed securities		32,816		0		(651)		32,165
Private collateralized mortgage obligations		61,173		548		(647)		61,074
Collateralized loan obligations		101,883		917		(71)		102,729
Obligations of state and political subdivisions		62,989		709		(860)		62,838
Corporate and other debt securities		72,480		410		(341)		72,549
Private commercial mortgage backed securities		32,403		140		(372)		32,171
	$	916,406	$	4,457	$	(11,588)	$	909,275
SECURITIES HELD TO MATURITY
Mortgage-backed securities of
U.S. Government Sponsored Entities	$	188,402	$	871	$	(1,332)	$	187,941
Collateralized mortgage obligations of
U.S. Government Sponsored Entities		140,786		395		(2,041)		139,140
Commercial mortgage backed securities of
U.S. Government Sponsored Entities		17,399		383		(23)		17,759
Collateralized loan obligations		26,904		430		(26)		27,308
Private collateralized mortgage obligations		6,166		4		(86)		6,084
	$	379,657	$	2,083	$	(3,508)	$	378,232

	December 31, 2016
	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
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 collateralized mortgage obligations		6,427		0		(109)		6,318
	$	372,498	$	1,753	$	(4,370)	$	369,881

There were no sales of securities during the three month period ended March 31, 2017. Proceeds from sales during the three month period ended March 31, 2016 were $10.4 million, with gross gains of $100,000 and gross losses of $11,000.

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 for maturity category from available for sale. The unrealized holding losses at the date of the transfer continue to be reported in other comprehensive income, and are amortized over the remaining life of these securities as an adjustment of yield in a manner consistent with the amortization of a discount. The amortization of unrealized holding losses reported in equity will offset the effect on interest income of the amortization of the discount. At March 31, 2017, the remaining unrealized holding losses totaled $1.7 million.

Securities at March 31, 2017 with a fair value of $187.6 million, were pledged as collateral for United States Treasury deposits, other public deposits and trust deposits. Securities with a fair value of $183.1 million were pledged as collateral for repurchase agreements.

The amortized cost and fair value of securities at March 31, 2017, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because prepayments of the underlying collateral for these securities may occur, due to 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
(Dollars in thousands)	Cost		Value		Cost		Value
Due in less than one year	$	0	$	0	$	9,533	$	9,734
Due after one year through
five years		0		0		77,180		77,564
Due after five years
through ten years		26,904		27,308		119,950		121,095
Due after ten years		0		0		31,350		30,640
		26,904		27,308		238,013		239,033
Mortgage-backed
securities of U.S. Government
Sponsored Entities		188,402		187,941		290,933		287,792
Collateralized mortgage
obligations of U.S. Government
Sponsored Entities		140,786		139,140		228,035		223,642
Commercial mortgage-backed
securities of U.S. Government
Sponsored Entities		17,399		17,759		22,328		22,676
Private mortgage backed securities		6,166		6,084		32,816		32,165
Private collateralized mortgage
obligations		0		0		61,173		61,074
Other debt securities		0		0		10,705		10,722
Private commercial mortgage
backed securities		0		0		32,403		32,171
	$	379,657	$	378,232	$	916,406	$	909,275

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 the period of time for which these losses were outstanding at March 31, 2017 and December 31, 2016, respectively.

	March 31, 2017
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Mortgage-backed securties of
U.S. Government Sponsored Entities	$	275,646	$	(4,550)	$	41,533	$	(629)	$	317,179	$	(5,179)
Collateralized mortgage obligations of
U.S. Government Sponsored Entities		159,951		(3,315)		124,465		(3,504)		284,416		(6,819)
Commercial mortgage-backed securties of
U.S. Government Sponsored Entities		7,988		(44)		0		0		7,988		(44)
Private mortage backed securities		0		0		36,879		(737)		36,879		(737)
Private collateralized mortgage obligations		1,721		(5)		33,735		(642)		35,456		(647)
Collateralized loan obligations		0		0		18,207		(97)		18,207		(97)
Obligations of state and political subdivisions		28,536		(718)		10,774		(142)		39,310		(860)
Corporate and other debt securities		13,763		(332)		4,828		(9)		18,591		(341)
Private commercial mortgage backed
securities		12,041		(291)		4,056		(81)		16,097		(372)
Total temporarily impaired securities	$	499,646	$	(9,255)	$	274,477	$	(5,841)	$	774,123	$	(15,096)

	December 31, 2016
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Mortgage-backed securties 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 securties of
U.S. Government Sponsored Entities		7,934		(102)		0		0		7,934		(102)
Private mortage 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)

The two tables above include securities held to maturity that were transferred from available for sale into held to maturity during 2014. Those securities had unrealized losses of $3.1 million at the date of transfer, and at March 31, 2017, the unamortized balance was $1.7 million. The fair value of those securities in an unrealized loss position for less than twelve months at March 31, 2017 and December 31, 2016 was $21.5 million and $22.8 million, respectively. The unrealized losses on those securities in an unrealized loss position for less than twelve months at March 31, 2017 and December 31, 2016 was $0.3 million and $0.4 million, respectively. None of these securities were in an unrealized loss position for more than twelve months at March 31, 2017 and December 31, 2016, respectively.

At March 31, 2017, approximately $1.4 million of the unrealized losses pertained to private label securities secured by seasoned residential collateral. Their fair value was $72.3 million and was 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 March 31, 2017, the Company also had $12.0 million of unrealized losses on collateralized mortgage obligations and mortgage backed securities of government sponsored entities having a fair value of $609.6 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 our 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 March 31, 2017, remaining securities categories had unrealized losses of $0.9 million and summed to a fair value of $60.9 million. Collateralized loan obligations with a fair value of $18.2 million are included in the sum, and management believes these obligations provide a strong credit enhancement even under severe stress scenarios. Management believes that unrealized losses on these remaining debt security holdings are a function of changes in investment spreads and interest movements and not change in credit quality. Management expects to recover the entire amortized cost basis of these securities.

As of March 31, 2017, 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 March 31, 2017.

Included in other assets is $31.8 million of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. At March 31, 2017, the Company had not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $31.8 million of cost method investment securities.

The Company also holds 211,330 shares of Visa Class B stock, which following resolution of Visa litigation will be converted to Visa Class A shares (the conversion rate was 1.6483 shares of Class A stock for each share of Class B stock) for a total of 348,335 shares of Visa Class A stock. Our ownership is related to prior ownership in Visa’s network while Visa operated as a cooperative (11,330 shares), and by acquisition via auctions (200,000 shares) for $6.2 million conducted by the FDIC during the first quarter of 2017. Our ownership is recorded on our financial records at $6.2 million.