Trading Securities

As of December 31, 2015, the Company had trading securities of $356,000. These securities are held in a rabbi trust and will be used for future payments associated with the Company's non-qualified 401(k) Restoration Plan and non-qualified deferred compensation plan. There were no such securities at December 31, 2014.

Available for Sale and Held to Maturity Securities

The following table presents a summary of the amortized cost, gross unrealized holding gains and losses, other-than-temporary impairment recorded in other comprehensive income and fair value of securities available for sale and securities held to maturity for the periods indicated:



	December 31, 2015									December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for sale securities
U.S. government agency securities	$	29,958	$	261	$	(4	)	$	30,215	$	41,369	$	139	$	(22	)	$	41,486
Agency mortgage-backed securities	207,693		4,227		(983		)	210,937		211,168		7,203		(693		)	217,678
Agency collateralized mortgage obligations	64,157		179		(752		)	63,584		63,059		599		(623		)	63,035
State, county, and municipal securities	4,543		116		—			4,659		5,106		117		—			5,223
Single issuer trust preferred securities issued by banks	2,865		8		(81		)	2,792		2,913		12		(16		)	2,909
Pooled trust preferred securities issued by banks and insurers (1)	2,217		—		(645		)	1,572		7,906		195		(1,780		)	6,321
Small business administration pooled securities	40,472		87		(110		)	40,449		—		—		—			—
Equity securities	13,235		374		(568		)	13,041		11,572		567		(237		)	11,902
Total available for sale securities	365,140		5,252		(3,143		)	367,249		343,093		8,832		(3,371		)	348,554
Held to maturity securities
U.S. treasury securities	1,009		55		—			1,064		1,010		63		—			1,073
Agency mortgage-backed securities	167,134		3,460		(219		)	170,375		159,522		5,422		—			164,944
Agency collateralized mortgage obligations	267,348		1,195		(3,652		)	264,891		198,220		1,842		(3,478		)	196,584
State, county, and municipal securities	225		2		—			227		424		4		—			428
Single issuer trust preferred securities issued by banks	1,500		22		—			1,522		1,500		—		(23		)	1,477
Small business administration pooled securities	35,291		437		(64		)	35,664		9,775		299		—			10,074
Corporate debt securities	5,000		6		—			5,006		5,002		117		—			5,119
Total held to maturity securities	477,507		5,177		(3,935		)	478,749		375,453		7,747		(3,501		)	379,699
Total	$	842,647	$	10,429	$	(7,078	)	$	845,998	$	718,546	$	16,579	$	(6,872	)	$	728,253


(1)	Gross unrealized gains and gross unrealized losses include $230,000 of net non-credit related OTTI at December 31, 2014. There was no non-credit related OTTI at December 31, 2015.

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The following table shows the gross realized gains and losses on available for sale securities for the periods indicated:



	Years Ended December 31
	2015			2014			2013
	(Dollars in thousands)
Equity securities classified as available for sale
Gross realized gains	$	20		$	91		$	(28	)
Gross realized losses	(99		)	—			—
Net realized gain (loss) on equity securities	$	(79	)	$	91		$	(28	)
Fixed income securities classified as available for sale
Gross realized gains	$	798		$	121		$	258
Gross realized losses	(1,124		)	(21		)	—
Net realized gain (loss) on fixed income securities	$	(326	)	$	100		$	258

The actual maturities of certain securities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. A schedule of the contractual maturities of securities available for sale and securities held to maturity as of December 31, 2015 is presented below:



	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	499	$	500	$	5,250	$	5,258
Due after one year to five years	34,384		34,715		49		49
Due after five to ten years	91,251		91,178		34,018		34,545
Due after ten years	225,771		227,815		438,190		438,897
Total debt securities	351,905		354,208		477,507		478,749
Equity securities	13,235		13,041		—		—
Total	$	365,140	$	367,249	$	477,507	$	478,749

Inclusive in the table above is $17.7 million of callable securities at December 31, 2015.

The carrying value of securities pledged to secure public funds, trust deposits, repurchase agreements and for other purposes, as required or permitted by law, was $314.1 million and $340.0 million at December 31, 2015 and 2014, respectively.

At December 31, 2015 and 2014, the Company had no investments in obligations of individual states, counties, or municipalities, which exceeded 10% of stockholders’ equity.

Other-Than-Temporary Impairment

The Company continually reviews investment securities for the existence of OTTI, taking into consideration current market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, the credit worthiness of the obligor of the security, volatility of earnings, current analysts’ evaluations, the Company’s intent to sell the security, or whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery, as well as other qualitative factors. The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment.

The following tables show the gross unrealized losses and fair value of the Company’s investments in an unrealized loss position, which the Company has not deemed to be OTTI, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:



		December 31, 2015
		Less than 12 months					12 months or longer					Total
Description of securities	# of holdings	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
		(Dollars in thousands)
U.S. government agency securities	3	$	1,990	$	(4	)	$	—	$	—		$	1,990	$	(4	)
Agency mortgage-backed securities	57	112,648		(1,062		)	4,297		(140		)	116,945		(1,202		)
Agency collateralized mortgage obligations	23	147,707		(1,420		)	80,927		(2,984		)	228,634		(4,404		)
Single issuer trust preferred securities issued by banks and insurers	2	1,018		(33		)	1,018		(48		)	2,036		(81		)
Pooled trust preferred securities issued by banks and insurers	1	—		—			1,572		(645		)	1,572		(645		)
Small business administration pooled securities	3	37,986		(174		)	—		—			37,986		(174		)
Equity securities	34	3,481		(189		)	4,971		(379		)	8,452		(568		)
Total temporarily impaired securities	123	$	304,830	$	(2,882	)	$	92,785	$	(4,196	)	$	397,615	$	(7,078	)

		December 31, 2014
		Less than 12 months					12 months or longer					Total
Description of securities	# of holdings	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
		(Dollars in thousands)
U.S.government agency securities	22	$	21,950	$	(22	)	$	—	$	—		$	21,950	$	(22	)
Agency mortgage-backed securities	17	3,471		(1		)	42,222		(692		)	45,693		(693		)
Agency collateralized mortgage obligations	14	35,083		(331		)	94,974		(3,770		)	130,057		(4,101		)
Single issuer trust preferred securities issued by banks and insurers	2	2,553		(39		)	—		—			2,553		(39		)
Pooled trust preferred securities issued by banks and insurers	2	—		—			2,681		(1,356		)	2,681		(1,356		)
Equity securities	23	1,480		(74		)	4,072		(163		)	5,552		(237		)
Total temporarily impaired securities	80	$	64,537	$	(467	)	$	143,949	$	(5,981	)	$	208,486	$	(6,448	)

The Company does not intend to sell these investments and has determined based upon available evidence that it is more likely than not that the Company will not be required to sell the security before the recovery of its amortized cost basis. As a result, the Company does not consider these investments to be OTTI. The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, and current analysts’ evaluations.

As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category are as follows at December 31, 2015:

•

U.S. Government Agency Securities, Agency Mortgage-Backed Securities, Agency Collateralized Mortgage Obligations and Small Business Administration Pooled Securities: These portfolios have contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. Government or one of its agencies.


•	Single Issuer Trust Preferred Securities: This portfolio consists of two securities, one of which is below investment grade. The unrealized loss on these securities is attributable to the illiquid nature of the trust preferred market in the current economic environment. Management evaluates various financial metrics for the issuers, including regulatory capital ratios of the issuers.

•

Pooled Trust Preferred Securities: This portfolio consists of one below investment grade security which is performing. The unrealized loss on this security is attributable to the illiquid nature of the trust preferred market and the significant risk premiums required in the current economic environment. Management evaluates collateral credit and instrument structure, including current and expected deferral and default rates and timing. In addition, discount rates are determined by evaluating comparable spreads observed currently in the market for similar instruments.

•

Equity Securities: This portfolio consists of mutual funds and other equity investments. During some periods, the mutual funds in the Company’s investment portfolio may have unrealized losses resulting from market fluctuations as well as the risk premium associated with that particular asset class. For example, emerging market equities tend to trade at a higher risk premium than U.S. government bonds and thus, will fluctuate to a greater degree on both the upside and the downside. In the context of a well-diversified portfolio, however, the correlation amongst the various asset classes represented by the funds serves to minimize downside risk. The Company evaluates each mutual fund in the portfolio regularly and measures performance on both an absolute and relative basis. A reasonable recovery period for positions with an unrealized loss is based on management’s assessment of general economic data, trends within a particular asset class, valuations, earnings forecasts and bond durations. The Company has the ability and intent to hold these equity securities until a recovery of fair value.

The following table shows the total OTTI that the Company recorded for the periods indicated:



	Years Ended December 31
	2015		2014			2013
	(Dollars in thousands)
Gross change in OTTI recorded on certain investments	$	—	$	2,098		$	588
Portion of OTTI recognized in OCI	—		(2,098		)	(588		)
Total credit related OTTI recognized in earnings	$	—	$	—		$	—

The following table shows the cumulative credit related component of OTTI for the periods indicated:



	2015			2014			2013
	(Dollars in thousands)
Balance at beginning of period	$	(9,997	)	$	(9,997	)	$	(10,847	)
Add
Incurred on securities not previously impaired	—			—			—
Incurred on securities previously impaired	—			—			—
Less
Securities sold during the period	9,997			—			850
Reclassification due to changes in Company’s intent	—			—			—
Increases in cash flow expected to be collected	—			—			—
Balance at end of period	$	—		$	(9,997	)	$	(9,997	)