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SECURITIES
 12 Months Ended
Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract]  
SECURITIES
Trading Securities
As of December 31, 2016 and December 31, 2015 the Company had trading securities of $804,000 and $356,000, respectively. 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.
Available for Sale and Held to Maturity Securities
The following table presents a summary of the amortized cost, gross unrealized holding gains and losses and fair value of securities available for sale and securities held to maturity for the periods indicated:
 
December 31, 2016
 
December 31, 2015
 
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
$
24,006

$
238

$
—

$
24,244

 
$
29,958

$
261

$
(4
)
$
30,215

Agency mortgage-backed securities
173,268

2,852

(736
)
175,384

 
207,693

4,227

(983
)
210,937

Agency collateralized mortgage obligations
101,094

106

(1,332
)
99,868

 
64,157

179

(752
)
63,584

State, county, and municipal securities
3,743

50

—

3,793

 
4,543

116

—

4,659

Single issuer trust preferred securities issued by banks
2,311

3

(3
)
2,311

 
2,865

8

(81
)
2,792

Pooled trust preferred securities issued by banks and insurers
2,200

—

(616
)
1,584

 
2,217

—

(645
)
1,572

Small business administration pooled securities
37,561

—

(372
)
37,189

 
40,472

87

(110
)
40,449

Equity securities
19,183

641

(553
)
19,271

 
13,235

374

(568
)
13,041

Total available for sale securities
363,366

3,890

(3,612
)
363,644

 
365,140

5,252

(3,143
)
367,249

Held to maturity securities
 
 
 
 
 
 
 
 
 
U.S. treasury securities
1,007

47

—

1,054

 
1,009

55

—

1,064

Agency mortgage-backed securities
156,088

2,274

(858
)
157,504

 
167,134

3,460

(219
)
170,375

Agency collateralized mortgage obligations
297,445

1,002

(3,797
)
294,650

 
267,348

1,195

(3,652
)
264,891

State, county, and municipal securities
—

—

—

—

 
225

2

—

227

Single issuer trust preferred securities issued by banks
1,500

44

—

1,544

 
1,500

22

—

1,522

Small business administration pooled securities
31,036

189

(327
)
30,898

 
35,291

437

(64
)
35,664

Corporate debt securities
—

—

—

—

 
5,000

6

—

5,006

Total held to maturity securities
487,076

3,556

(4,982
)
485,650

 
477,507

5,177

(3,935
)
478,749

Total
$
850,442

$
7,446

$
(8,594
)
$
849,294

 
$
842,647

$
10,429

$
(7,078
)
$
845,998



When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale.

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, 2016 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
$
999

 
$
1,001

 
$
1

 
$
1

Due after one year to five years
29,144

 
29,419

 
16,007

 
16,228

Due after five to ten years
97,144

 
97,421

 
22,664

 
23,309

Due after ten years
216,896

 
216,532

 
448,404

 
446,112

Total debt securities
344,183

 
344,373

 
487,076

 
485,650

Equity securities
19,183

 
19,271

 
—

 
—

Total
$
363,366


$
363,644

 
$
487,076

 
$
485,650

Inclusive in the table above is $10.9 million of callable securities at December 31, 2016.
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 $482.1 million and $444.8 million at December 31, 2016 and 2015, respectively.
At December 31, 2016 and 2015, 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, 2016
 
 
 
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)
Agency mortgage-backed securities
57

 
$
137,949

 
$
(1,594
)
 
$
—

 
$
—

 
$
137,949

 
$
(1,594
)
Agency collateralized mortgage obligations
32

 
243,051

 
(3,140
)
 
47,403

 
(1,989
)
 
290,454

 
(5,129
)
Single issuer trust preferred securities issued by banks and insurers
1

 
—

 
—

 
1,036

 
(3
)
 
1,036

 
(3
)
Pooled trust preferred securities issued by banks and insurers
1

 
—

 
—

 
1,583

 
(616
)
 
1,583

 
(616
)
Small business administration pooled securities
5

 
59,846

 
(699
)
 
—

 
—

 
59,846

 
(699
)
Equity securities
25

 
3,625

 
(77
)
 
6,334

 
(476
)
 
9,959

 
(553
)
Total temporarily impaired securities
121

 
$
444,471

 
$
(5,510
)
 
$
56,356

 
$
(3,084
)
 
$
500,827

 
$
(8,594
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
)
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 unrealized losses 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, 2016:
•
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 one security, which is investment grade. The unrealized loss on this security 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 does not intend to sell these equity securities and has determined based on available evidence that it will not be required to sell the equity securities prior to the recovery of fair value.
The following table shows the total OTTI that the Company recorded for the periods indicated:
 
Years Ended December 31
 
2016
 
2015
 
2014
 
(Dollars in thousands)
Gross change in OTTI recorded on certain investments
$
—

 
$
—

 
$
2,098

Portion of OTTI recognized in OCI
—

 
—

 
(2,098
)
Total credit related OTTI recognized in earnings
$
—

 
$
—

 
$
—

The following table shows the cumulative credit related component of OTTI for the periods indicated:
 
Years Ended December 31
 
2016
 
2015
 
2014
 
(Dollars in thousands)
Balance at beginning of period
$
—

 
$
(9,997
)
 
$
(9,997
)
Add
 
 
 
 
 
Incurred on securities not previously impaired
—

 
—

 
—

Incurred on securities previously impaired
—

 
—

 
—

Less
 
 
 
 
 
Securities sold during the period
—

 
9,997

 
—

Reclassification due to changes in Company’s intent
—

 
—

 
—

Increases in cash flow expected to be collected
—

 
—

 
—

Balance at end of period
$
—

 
$
—

 
$
(9,997
)