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Securities
 3 Months Ended
Mar. 31, 2017
Investments, Debt and Equity Securities [Abstract]  
SECURITIES
SECURITIES
Trading Securities

The Company had trading securities of $1.3 million and $804,000 as of March 31, 2017 and December 31, 2016, 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 gains and losses and fair value of securities available for sale and securities held to maturity for the periods indicated:
 
March 31, 2017
 
December 31, 2016
 
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
$
24,007

 
$
262

 
$
—

 
$
24,269

 
$
24,006

 
$
238

 
$
—

 
$
24,244

Agency mortgage-backed securities
186,103

 
2,729

 
(498
)
 
188,334

 
173,268

 
2,852

 
(736
)
 
175,384

Agency collateralized mortgage obligations
126,017

 
182

 
(1,331
)
 
124,868

 
101,094

 
106

 
(1,332
)
 
99,868

State, county, and municipal securities
3,733

 
54

 
—

 
3,787

 
3,743

 
50

 
—

 
3,793

Single issuer trust preferred securities issued by banks
2,298

 
22

 
—

 
2,320

 
2,311

 
3

 
(3
)
 
2,311

Pooled trust preferred securities issued by banks and insurers
2,201

 
—

 
(605
)
 
1,596

 
2,200

 
—

 
(616
)
 
1,584

Small business administration pooled securities
37,140

 
28

 
(166
)
 
37,002

 
37,561

 
—

 
(372
)
 
37,189

Equity securities
19,166

 
964

 
(469
)
 
19,661

 
19,183

 
641

 
(553
)
 
19,271

Total available for sale securities
$
400,665

 
$
4,241

 
$
(3,069
)
 
$
401,837

 
$
363,366

 
$
3,890

 
$
(3,612
)
 
$
363,644

Held to maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
1,007

 
$
45

 
$
—

 
$
1,052

 
$
1,007

 
$
47

 
$
—

 
$
1,054

Agency mortgage-backed securities
184,317

 
2,283

 
(1,024
)
 
185,576

 
156,088

 
2,274

 
(858
)
 
157,504

Agency collateralized mortgage obligations
284,716

 
1,065

 
(3,657
)
 
282,124

 
297,445

 
1,002

 
(3,797
)
 
294,650

Single issuer trust preferred securities issued by banks
1,500

 
38

 
—

 
1,538

 
1,500

 
44

 
—

 
1,544

Small business administration pooled securities
30,583

 
228

 
(184
)
 
30,627

 
31,036

 
189

 
(327
)
 
30,898

Total held to maturity securities
$
502,123

 
$
3,659

 
$
(4,865
)
 
$
500,917

 
$
487,076

 
$
3,556

 
$
(4,982
)
 
$
485,650

Total
$
902,788

 
$
7,900

 
$
(7,934
)
 
$
902,754

 
$
850,442

 
$
7,446

 
$
(8,594
)
 
$
849,294


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 March 31, 2017 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
$
1,232

 
$
1,239

 
$
—

 
$
—

Due after one year to five years
38,912

 
39,410

 
15,915

 
16,092

Due after five to ten years
87,856

 
88,207

 
21,090

 
21,643

Due after ten years
253,499

 
253,320

 
465,118

 
463,182

Total debt securities
$
381,499

 
$
382,176

 
$
502,123

 
$
500,917

Equity securities
$
19,166

 
$
19,661

 
$
—

 
$
—

Total
$
400,665

 
$
401,837

 
$
502,123

 
$
500,917


Inclusive in the table above is $10.9 million of callable securities in the Company’s investment portfolio at March 31, 2017.
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 $498.6 million and $482.1 million at March 31, 2017 and December 31, 2016, respectively.
At March 31, 2017 and December 31, 2016, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of stockholders’ equity.
Other-Than-Temporary Impairment ("OTTI")
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, 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:
 
March 31, 2017
 
 
 
Less than 12 months
 
12 months or longer
 
Total
 
# of holdings
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
(Dollars in thousands)
Agency mortgage-backed securities
42

 
$
145,227

 
$
(1,522
)
 
$
—

 
$
—

 
$
145,227

 
$
(1,522
)
Agency collateralized mortgage obligations
33

 
247,688

 
(3,003
)
 
45,458

 
(1,985
)
 
293,146

 
(4,988
)
Pooled trust preferred securities issued by banks and insurers
1

 
—

 
—

 
1,596

 
(605
)
 
1,596

 
(605
)
Small business administration pooled securities
4

 
46,217

 
(350
)
 
—

 
—

 
46,217

 
(350
)
Equity securities
22

 
1,706

 
(53
)
 
5,928

 
(416
)
 
7,634

 
(469
)
Total temporarily impaired securities
102

 
$
440,838

 
$
(4,928
)
 
$
52,982

 
$
(3,006
)
 
$
493,820

 
$
(7,934
)

 
December 31, 2016
 
 
 
Less than 12 months
 
12 months or longer
 
Total
 
# 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
)

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 March 31, 2017:
•
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 either implicitly or explicitly guaranteed by the U.S. Government or one of its agencies.
•
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 in the current economic and regulatory 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.
For the three months ended March 31, 2017 and 2016 there was no OTTI recorded and no cumulative credit related component of OTTI.