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SECURITIES
 12 Months Ended
Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]  
SECURITIES
Trading Securities
The Company had trading securities of $1.5 million and $1.3 million as of December 31, 2018 and 2017, 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.
Equity Securities
The Company had equity securities of $19.5 million as of December 31, 2018. These securities consist primarily of mutual funds held in a rabbi trust and will be used for future payments associated with the Company’s supplemental executive retirement plans. These securities were previously classified as available for sale and were reclassified as equity securities due to a change in accounting guidance effective January 1, 2018. The equity securities had a fair value of $20.6 million as of December 31, 2017 and are reflected accordingly as available for sale in the table below.
The following table represents a summary of the gains and losses that relates to equity securities for the periods indicated:
 
Years Ended December 31
 
2018
 
2017
 
2016
Net losses recognized during the period on equity securities
$
(1,225
)
 
n/a
 
n/a
Less: net gains recognized during the period on equity securities sold during the period
874

 
n/a
 
n/a
Unrealized losses recognized during the reporting period on equity securities still held at the reporting date
$
(2,099
)
 
n/a
 
n/a

























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, 2018
 
December 31, 2017
 
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
$
32,477

$
—

$
(439
)
$
32,038

 
$
35,475

$
86

$
(131
)
$
35,430

Agency mortgage-backed securities
222,491

1,020

(3,406
)
220,105

 
214,934

1,897

(1,067
)
215,764

Agency collateralized mortgage obligations
138,149

197

(3,435
)
134,911

 
124,098

78

(2,164
)
122,012

State, county, and municipal securities
1,719

16

—

1,735

 
2,237

37

—

2,274

Single issuer trust preferred securities issued by banks
717

—

(10
)
707

 
2,012

4

—

2,016

Pooled trust preferred securities issued by banks and insurers
1,678

—

(349
)
1,329

 
2,179

—

(539
)
1,640

Small business administration pooled securities
53,317

—

(1,390
)
51,927

 
47,852

44

(118
)
47,778

Equity securities
—

—

—

—

 
19,432

1,594

(442
)
20,584

Total available for sale securities
450,548

1,233

(9,029
)
442,752

 
448,219

3,740

(4,461
)
447,498

Held to maturity securities
 
 
 
 
 
 
 
 
 
U.S. treasury securities
1,004

11

—

1,015

 
1,006

29

—

1,035

Agency mortgage-backed securities
252,484

1,548

(3,104
)
250,928

 
204,768

1,791

(736
)
205,823

Agency collateralized mortgage obligations
332,775

869

(6,920
)
326,724

 
262,998

397

(4,987
)
258,408

Single issuer trust preferred securities issued by banks
1,500

—

(10
)
1,490

 
1,500

29

—

1,529

Small business administration pooled securities
23,727

105

(349
)
23,483

 
27,416

183

(200
)
27,399

Total held to maturity securities
611,490

2,533

(10,383
)
603,640

 
497,688

2,429

(5,923
)
494,194

Total
$
1,062,038

$
3,766

$
(19,412
)
$
1,046,392

 
$
945,907

$
6,169

$
(10,384
)
$
941,692



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, 2018 is presented below:
 
Due in one year or less
 
Due after one year to five years
 
Due after five to ten years
 
Due after ten years
 
Total
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
(Dollars in thousands)
Available for sale securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agency securities
$
—

 
$
—

 
$
20,010

 
$
19,903

 
$
12,467

 
$
12,135

 
$
—

 
$
—

 
$
32,477

 
$
32,038

Agency mortgage-backed securities
89

 
90

 
52,452

 
51,761

 
89,408

 
88,402

 
80,542

 
79,852

 
222,491

 
220,105

Agency collateralized mortgage obligations
—

 
—

 
—

 
—

 
—

 
—

 
138,149

 
134,911

 
138,149

 
134,911

State, county, and municipal securities
—

 
—

 
770

 
771

 
949

 
964

 
—

 
—

 
1,719

 
1,735

Single issuer trust preferred securities issued by banks
—

 
—

 
—

 
—

 
—

 
—

 
717

 
707

 
717

 
707

Pooled trust preferred securities issued by banks and insurers
—

 
—

 
—

 
—

 
—

 
—

 
1,678

 
1,329

 
1,678

 
1,329

Small business administration pooled securities
—

 
—

 
—

 
—

 
—

 
—

 
53,317

 
51,927

 
53,317

 
51,927

Total available for sale securities
$
89

 
$
90

 
$
73,232

 
$
72,435

 
$
102,824

 
$
101,501

 
$
274,403

 
$
268,726

 
$
450,548

 
$
442,752

Held to maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
—

 
$
—

 
$
1,004

 
$
1,015

 
$
—

 
$
—

 
$
—

 
$
—

 
$
1,004

 
$
1,015

Agency mortgage-backed securities
—

 
—

 
12,098

 
11,966

 
35,703

 
35,310

 
204,683

 
203,652

 
252,484

 
250,928

Agency collateralized mortgage obligations
—

 
—

 
—

 
—

 
735

 
732

 
332,040

 
325,992

 
332,775

 
326,724

State, county, and municipal securities
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Single issuer trust preferred securities issued by banks
—

 
—

 
—

 
—

 
1,500

 
1,490

 
—

 
—

 
1,500

 
1,490

Small business administration pooled securities
—

 
—

 
—

 
—

 
—

 
—

 
23,727

 
23,483

 
23,727

 
23,483

Total held to maturity securities
$
—

 
$
—

 
$
13,102

 
$
12,981

 
$
37,938

 
$
37,532

 
$
560,450

 
$
553,127

 
$
611,490

 
$
603,640

Inclusive in the table above is $5.3 million of callable securities at December 31, 2018.
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 $361.1 million and $547.2 million at December 31, 2018 and 2017, respectively.
At December 31, 2018 and 2017, 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, 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 are 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, 2018
 
 
 
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

 
$
9,960

 
$
(43
)
 
$
22,078

 
$
(396
)
 
$
32,038

 
$
(439
)
Agency mortgage-backed securities
144

 
104,616

 
(1,363
)
 
222,850

 
(5,147
)
 
327,466

 
(6,510
)
Agency collateralized mortgage obligations
48

 
57,871

 
(398
)
 
279,229

 
(9,957
)
 
337,100

 
(10,355
)
Single issuer trust preferred securities issued by banks and insurers
2

 
2,197

 
(20
)
 
—

 
—

 
2,197

 
(20
)
Pooled trust preferred securities issued by banks and insurers
1

 
—

 
—

 
1,329

 
(349
)
 
1,329

 
(349
)
Small business administration pooled securities
7

 
28,257

 
(662
)
 
40,621

 
(1,077
)
 
68,878

 
(1,739
)
Total temporarily impaired securities
205

 
$
202,901

 
$
(2,486
)
 
$
566,107

 
$
(16,926
)
 
$
769,008

 
$
(19,412
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
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
4

 
$
24,343

 
$
(131
)
 
$
—

 
$
—

 
$
24,343

 
$
(131
)
Agency mortgage-backed securities
84

 
$
235,411

 
$
(1,493
)
 
$
14,886

 
$
(310
)
 
$
250,297

 
$
(1,803
)
Agency collateralized mortgage obligations
42

 
178,142

 
(1,579
)
 
159,506

 
(5,572
)
 
337,648

 
(7,151
)
Pooled trust preferred securities issued by banks and insurers
1

 
—

 
—

 
1,640

 
(539
)
 
1,640

 
(539
)
Small business administration pooled securities
4

 
34,553

 
(223
)
 
9,647

 
(95
)
 
44,200

 
(318
)
Equity securities
28

 
3,290

 
(39
)
 
7,619

 
(403
)
 
10,909

 
(442
)
Total temporarily impaired securities
163

 
$
475,739

 
$
(3,465
)
 
$
193,298

 
$
(6,919
)
 
$
669,037

 
$
(10,384
)
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 each security before the recovery of its amortized cost basis. As a result, the Company does not consider these investments to be OTTI and accordingly, there was no OTTI recorded and no cumulative credit related component of OTTI for the years ended December 31, 2018, 2017 or 2016. 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, 2018:
•
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, which are 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 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.