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Securities
 9 Months Ended
Sep. 30, 2019
Investments, Debt and Equity Securities [Abstract]  
SECURITIES SECURITIES
Trading Securities
The Company had trading securities of $2.0 million and $1.5 million as of September 30, 2019 and December 31, 2018, respectively. These securities are held in a rabbi trust and will be used for future payments associated with the Company’s nonqualified 401(k) Restoration Plan and Nonqualified Deferred Compensation Plan.
Equity Securities
The Company had equity securities of $21.0 million and $19.5 million as of September 30, 2019 and December 31, 2018, respectively. 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.
The following table represents a summary of the gains and losses that relate to equity securities for the periods indicated:
 
Three Months Ended
 
Nine Months Ended
 
September 30
 
September 30
 
2019
 
2018
 
2019
 
2018
Net gains (losses) recognized during the period on equity securities
$
211

 
$
324

 
1,562

 
(107
)
Less: net gains recognized during the period on equity securities sold during the period
—

 
4

 
6

 
8

Unrealized gains (losses) recognized during the reporting period on equity securities still held at the reporting date
$
211

 
$
320

 
1,556

 
(115
)

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:
 
September 30, 2019
 
December 31, 2018
 
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
$
32,475

 
$
827

 
$
—

 
$
33,302

 
$
32,477

 
$
—

 
$
(439
)
 
$
32,038

Agency mortgage-backed securities
196,278

 
4,330

 
(5
)
 
200,603

 
222,491

 
1,020

 
(3,406
)
 
220,105

Agency collateralized mortgage obligations
92,574

 
1,964

 
—

 
94,538

 
138,149

 
197

 
(3,435
)
 
134,911

State, county, and municipal securities
1,713

 
23

 
—

 
1,736

 
1,719

 
16

 
—

 
1,735

Single issuer trust preferred securities issued by banks
717

 
3

 
—

 
720

 
717

 
—

 
(10
)
 
707

Pooled trust preferred securities issued by banks and insurers
1,493

 
—

 
(387
)
 
1,106

 
1,678

 
—

 
(349
)
 
1,329

Small business administration pooled securities
58,360

 
1,610

 
—

 
59,970

 
53,317

 
—

 
(1,390
)
 
51,927

Total available for sale securities
$
383,610

 
$
8,757

 
$
(392
)
 
$
391,975

 
$
450,548

 
$
1,233

 
$
(9,029
)
 
$
442,752

Held to maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agency securities
$
12,853

 
$
146

 
$
—

 
$
12,999

 
$
—

 
$
—

 
$
—

 
$
—

U.S. Treasury securities
1,003

 
19

 
—

 
1,022

 
1,004

 
11

 
—

 
1,015

Agency mortgage-backed securities
418,350

 
8,900

 
(39
)
 
427,211

 
252,484

 
1,548

 
(3,104
)
 
250,928

Agency collateralized mortgage obligations
310,352

 
5,857

 
(687
)
 
315,522

 
332,775

 
869

 
(6,920
)
 
326,724

Single issuer trust preferred securities issued by banks
1,500

 
—

 
(10
)
 
1,490

 
1,500

 
—

 
(10
)
 
1,490

Small business administration pooled securities
33,212

 
707

 
—

 
33,919

 
23,727

 
105

 
(349
)
 
23,483

Total held to maturity securities
$
777,270

 
$
15,629

 
$
(736
)
 
$
792,163

 
$
611,490

 
$
2,533

 
$
(10,383
)
 
$
603,640

Total
$
1,160,880

 
$
24,386

 
$
(1,128
)
 
$
1,184,138

 
$
1,062,038

 
$
3,766

 
$
(19,412
)
 
$
1,046,392


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 September 30, 2019 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
$
10,002

 
$
10,003

 
$
10,003

 
$
10,154

 
$
12,470

 
$
13,145

 
$
—

 
$
—

 
$
32,475

 
$
33,302

Agency mortgage-backed securities
—

 
—

 
71,277

 
72,138

 
56,084

 
58,039

 
68,917

 
70,426

 
196,278

 
200,603

Agency collateralized mortgage obligations
—

 
—

 
—

 
—

 
—

 
—

 
92,574

 
94,538

 
92,574

 
94,538

State, county, and municipal securities
—

 
—

 
1,021

 
1,024

 
692

 
712

 
—

 
—

 
1,713

 
1,736

Single issuer trust preferred securities issued by banks
—

 
—

 
—

 
—

 
—

 
—

 
717

 
720

 
717

 
720

Pooled trust preferred securities issued by banks and insurers
—

 
—

 
—

 
—

 
—

 
—

 
1,493

 
1,106

 
1,493

 
1,106

Small business administration pooled securities
—

 
—

 
—

 
—

 
—

 
—

 
58,360

 
59,970

 
58,360

 
59,970

Total available for sale securities
$
10,002

 
$
10,003

 
$
82,301

 
$
83,316

 
$
69,246

 
$
71,896

 
$
222,061

 
$
226,760

 
$
383,610

 
$
391,975

Held to maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agency securities
$
—

 
$
—

 
$
12,853

 
$
12,999

 
$
—

 
$
—

 
$
—

 
$
—

 
$
12,853

 
$
12,999

U.S. Treasury securities
—

 
—

 
1,003

 
1,022

 
—

 
—

 
—

 
—

 
1,003

 
1,022

Agency mortgage-backed securities
—

 
—

 
11,128

 
11,153

 
37,012

 
37,523

 
370,210

 
378,535

 
418,350

 
427,211

Agency collateralized mortgage obligations
—

 
—

 
154

 
154

 
—

 
—

 
310,198

 
315,368

 
310,352

 
315,522

Single issuer trust preferred securities issued by banks
—

 
—

 
—

 
—

 
1,500

 
1,490

 
—

 
—

 
1,500

 
1,490

Small business administration pooled securities
—

 
—

 
—

 
—

 
—

 
—

 
33,212

 
33,919

 
33,212

 
33,919

Total held to maturity securities
$
—

 
$
—

 
$
25,138

 
$
25,328

 
$
38,512

 
$
39,013

 
$
713,620

 
$
727,822

 
$
777,270

 
$
792,163

Total
$
10,002

 
$
10,003

 
$
107,439

 
$
108,644

 
$
107,758

 
$
110,909

 
$
935,681

 
$
954,582

 
$
1,160,880

 
$
1,184,138

Inclusive in the table above is $17.9 million of callable securities at September 30, 2019.
The carrying value of securities pledged to secure public funds, trust deposits, and for other purposes, as required or permitted by law, was $340.6 million and $361.1 million at September 30, 2019 and December 31, 2018, respectively.
At September 30, 2019 and December 31, 2018, 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 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:
 
September 30, 2019
 
 
 
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
6

 
10,155

 
(39
)
 
1,054

 
(5
)
 
11,209

 
(44
)
Agency collateralized mortgage obligations
17

 
35,178

 
(99
)
 
39,827

 
(588
)
 
75,005

 
(687
)
Single issuer trust preferred securities issued by banks and insurers
1

 
—

 
—

 
1,490

 
(10
)
 
1,490

 
(10
)
Pooled trust preferred securities issued by banks and insurers
1

 
—

 
—

 
1,106

 
(387
)
 
1,106

 
(387
)
Total temporarily impaired securities
25

 
$
45,333

 
$
(138
)
 
$
43,477

 
$
(990
)
 
$
88,810

 
$
(1,128
)

 
December 31, 2018
 
 
 
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)
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
)

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 for the three and nine months ended September 30, 2019 and 2018. There was no cumulative credit related component of OTTI as of September 30, 2019 or December 31, 2018. 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 September 30, 2019:
•
Agency Mortgage-Backed Securities and Agency Collateralized Mortgage Obligations: 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 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.