XML 27 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
Investments Securities
 12 Months Ended
Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
INVESTMENT SECURITIES
The following tables present a summary of investment securities:
 
Amortized
Cost
 
Unrealized
 
Fair
Value
Gains
 
Losses
 
(In thousands)
At December 31, 2018
 
 
 
 
 
 
 
Available-for-sale securities at fair value:
 
 
 
 
 
 
 
U.S. government and agencies
$
30,043

 
$
—

 
$
(929
)
 
$
29,114

Government-sponsored entities
211,655

 
—

 
(3,952
)
 
207,703

Municipal bonds
309,837

 
2,223

 
(3,101
)
 
308,959

Mortgage-backed securities (1)
467,239

 
214

 
(19,164
)
 
448,289

Total
$
1,018,774

 
$
2,437

 
$
(27,146
)
 
$
994,065

 
 
 
 
 
 
 
 
Held-to-maturity securities at amortized cost:
 
 
 
 
 
 
 
U.S. government and agencies
$
9,898

 
$
2

 
$
—

 
$
9,900

Mortgage-backed securities (1)
60,540

 
—

 
(1,845
)
 
58,695

Total
$
70,438

 
$
2

 
$
(1,845
)
 
$
68,595

 
 
 
 
 
 
 
 
Equity securities at fair value:
 
 
 
 
 
 
 
Money market mutual funds (2)
$
14,228

 
$
—

 
$
—

 
$
14,228

Total
$
14,228

 
$
—

 
$
—

 
$
14,228

 
Amortized
Cost
 
Unrealized
 
Fair
Value
Gains
 
Losses
 
(In thousands)
At December 31, 2017
 
 
 
 
 
 
 
Available-for-sale securities at fair value:
 
 
 
 
 
 
 
U.S. government and agencies
$
35,132

 
$
—

 
$
(833
)
 
$
34,299

Government-sponsored entities
305,101

 
22

 
(2,622
)
 
302,501

Municipal bonds
299,647

 
4,559

 
(1,148
)
 
303,058

Mortgage-backed securities (1)
521,753

 
491

 
(12,568
)
 
509,676

Total
$
1,161,633

 
$
5,072

 
$
(17,171
)
 
$
1,149,534

 
 
 
 
 
 
 
 
Held-to-maturity securities at amortized cost:
 
 
 
 
 
 
 
Mortgage-backed securities (1)
$
74,576

 
$
—

 
$
(795
)
 
$
73,781

Total
$
74,576

 
$
—

 
$
(795
)
 
$
73,781

 
 
 
 
 
 
 
 
Equity securities at fair value:
 
 
 
 
 
 
 
Money market mutual funds (2)
$
20,794

 
$
—

 
$
—

 
$
20,794

Total
$
20,794

 
$
—

 
$
—

 
$
20,794

_________________
(1)
All mortgage-backed securities are guaranteed by the U.S. government, U.S. government agencies, or government-sponsored entities.
(2)
Money market mutual funds maintain a constant net asset value of $1.00 and therefore have no unrealized gain or loss.
The following tables present the maturities of available-for-sale investment securities, based on contractual maturity, and the weighted average yields of such securities as of December 31, 2018. Certain securities are callable before their final maturity. Additionally, certain securities (such as mortgage-backed securities) are shown within the table below based on their final (contractual) maturity, but due to prepayments and amortization are expected to have shorter lives.
 
U.S. government and agencies (1)
 
Government-sponsored entities (1)
Amortized
cost
 
Fair
value
 
Weighted
average
yield
 
Amortized
cost
 
Fair
value
 
Weighted
average
yield
(In thousands)
Within one year
$
9,999

 
$
9,974

 
1.48
%
 
$
56,222

 
$
56,014

 
1.76
%
After one, but within five years
10,095

 
9,802

 
1.74
%
 
119,301

 
117,124

 
1.94
%
After five, but within ten years
9,949

 
9,338

 
1.70
%
 
36,132

 
34,565

 
2.05
%
Greater than ten years
—

 
—

 
—
%
 
—

 
—

 
—
%
Total
$
30,043

 
$
29,114

 
1.64
%
 
$
211,655

 
$
207,703

 
1.91
%
 
Municipal bonds (1)
 
Mortgage-backed securities (3)
Amortized
cost
 
Fair
value
 
Weighted
average
yield (2)
 
Amortized
cost
 
Fair
value
 
Weighted
average
yield
(In thousands)
Within one year
$
15,981

 
$
15,957

 
1.86
%
 
$
35

 
$
35

 
4.56
%
After one, but within five years
43,351

 
43,327

 
2.45
%
 
69,607

 
67,370

 
2.16
%
After five, but within ten years
52,485

 
52,733

 
3.16
%
 
202,899

 
193,719

 
2.14
%
Greater than ten years
198,020

 
196,942

 
3.42
%
 
194,698

 
187,165

 
2.14
%
Total
$
309,837

 
$
308,959

 
3.16
%
 
$
467,239

 
$
448,289

 
2.14
%

The following table presents the maturities of held-to-maturity investment securities, based on contractual maturity, and the weighted average yields of such securities as of December 31, 2018:
 
U.S. government and agencies (1)
 
Mortgage-backed securities (3)
Amortized
cost
 
Fair
value
 
Weighted
average
yield
 
Amortized
cost
 
Fair
value
 
Weighted
average
yield
(In thousands)
Within one year
$
9,898

 
$
9,900

 
2.52
%
 
$
—

 
$
—

 
—
%
After one, but within five years
—

 
—

 
—
%
 
—

 
—

 
—
%
After five, but within ten years
—

 
—

 
—
%
 
45,979

 
44,591

 
2.21
%
Greater than ten years
—

 
—

 
—
%
 
14,561

 
14,104

 
2.46
%
Total
$
9,898

 
$
9,900

 
2.52
%
 
$
60,540

 
$
58,695

 
2.27
%

The following table presents the maturities of equity securities, based on contractual maturity, and the weighted average yields of such securities as of December 31, 2018:
 
Money market mutual funds
Amortized
cost
 
Fair
value
 
Weighted
average
yield
(In thousands)
Within one year
$
14,228

 
$
14,228

 
2.14
%
After one, but within five years
—

 
—

 
—
%
After five, but within ten years
—

 
—

 
—
%
Greater than ten years
—

 
—

 
—
%
Total
$
14,228

 
$
14,228

 
2.14
%
___________________
(1)
Certain securities are callable before their final maturity. 
(2)
Yields shown on a fully taxable equivalent (“FTE”) basis.
(3)
Mortgage-backed securities are shown based on their final (contractual) maturity, but, due to prepayments, they are expected to have shorter lives.
The weighted average remaining maturity at December 31, 2018 was 7.7 years for available-for-sale investment securities, with $217.0 million of available-for-sale investment securities callable before maturity. The weighted average remaining maturity at December 31, 2017 was 8.1 years for available-for-sale investment securities, with $184.9 million of available-for-sale investment securities callable before maturity.
The weighted average remaining maturity for held-to-maturity investment securities was 11.0 years and 11.9 years at December 31, 2018 and December 31, 2017, respectively.
The following table presents the proceeds from sales, gross realized gains and gross realized losses for available-for-sale investment securities that were sold or called during the following periods as well as changes in fair value of equity securities as prescribed by ASC 321, Investment- Equity Securities. ASU 2016-01, Recognition and Measurements of Financial Assets and Financial Liabilities was adopted on January 1, 2018, at which time a cumulative effect adjustment of $339 thousand was recorded to reclassify the amount of accumulated unrealized gains related to equity securities from accumulated other comprehensive income to retained earnings.
 
Year Ended December 31,
2018
 
2017
 
2016
(In thousands)
Proceeds from sales
$
53,412

 
$
81,221

 
$
11,135

Realized gains
7

 
519

 
522

Realized losses
(597
)
 
(143
)
 
(1
)
Change in unrealized gain/ (loss) on equity securities reflected in the consolidated statement of operations
(23
)
 
n/a

 
n/a


The following tables present information regarding securities at December 31, 2018 and 2017 having temporary impairment, due to the fair values having declined below the amortized cost of the individual securities, and the time period that the investments have been temporarily impaired.
 
Less than 12 months
 
12 months or longer
 
Total
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Number of
securities
 
(In thousands, except number of securities)
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
—

 
$
—

 
$
29,114

 
$
(929
)
 
$
29,114

 
$
(929
)
 
5

Government-sponsored entities
—

 
—

 
207,703

 
(3,952
)
 
207,703

 
(3,952
)
 
32

Municipal bonds
25,394

 
(128
)
 
130,209

 
(2,973
)
 
155,603

 
(3,101
)
 
85

Mortgage-backed securities (1)
2,469

 
(11
)
 
433,888

 
(19,153
)
 
436,357

 
(19,164
)
 
110

Total
$
27,863

 
$
(139
)
 
$
800,914

 
$
(27,007
)
 
$
828,777

 
$
(27,146
)
 
232

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities (1)
$
—

 
$
—

 
$
58,695

 
$
(1,845
)
 
$
58,695

 
$
(1,845
)
 
16

Total
$
—

 
$
—

 
$
58,695

 
$
(1,845
)
 
$
58,695

 
$
(1,845
)
 
16

 
Less than 12 months
 
12 months or longer
 
Total
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Fair
value
 
Unrealized
losses
 
Number of
securities
 
(In thousands, except number of securities)
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Available-for-sale securities
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
14,902

 
$
(79
)
 
$
19,397

 
$
(754
)
 
$
34,299

 
$
(833
)
 
6

Government-sponsored entities
220,275

 
(1,350
)
 
38,273

 
(1,272
)
 
258,548

 
(2,622
)
 
36

Municipal bonds
46,112

 
(131
)
 
50,842

 
(1,017
)
 
96,954

 
(1,148
)
 
63

Mortgage-backed securities (1)
97,117

 
(903
)
 
386,785

 
(11,665
)
 
483,902

 
(12,568
)
 
103

Total
$
378,406

 
$
(2,463
)
 
$
495,297

 
$
(14,708
)
 
$
873,703

 
$
(17,171
)
 
208

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held-to-maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities (1)
$
59,218

 
$
(534
)
 
$
14,563

 
$
(261
)
 
$
73,781

 
$
(795
)
 
16

Total
$
59,218

 
$
(534
)
 
$
14,563

 
$
(261
)
 
$
73,781

 
$
(795
)
 
16

___________________
(1)
All mortgage-backed securities are guaranteed by the U.S. government, U.S. government agencies, or government-sponsored entities.
As of December 31, 2018, the U.S. government and agencies securities, government-sponsored entities securities and mortgage-backed securities in the first table above had current Standard and Poor's credit rating of AAA. The municipal bonds in the first table above had a current Standard and Poor’s credit rating of at least AA-. At December 31, 2018, the Company does not consider these investments other-than-temporarily impaired as the decline in fair value on investments is primarily attributed to changes in interest rates and not credit quality.
At December 31, 2018 and December 31, 2017, the amount of investment securities in an unrealized loss position greater than 12 months, as well as in total, was primarily due to changes in interest rates and not due to credit quality. As of December 31, 2018, the Company had no intent to sell any securities in an unrealized loss position and it is not more likely than not that the Company would be forced to sell any of these securities prior to the full recovery of all unrealized loss amounts. Subsequent to December 31, 2018 and through the date of the filing of this Annual Report on Form 10-K, no securities were downgraded to below investment grade, nor were any securities in an unrealized loss position sold.
The following table presents the concentration of securities with any one issuer that exceeds 10% of shareholders’ equity as of December 31, 2018:
 
Amortized cost
 
Fair value
(In thousands)
Government National Mortgage Association
$
81,247

 
$
78,482

Federal Home Loan Mortgage Corporation
321,097

 
308,914

Federal Home Loan Bank
109,761

 
107,661

Federal National Mortgage Association
207,283

 
200,007

Total
$
719,388

 
$
695,064


Cost method investments
The Company invests in low-income housing tax credits, which are included in other assets, to encourage private capital investment in the construction and rehabilitation of low-income housing. The Company makes these investments as an indirect subsidy that allows investors, such as the Company, in a flow-through limited liability entity, such as limited partnerships or limited liability companies that manage or invest in qualified affordable housing projects, to receive the benefits of the tax credits allocated to the entity that owns the qualified affordable housing project. The Company also holds partnership interests in venture capital funds formed to provide financing to small businesses and to promote community development.
The Company amortizes its investment in the low income housing tax credits using the proportional amortization method. Under the proportional amortization method, the Company amortizes the cost of its investment, in proportion to the tax credits and other tax benefits it receives to income tax expense. Included in income tax expense was amortization of $3.0 million, $2.7 million, and $1.6 million for the years ending December 31, 2018, 2017 and 2016, respectively. Also included in income tax expense were the related tax benefits of $2.9 million, $2.2 million and $1.7 million for the years ending December 31, 2018, 2017, and 2016, respectively.
The Company had $54.4 million and $39.4 million in cost method investments included in other assets as of December 31, 2018 and December 31, 2017, respectively. In addition, the Company had $23.0 million and $11.5 million in unadvanced funds related to commitments in these investments as of December 31, 2018 and 2017, respectively.
Under the proportional amortization method, an investment must be tested for impairment when events or changes in circumstances indicate that it is more likely than not that the carrying amount of the investment will not be realized. There was no indication of impairment for the years ending December 31, 2018 and 2017.