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Investment Securities
 9 Months Ended
Sep. 30, 2014
Investment Securities [Abstract]  
Investment Securities

 

NOTE 3:  INVESTMENT SECURITIES

 

A summary of the amortized cost and fair values of investment securities at September 30, 2014 and December 31, 2013 follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized

 

Gross Unrealized

 

Fair

(Dollars in thousands)

Cost

 

Gains

 

Losses

 

Value

At September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

Obligations of state and political subdivisions

$
10,663 

 

$
602 

 

$

 -

 

$
11,265 

Total

$
10,663 

 

$
602 

 

$

 -

 

$
11,265 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

Federal agency securities

$
110,620 

 

$
325 

 

$
(1,264)

 

$
109,681 

Obligations of state and political subdivisions

 
32,864 

 

 
439 

 

 
(262)

 

 
33,041 

Residential mortgage-backed securities

 
171,964 

 

 
1,792 

 

 
(1,562)

 

 
172,194 

Asset-backed securities

 
9,601 

 

 

 -

 

 
(46)

 

 
9,555 

Other securities

 
33,993 

 

 
1,511 

 

 
(31)

 

 
35,473 

Total

$
359,042 

 

$
4,067 

 

$
(3,165)

 

$
359,944 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

Obligations of state and political subdivisions

$
11,720 

 

$
395 

 

$

 -

 

$
12,115 

Total

$
11,720 

 

$
395 

 

$

 -

 

$
12,115 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

Federal agency securities

$
123,332 

 

$
330 

 

$
(2,889)

 

$
120,773 

Obligations of state and political subdivisions

 
33,685 

 

 
36 

 

 
(1,085)

 

 
32,636 

Residential mortgage-backed securities

 
183,512 

 

 
1,747 

 

 
(2,089)

 

 
183,170 

Asset-backed securities

 
9,578 

 

 

 -

 

 
(96)

 

 
9,482 

Other securities

 
35,316 

 

 
1,267 

 

 
(165)

 

 
36,418 

Total

$
385,423 

 

$
3,380 

 

$
(6,324)

 

$
382,479 

 

Residential mortgage-backed securities consist of agency securities underwritten and guaranteed by Government National Mortgage Association, Federal Home Loan Mortgage Corporation, and Federal National Mortgage Association. Other securities consist of corporate stock.

 

Securities with limited marketability, such as Federal Reserve Bank stock, Federal Home Loan Bank (“FHLB”) stock, and certain other investments, are carried at cost and included in other assets on the unaudited consolidated statements of financial condition.  Total investments carried at cost were $7.3 million at September 30, 2014 and $8.1 million at December 31, 2013.  There are no identified events or changes in circumstances that may have a significant adverse effect on the investments carried at cost.  

 

A comparison of the amortized cost and approximate fair value of our investment securities by maturity date at September 30, 2014 follows: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale

 

Held to Maturity

 

Amortized

 

Fair

 

Amortized

 

Fair

(Dollars in thousands)

Cost

 

Value

 

Cost

 

Value

One year or less

$
19,323 

 

$
19,581 

 

$
940 

 

$
946 

More than one year through five years

 
170,716 

 

 
172,418 

 

 
3,834 

 

 
3,976 

More than five years through ten years

 
118,044 

 

 
116,772 

 

 
2,515 

 

 
2,612 

More than ten years

 
50,959 

 

 
51,173 

 

 
3,374 

 

 
3,731 

Total

$
359,042 

 

$
359,944 

 

$
10,663 

 

$
11,265 

 

The foregoing analysis assumes that our residential mortgage-backed securities mature during the period in which they are estimated to prepay.  No other prepayment or repricing assumptions have been applied to our investment securities for this analysis. 

 

Gain or loss on sale of investments is based upon the specific identification method.  There was a $0.8  million gain on sales of securities for the nine months ended September 30, 2014, which was the result of the gain on the sale of a stock investment that was acquired in a prior year repossession, and of the release of escrowed funds received in association with the sale of an investment that was carried at cost. There were no sales of securities for the nine months ended September 30, 2013.

 

The following table shows securities with gross unrealized losses and their fair values by the length of time that the individual securities had been in a continuous unrealized loss position at September 30, 2014 and December 31, 2013.  Securities whose market values exceed cost are excluded from this table.     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuous Unrealized

 

 

 

 

 

 

Amortized cost of

 

Loss Existing for:

 

Fair value of

 

Number of

 

securities with

 

Less Than

 

More Than

 

securities with

(Dollars in thousands)

Securities

 

unrealized losses

 

12 Months

 

12 Months

 

unrealized losses

At September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal agency securities
15 

 

$
66,999 

 

$
(798)

 

$
(466)

 

$
65,735 

Obligations of state and political subdivisions
10 

 

 
15,182 

 

 
(96)

 

 
(166)

 

 
14,920 

Residential mortgage-backed securities
39 

 

 
63,596 

 

 
(1,236)

 

 
(327)

 

 
62,033 

Asset-backed securities
3 

 

 
9,601 

 

 
(46)

 

 

 -

 

 
9,555 

Other securities
1 

 

 
2,000 

 

 
(30)

 

 

 -

 

 
1,970 

Total
68 

 

$
157,378 

 

$
(2,206)

 

$
(959)

 

$
154,213 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal agency securities
24 

 

$
87,921 

 

$
(2,885)

 

$
(4)

 

$
85,032 

Obligations of state and political subdivisions
20 

 

 
31,579 

 

 
(887)

 

 
(198)

 

 
30,494 

Residential mortgage-backed securities
53 

 

 
104,667 

 

 
(2,015)

 

 
(74)

 

 
102,578 

Asset-backed securities
3 

 

 
9,578 

 

 
(96)

 

 

 -

 

 
9,482 

Other securities
8 

 

 
27,728 

 

 
(165)

 

 

 -

 

 
27,563 

Total
108 

 

$
261,473 

 

$
(6,048)

 

$
(276)

 

$
255,149 

 

We evaluate all securities on an individual basis for other-than-temporary impairment on at least a quarterly basis.  Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for an anticipated recovery in fair value. 

 

We have the ability and intent to hold the securities classified as held to maturity until they mature, at which time we expect to receive full value for the securities.  Furthermore, as of September 30, 2014, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that it is not likely that we will have to sell any such securities before a recovery of cost.  The declines in fair value were attributable to recent increases in market interest rates over the yields available at the time the underlying securities were purchased or increases in spreads over market interest rates.  Management does not believe any of the securities are impaired due to credit quality.  Accordingly, as of September 30, 2014, management believes the impairment of these investments is not deemed to be other-than-temporary. 

 

As required by law, available for sale investment securities are pledged to secure public and trust deposits, sweep agreements, and borrowings from the FHLB.  Securities with an amortized cost of $240.1 million and $292.6 million were pledged to meet such requirements at September 30, 2014 and December 31, 2013, respectively.  Any amount over-pledged can be released at any time.