Investments (Tables)

9 Months Ended

Sep. 30, 2014

Aggregate Carrying And Approximate Market Values Of Available-For-Sale Securities

The amortized cost and estimated fair values of the Company's securities are shown in the following table (in thousands):



	September 30, 2014								December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	1,923	$	20	$	—	$	1,943	$	2,317	$	48	$	—	$	2,365
Obligations of states and
political subdivisions	41,096		729		13		41,812		41,027		627		106		41,548
Mortgage-backed securities:
U.S. government agencies	183,470		2,950		3,123		183,297		282,653		2,765		7,310		278,108
Private label	1,767		11		—		1,778		2,184		16		3		2,197
Trust preferred
securities	10,164		300		1,648		8,816		12,943		2,113		1,900		13,156
Corporate securities	7,802		203		375		7,630		9,788		183		843		9,128
Total Debt Securities	246,222		4,213		5,159		245,276		350,912		5,752		10,162		346,502
Marketable equity securities	2,447		1,250		—		3,697		3,334		1,339		—		4,673
Investment funds	1,525		—		17		1,508		1,525		—		40		1,485
Total Securities
Available-for-Sale	$	250,194	$	5,463	$	5,176	$	250,481	$	355,771	$	7,091	$	10,202	$	352,660

Aggregate Carrying And Approximate Market Values Of Held-To-Maturity Securities



	September 30, 2014								December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities held-to-maturity
Mortgage-backed securities
US government agencies	$	89,193	$	1,443	$	—	$	90,636	$	—	$	—	$	—	$	—
Trust preferred securities	3,896		811		—		4,707		4,117		1,218		—		5,335
Total Securities
Held-to-Maturity	$	93,089	$	2,254	$	—	$	95,343	$	4,117	$	1,218	$	—	$	5,335

Other investment securities:
Non-marketable equity securities	$	14,234	$	—	$	—	$	14,234	$	13,343	$	—	$	—	$	13,343
Total Other Investment
Securities	$	14,234	$	—	$	—	$	14,234	$	13,343	$	—	$	—	$	13,343

Gross Unrealized Losses And Fair Value Of Investments

The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):



	September 30, 2014
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	1,641	$	3	$	445	$	10	$	2,086	$	13
Mortgage-backed securities:
U.S. Government agencies	22,774		341		80,798		2,782		103,572		3,123
Trust preferred securities	368		144		4,805		1,504		5,173		1,648
Corporate securities	—		—		4,363		375		4,363		375
Investment funds	—		—		1,483		17		1,483		17
Total	$	24,783	$	488	$	91,894	$	4,688	$	116,677	$	5,176



	December 31, 2013
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	5,600	$	87	$	243	$	19	$	5,843	$	106
Mortgage-backed securities:
U.S. Government agencies	195,661		7,113		5,040		197		200,701		7,310
Private label	1,491		3		—		—		1,491		3
Trust preferred securities	—		—		4,400		1,900		4,400		1,900
Corporate securities	5,881		843		—		—		5,881		843
Investment funds	$	1,460	$	40	$	—	$	—	1,460		40
Total	$	210,093	$	8,086	$	9,683	$	2,116	$	219,776	$	10,202

Credit Loss Component Of OTTI On Debt Securities Recognized In Earnings

The following table presents a progression of the credit loss component of OTTI on debt and equity securities recognized in earnings during the nine months ended September 30, 2014 and for the year ended December 31, 2013 (in thousands). The credit loss component represents the difference between the present value of expected future cash flows and the amortized cost basis of the security. The credit component of OTTI recognized in earnings during a period is presented in two parts based upon whether the credit impairment in the current period is the first time the security was credit impaired (initial credit impairment) or if there is additional credit impairment on a security that was credit impaired in previous periods.



	Debt Securities		Equity Securities			Total
Balance at January 1, 2013	$	21,186	$	4,813		$	25,999
Additions:
Initial credit impairment	—		—			—
Additional credit impairment	—		—			—
Deductions:
Sold	—		(115		)	(115		)
Balance at December 31, 2013	21,186		4,698			25,884
Additions:
Initial credit impairment	—		—			—
Additional credit impairment	—		—			—
Deductions:
Sold	—		(2,251		)	(2,251		)
Balance at September 30, 2014	$	21,186	$	2,447		$	23,633

Additional Information Of Trust Preferred Securities With Credit Rating Below Investment Grade

The following table presents additional information about the Company’s trust preferred securities with a credit rating of below investment grade as of September 30, 2014 (dollars in thousands):



Deal Name	Type	Class	Original Cost		Amortized Cost		Fair Value		Difference (1)		Lowest Credit Rating	# of issuers currently performing	Actual deferrals/defaults (as a % of original dollar)		Expected deferrals/defaults (as a % of remaining performing collateral)			Excess Subordination as a Percentage of Current Performing Collateral (4)
	Pooled trust preferred securities:
	Other-than-temporarily impaired
	Available for Sale:
P1	Pooled	Mezz	$	698	$	75	$	353	278		Caa1	6	19.5	%	20.0	%	⁽²⁾	65.7	%
P2	Pooled	Mezz	2,535		—		—		—		Ca	4	22.3	%	—	%	⁽²⁾	—	%
P3	Pooled	Mezz	2,962		1,419		636		(783	)	Caa3	17	22.6	%	8.2	%	⁽²⁾	43.5	%
P4	Pooled	Mezz	4,060		400		119		(281	)	Ca	9	19.2	%	7.1	%	⁽³⁾	26.9	%
P5	Pooled	Mezz	5,877		512		368		(144	)	Ca	7	19.8	%	20.0	%	⁽²⁾	62.7	%
	Held to Maturity:
P6	Pooled	Mezz	1,351		43		707		664		Caa1	6	19.5	%	20.0	%	⁽²⁾	65.7	%
P7	Pooled	Mezz	3,367		—		—		—		Ca	4	22.3	%	—	%	⁽²⁾	—	%
	Single issuer trust preferred securities
	Available for sale:
S5	Single		261		235		249		14		NR	1	—	%	—	%
	Held to Maturity:
S9	Single		4,000		4,000		4,000		—		NR	1	—	%	—	%


(1)	The differences noted consist of unrealized gains (losses) recorded at September 30, 2014 and noncredit other-than-temporary impairment losses recorded subsequent to April 1, 2009 that have not been reclassified as credit losses.


(2)	Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default. This model for this security assumes that all collateral that is currently deferring will default with a zero recovery rate. The underlying issuers can cure, thus this bond could recover at a higher percentage upon default than zero.


(3)	Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default. The model for this security assumes that one of the banks that is currently deferring will cure. If additional underlying issuers cure, this bond could recover at a higher percentage.

(4)

Excess subordination is defined as the additional defaults/deferrals necessary in the next reporting period to deplete the entire credit enhancement (excess interest and over-collateralization) beneath our tranche within each pool to the point that would cause a "break in yield." This amount assumes that all currently performing collateral continues to perform. A break in yield means that our security would not be expected to receive all the contractual cash flows (principal and interest) by maturity. The "percent of current performing collateral" is the ratio of the "excess subordination amount" to current performing collateral—a higher percent means there is more excess subordination to absorb additional defaults/deferrals, and the better our security is protected from loss.

Amortized Cost And Estimated Fair Value Of Debt Securities By Contractual Maturity

The amortized cost and estimated fair value of debt securities at September 30, 2014, by contractual maturity, are shown in the following table (in thousands). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties. Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.



	Amortized Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	8,246	$	8,289
Due after one year through five years	19,515		20,162
Due after five years through ten years	27,059		27,672
Due after ten years	191,402		189,153
	$	246,222	$	245,276
Securities Held-to-Maturity
Due in one year or less	$	—
Due after one year through five years	—
Due after five years through ten years	—
Due after ten years	93,089		95,343
	$	93,089	$	95,343

Gross Gains And Losses Realized

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands). The specific identification method is used to determine the cost basis of securities sold.



	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013

Gross realized gains	$	71	$	—	$	972	$	93
Gross realized losses	—		—		—		—
Net investment security gains	$	71	$	—	$	972	$	93

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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- Definition

Tabular disclosure of all investments in certain debt and equity securities for which the entity has the positive intent and ability to hold until maturity.

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- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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