SECURITIES

3 Months Ended

Mar. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Securities [Text Block]

NOTE D — SECURITIES

The amortized cost and fair value of securities available for sale and held for investment at March 31, 2015 and December 31, 2014 are summarized as follows:

 

	March 31, 2015
	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	3,773	$	90	$	0	$	3,863
Mortgage-backed securities of U.S. Government Sponsored Entities		117,961		1,790		(260)		119,491
Collateralized mortgage obligations of U.S. Government Sponsored Entities		334,248		2,086		(3,647)		332,687
Private mortgage backed securities		30,011		50		(221)		29,840
Private collateralized mortgage obligations		94,072		822		(1,007)		93,887
Collateralized loan obligations		127,416		13		(1,053)		126,376
Obligations of state and political subdivisions		23,241		850		(3)		24,088
	$	730,722	$	5,701	$	(6,191)	$	730,232
SECURITIES HELD FOR INVESTMENT
Mortgage-backed securities of U.S. Government Sponsored Entities	$	66,291	$	1,876	$	0	$	68,167
Collateralized mortgage obligations of U.S. Government Sponsored Entities		106,763		1,768		0		108,531
Private collateralized mortgage obligations		8,708		0		(84)		8,624
Collateralized loan obligations		41,299		125		(240)		41,184
	$	223,061	$	3,769	$	(324)	$	226,506

	December 31, 2014
	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	3,876	$	23	$	0	$	3,899
Mortgage-backed securities of U.S. Government Sponsored Entities		123,981		1,501		(423)		125,059
Collateralized mortgage obligations of U.S. Government Sponsored Entities		352,483		1,075		(6,077)		347,481
Private mortgage backed securities		29,967		291		0		30,258
Private collateralized mortgage obligations		85,175		688		(728)		85,135
Collateralized loan obligations		127,397		0		(2,172)		125,225
Obligations of state and political subdivisions		23,511		810		(3)		24,318
	$	746,390	$	4,388	$	(9,403)	$	741,375
SECURITIES HELD FOR INVESTMENT
Mortgage-backed securities of U.S. Government Sponsored Entities	$	67,535	$	812	$	0	$	68,347
Collateralized mortgage obligations of U.S. Government Sponsored Entities		114,541		695		(280)		114,956
Collateralized loan obligations		25,828		0		(343)		25,485
	$	207,904	$	1,507	$	(623)	$	208,788

No sales of securities during the three month period ended March 31, 2015 were transacted. Proceeds from sales of securities during the three month period ended March 31, 2014 were $4,061,000 with gross gains of $17,000 and no gross losses. .

On May 31, 2014 management identified $158.8 million of investment securities available for sale and transferred them into held for investment. The unrealized holding losses at the date of transfer totaled $3.1 million.

The securities that were transferred into the held for investment category from the available for sale category, the unrealized holding losses at the date of the transfer will continue to be reported in other comprehensive income, and will be amortized over the remaining life of the security as an adjustment of yield in a manner consistent with the amortization of a discount. The amortization of unrealized holding losses reported in equity will offset the effect on interest income of the amortization of the discount.

Securities at March 31, 2015 with a carrying and fair value of $131,753,000 and $131,769,000, respectively, at March 31, 2015 were pledged as collateral for United States Treasury deposits, and other public and trust deposits. Securities with a carrying value and fair value of $206,170,000 and $206,996,000, respectively, were pledged as collateral for repurchase agreements.

The amortized cost and fair value of securities at March 31, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.

	Held for Investment				Available for Sale
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Due in less than one year	$	0	$	0	$	0	$	0
Due after one year through five years		4,838		4,750		637		638
Due after five years through ten years		36,461		36,435		8,298		8,464
Due after ten years		0		0		145,494		145,224
		41,299		41,185		154,429		154,326
Mortgage-backed securities of U.S. Government Sponsored Entities		66,291		68,167		117,961		119,491
Collateralized mortgage obligations of U.S. Government Sponsored Entities		106,763		108,530		334,248		332,687
Private mortgage backed securities		0		0		30,011		29,840
Private collateralized mortgage obligations		8,708		8,624		94,072		93,888
	$	223,061	$	226,506	$	730,721	$	730,232

The estimated fair value of a security is determined based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flows analyses, using observable market data where available. The tables below indicate the amount of securities with unrealized losses and period of time for which these losses were outstanding at March 31, 2015 and December 31, 2014, respectively.

	March 31, 2015
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
Mortgage-backed securties of U.S. Governement Sponsored Entities	$	50,484	$	(131)	$	9,963	$	(129)	$	60,447	$	(260)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		40,219		(206)		156,937		(3,441)		197,156		(3,647)
Private mortage backed securities		14,336		(221)		0		0		14,336		(221)
Private collaterlized mortgage obligations		47,173		(856)		14,311		(235)		61,484		(1,091)
Collateralized loan obligations		103,128		(868)		24,494		(424)		127,622		(1,292)
Obligations of state and political subdivisions		1,760		(3)		0		0		1,760		(3)
Total temporarily impaired securities	$	257,100	$	(2,285)	$	205,705	$	(4,229)	$	462,805	$	(6,514)

	December 31, 2014
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses		Value		Losses		Value		Losses
U.S. Treasury securities and obligations of U.S. Governement Sponsored Entities	$	100	$	0	$	0	$	0	$	100	$	0
Mortgage-backed securties of U.S. Governement Sponsored Entities		36,890		(153)		21,640		(271)		58,530		(424)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		100,148		(833)		170,400		(5,523)		270,548		(6,356)
Private collaterlized mortgage obligations		61,554		(914)		10,091		(157)		71,645		(1,071)
Collateralized loan obligations		100,714		(1,769)		24,511		(403)		125,225		(2,172)
Obligations of state and political subdivisions		1,734		(3)		0		0		1,734		(3)
Total temporarily impaired securities	$	301,140	$	(3,672)	$	226,642	$	(6,354)	$	527,782	$	(10,026)

At March 31, 2015, approximately $1.3 million of the unrealized losses pertain to private label securities secured by collateral originated in 2005 and prior. Their fair value is $75.8 million and is attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The collateral underlying these mortgage investments are 30- and 15-year fixed and 10/1 adjustable rate mortgage loans with low loan to values, subordination and historically have had minimal foreclosures and losses. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At March 31, 2015, the Company also had $3.9 million of unrealized losses on collateralized mortgage obligations and mortgage backed securities of government sponsored entities having a fair value of $257.6 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At March 31, 2015, the Company also had $1.3 million of unrealized losses on collateralized loan obligations having a fair value of $127.6 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

As of March 31, 2015, management does not intend to sell securities that are in unrealized loss positions and it is not more likely than not that the Company will be required to sell these securities before recovery of the amortized cost basis. Therefore, management does not consider any investment to be other-than-temporarily impaired at March 31, 2015.

Included in other assets is $15.1 million of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. At March 31, 2015, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $15.1 million of cost method investment securities.