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Investment Securities
6 Months Ended
Jun. 30, 2017
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
Investment Securities
 
The portfolio of investment securities consisted of the following (in thousands):

 
 
June 30, 2017
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
Available-for-sale:
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions
 
$
24,902

 
$
271

 
$
338

 
$
24,835

GSE mortgage-backed securities
 
74,948

 
1,799

 
7

 
76,740

Collateralized mortgage obligations: residential
 
222,076

 
400

 
1,804

 
220,672

Collateralized mortgage obligations: commercial
 
2,573

 

 
24

 
2,549

Mutual funds
 
2,100

 

 
23

 
2,077

Corporate debt securities
 
20,974

 
733

 

 
21,707

 
 
$
347,573

 
$
3,203

 
$
2,196

 
$
348,580

 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
Available-for-sale:
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions
 
$
29,935

 
$
226

 
$
1,020

 
$
29,141

GSE mortgage-backed securities
 
72,144

 
1,736

 
302

 
73,578

Collateralized mortgage obligations: residential
 
223,602

 
206

 
3,606

 
220,202

Collateralized mortgage obligations: commercial
 
3,135

 

 
53

 
3,082

Mutual funds
 
2,100

 

 
41

 
2,059

  Corporate debt securities
 
13,500

 
311

 

 
13,811

 
 
$
344,416

 
$
2,479

 
$
5,022

 
$
341,873



 
 
June 30, 2017
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
Held-to-maturity:
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions
 
$
36,482

 
$
724

 
$

 
$
37,206

GSE mortgage-backed securities
 
39,817

 
569

 
82

 
40,304

Collateralized mortgage obligations: residential
 
8,240

 

 
218

 
8,022

Collateralized mortgage obligations: commercial
 
2,923

 
5

 

 
2,928

 
 
$
87,462

 
$
1,298

 
$
300

 
$
88,460

 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
Held-to-maturity:
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions
 
$
40,515

 
$
309

 
$
39

 
$
40,785

GSE mortgage-backed securities
 
44,375

 
426

 
311

 
44,490

Collateralized mortgage obligations: residential
 
8,969

 

 
323

 
8,646

Collateralized mortgage obligations: commercial
 
4,352

 

 
12

 
4,340

 
 
$
98,211

 
$
735

 
$
685

 
$
98,261



With the exception of one private-label collateralized mortgage obligations (“CMOs”) with a combined balance remaining of $14,000 at June 30, 2017, all of the Company’s CMOs are government-sponsored enterprise (“GSE”) securities.
 
The following table presents the amortized cost and fair value of debt securities at June 30, 2017 by contractual maturity (in thousands).   Actual maturities will differ from contractual maturities because of rights to call or repay obligations with or without penalties and scheduled and unscheduled principal payments on mortgage-backed securities and collateralized mortgage obligations.

 
 
Amortized
Cost
 
Fair
Value
Available-for-sale:
 
 
 
 
Due in one year or less
 
$
1,139

 
$
1,142

Due after one year through five years
 
8,265

 
8,484

Due after five years through ten years
 
53,450

 
55,145

Due after ten years
 
282,619

 
281,732

 
 
$
345,473

 
$
346,503

 
 
 
 
 
 
 
Amortized
Cost
 
Fair
Value
Held-to-maturity:
 
 
 
 
Due in one year or less
 
$
1,235

 
$
1,236

Due after one year through five years
 
5,633

 
5,699

Due after five years through ten years
 
42,646

 
43,368

Due after ten years
 
37,948

 
38,157

 
 
$
87,462

 
$
88,460



Details concerning investment securities with unrealized losses are as follows (in thousands):
 
 
 
June 30, 2017
 
 
Securities with losses
under 12 months
 
Securities with losses
over 12 months
 
Total
 
 
Fair
Value
 
Gross
Unrealized
 Loss
 
Fair
Value
 
Gross
Unrealized
Loss
 
Fair
Value
 
Gross
Unrealized
Loss
Available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of state and  political subdivisions
 
$
12,843

 
$
338

 
$

 
$

 
$
12,843

 
$
338

GSE mortgage-backed  securities
 
6,440

 
7

 

 

 
6,440

 
7

Collateralized mortgage  obligations: residential
 
142,077

 
1,380

 
20,155

 
424

 
162,232

 
1,804

Collateralized mortgage  obligations: commercial
 

 

 
2,549

 
24

 
2,549

 
24

Mutual funds
 
2,077

 
23

 

 

 
2,077

 
23

 
 
$
163,437

 
$
1,748

 
$
22,704

 
$
448

 
$
186,141

 
$
2,196

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
Securities with losses
under 12 months
 
Securities with losses
over 12 months
 
Total
 
 
Fair
Value
 
Gross
Unrealized
Loss
 
Fair
Value
 
Gross
Unrealized
Loss
 
Fair
Value
 
Gross
Unrealized
Loss
Available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions
 
$
13,402

 
$
1,020

 
$

 
$

 
$
13,402

 
$
1,020

GSE mortgage-backed  securities
 
29,119

 
302

 

 

 
29,119

 
302

Collateralized mortgage  obligations: residential
 
187,235

 
3,099

 
14,194

 
507

 
201,429

 
3,606

Collateralized mortgage  obligations: commercial
 
961

 
4

 
2,121

 
49

 
3,082

 
53

Mutual funds
 
2,059

 
41

 

 

 
2,059

 
41

 
 
$
232,776

 
$
4,466

 
$
16,315

 
$
556

 
$
249,091

 
$
5,022


 
 
June 30, 2017
 
 
Securities with losses
under 12 months
 
Securities with losses
over 12 months
 
Total
 
 
Fair
Value
 
Gross
Unrealized
Loss
 
Fair
Value
 
Gross
Unrealized Loss
 
Fair
Value
 
Gross
Unrealized
Loss
Held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
 
GSE mortgage-backed securities
 
$
5,488

 
$
82

 
$

 
$

 
$
5,488

 
$
82

Collateralized mortgage obligations: residential
 

 

 
8,022


218

 
8,022

 
218

 
 
$
5,488

 
$
82

 
$
8,022

 
$
218

 
$
13,510

 
$
300

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 
Securities with losses
under 12 months
 
Securities with losses
over 12 months
 
Total
 
 
Fair
Value
 
Gross
Unrealized
Loss
 
Fair
Value
 
Gross
Unrealized
Loss
 
Fair
Value
 
Gross
Unrealized
Loss
Held-to-maturity:
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of state and political subdivisions
 
$
8,054

 
$
39

 
$

 
$

 
$
8,054

 
$
39

GSE mortgage-backed securities
 
19,408

 
311

 

 

 
19,408

 
311

Collateralized mortgage obligations: residential
 

 

 
8,645

 
323

 
8,645

 
323

Collateralized mortgage obligations: commercial
 
4,340

 
12

 

 

 
4,340

 
12

 
 
$
31,802

 
$
362

 
$
8,645

 
$
323

 
$
40,447

 
$
685



Management evaluates each quarter whether unrealized losses on securities represent impairment that is other than temporary. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities.  If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management then reviews for potential other than temporary impairment based upon other qualitative factors.  In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market’s perception of the issuer’s financial health and the security’s credit quality.  If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined.  For equity securities, management reviews the near term prospects of the issuer, the nature and cause of the unrealized loss, the severity and duration of the impairments and other factors when determining if an unrealized loss is other than temporary. If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.
 
As of June 30, 2017, 49 securities had unrealized losses totaling 1.22% of the individual securities’ amortized cost basis and 0.57% of the Company’s total amortized cost basis.  Of the 49 securities, 10 had been in an unrealized loss position for over twelve months at June 30, 2017.  These 10 securities had an amortized cost basis and unrealized loss of $31.4 million and $666,000, respectively.  The unrealized losses on debt securities at June 30, 2017 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased.  Management identified no impairment related to credit quality.  At June 30, 2017, management had the intent and ability to hold impaired securities and no impairment was evaluated as other than temporary.  As a result, no other than temporary impairment losses were recognized during the three months ended June 30, 2017.
 
During the six months ended June 30, 2017, the Company sold 10 securities classified as available-for-sale and 1 security classified as held-to-maturity. Of the available-for-sale securities, 7 securities were sold with gains totaling $111,000 and 3 securities were sold at a loss of $109,000 for a net gain of $2,000.  The decision to sell the 1 held-to-maturity security, which was sold at a gain of $7,000, was based on the pre-refunding of the bond which would accelerate the maturity of the bond by 15 years with an anticipated call date within six months. During the six months ended June 30, 2016, the Company sold 2 securities classified as available-for-sale at a gross gain of $20,000.  

Securities with an aggregate carrying value of approximately $294.5 million and $293.4 million at June 30, 2017 and December 31, 2016, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.