Trading Securities

As of December 31, 2017 and December 31, 2016 the Company had trading securities of $1.3 million and $804,000, respectively. These securities are held in a rabbi trust and will be used for future payments associated with the Company's non-qualified 401(k) Restoration Plan and Non-qualified Deferred Compensation Plan.

Available for Sale and Held to Maturity Securities

The following table presents a summary of the amortized cost, gross unrealized holding gains and losses and fair value of securities available for sale and securities held to maturity for the periods indicated:



	December 31, 2017									December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
Available for sale securities
U.S. government agency securities	$	35,475	$	86	$	(131	)	$	35,430	$	24,006	$	238	$	—		$	24,244
Agency mortgage-backed securities	214,934		1,897		(1,067		)	215,764		173,268		2,852		(736		)	175,384
Agency collateralized mortgage obligations	124,098		78		(2,164		)	122,012		101,094		106		(1,332		)	99,868
State, county, and municipal securities	2,237		37		—			2,274		3,743		50		—			3,793
Single issuer trust preferred securities issued by banks	2,012		4		—			2,016		2,311		3		(3		)	2,311
Pooled trust preferred securities issued by banks and insurers	2,179		—		(539		)	1,640		2,200		—		(616		)	1,584
Small business administration pooled securities	47,852		44		(118		)	47,778		37,561		—		(372		)	37,189
Equity securities	19,432		1,594		(442		)	20,584		19,183		641		(553		)	19,271
Total available for sale securities	448,219		3,740		(4,461		)	447,498		363,366		3,890		(3,612		)	363,644
Held to maturity securities
U.S. treasury securities	1,006		29		—			1,035		1,007		47		—			1,054
Agency mortgage-backed securities	204,768		1,791		(736		)	205,823		156,088		2,274		(858		)	157,504
Agency collateralized mortgage obligations	262,998		397		(4,987		)	258,408		297,445		1,002		(3,797		)	294,650
Single issuer trust preferred securities issued by banks	1,500		29		—			1,529		1,500		44		—			1,544
Small business administration pooled securities	27,416		183		(200		)	27,399		31,036		189		(327		)	30,898
Total held to maturity securities	497,688		2,429		(5,923		)	494,194		487,076		3,556		(4,982		)	485,650
Total	$	945,907	$	6,169	$	(10,384	)	$	941,692	$	850,442	$	7,446	$	(8,594	)	$	849,294

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale.

The actual maturities of certain securities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. A schedule of the contractual maturities of securities available for sale and securities held to maturity as of December 31, 2017 is presented below:



	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars in thousands)
Due in one year or less	$	3,213	$	3,215	$	—	$	—
Due after one year to five years	49,241		49,312		15,636		15,711
Due after five to ten years	107,417		107,402		16,801		17,098
Due after ten years	268,916		266,985		465,251		461,385
Total debt securities	428,787		426,914		497,688		494,194
Equity securities	19,432		20,584		—		—
Total	$	448,219	$	447,498	$	497,688	$	494,194

Inclusive in the table above is $9.4 million of callable securities at December 31, 2017.

The carrying value of securities pledged to secure public funds, trust deposits, repurchase agreements and for other purposes, as required or permitted by law, was $547.2 million and $482.1 million at December 31, 2017 and 2016, respectively.

At December 31, 2017 and 2016, the Company had no investments in obligations of individual states, counties, or municipalities, which exceeded 10% of stockholders’ equity.

Other-Than-Temporary Impairment

The Company continually reviews investment securities for the existence of OTTI, taking into consideration current market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, the credit worthiness of the obligor of the security, volatility of earnings, current analysts’ evaluations, the Company’s intent to sell the security, whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery, as well as other qualitative factors. The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment.

The following tables show the gross unrealized losses and fair value of the Company’s investments in an unrealized loss position, which the Company has not deemed to be OTTI, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:



		December 31, 2017
		Less than 12 months					12 months or longer					Total
Description of securities	# of holdings	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
		(Dollars in thousands)
U.S. government agency securities	4	$	24,343	$	(131	)	$	—	$	—		$	24,343	$	(131	)
Agency mortgage-backed securities	84	$	235,411	$	(1,493	)	$	14,886	$	(310	)	$	250,297	$	(1,803	)
Agency collateralized mortgage obligations	42	178,142		(1,579		)	159,506		(5,572		)	337,648		(7,151		)
Pooled trust preferred securities issued by banks and insurers	1	—		—			1,640		(539		)	1,640		(539		)
Small business administration pooled securities	4	34,553		(223		)	9,647		(95		)	44,200		(318		)
Equity securities	28	3,290		(39		)	7,619		(403		)	10,909		(442		)
Total temporarily impaired securities	163	$	475,739	$	(3,465	)	$	193,298	$	(6,919	)	$	669,037	$	(10,384	)

		December 31, 2016
		Less than 12 months					12 months or longer					Total
Description of securities	# of holdings	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
		(Dollars in thousands)
Agency mortgage-backed securities	57	$	137,949	$	(1,594	)	$	—	$	—		$	137,949	$	(1,594	)
Agency collateralized mortgage obligations	32	243,051		(3,140		)	47,403		(1,989		)	290,454		(5,129		)
Single issuer trust preferred securities issued by banks and insurers	1	—		—			1,036		(3		)	1,036		(3		)
Pooled trust preferred securities issued by banks and insurers	1	—		—			1,583		(616		)	1,583		(616		)
Small business administration pooled securities	5	59,846		(699		)	—		—			59,846		(699		)
Equity securities	25	3,625		(77		)	6,334		(476		)	9,959		(553		)
Total temporarily impaired securities	121	$	444,471	$	(5,510	)	$	56,356	$	(3,084	)	$	500,827	$	(8,594	)

The Company does not intend to sell these investments and has determined based upon available evidence that it is more likely than not that the Company will not be required to sell the security before the recovery of its amortized cost basis. As a result, the Company does not consider these investments to be OTTI. The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, and current analysts’ evaluations.

As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category are as follows at December 31, 2017:

•

U.S. Government Agency Securities, Agency Mortgage-Backed Securities, Agency Collateralized Mortgage Obligations and Small Business Administration Pooled Securities: These portfolios have contractual terms that generally do not permit the issuer to settle the securities at a price less than the current par value of the investment. The decline in market value of these securities is attributable to changes in interest rates and not credit quality. Additionally, these securities are implicitly guaranteed by the U.S. Government or one of its agencies.

•

Pooled Trust Preferred Securities: This portfolio consists of one below investment grade security which is performing. The unrealized loss on this security is attributable to the illiquid nature of the trust preferred market in the current economic and regulatory environment. Management evaluates collateral credit and instrument structure, including current and expected deferral and default rates and timing. In addition, discount rates are determined by evaluating comparable spreads observed currently in the market for similar instruments.

•

Equity Securities: This portfolio consists of mutual funds and other equity investments. During some periods, the mutual funds in the Company’s investment portfolio may have unrealized losses resulting from market fluctuations as well as the risk premium associated with that particular asset class. For example, emerging market equities tend to trade at a higher risk premium than U.S. government bonds and thus, will fluctuate to a greater degree on both the upside and the downside. In the context of a well-diversified portfolio, however, the correlation amongst the various asset classes represented by the funds serves to minimize downside risk. The Company evaluates each mutual fund in the portfolio regularly and measures performance on both an absolute and relative basis. A reasonable recovery period for positions with an unrealized loss is based on management’s assessment of general economic data, trends within a particular asset class, valuations, earnings forecasts and bond durations. The Company has the ability and intent to hold these equity securities until a recovery of fair value.

There was no OTTI recorded for the years ended December 31, 2017, 2016 or 2015. Additionally, there was no cumulative credit related component of OTTI as of December 31, 2017, 2016 and 2015, as securities with $10.0 million of cumulative credit related OTTI were sold during 2015.