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Securities
 9 Months Ended
Sep. 30, 2018
Investments, Debt and Equity Securities [Abstract]  
SECURITIES SECURITIES
Trading Securities
The Company had trading securities of $1.6 million and $1.3 million as of September 30, 2018 and December 31, 2017, respectively. These securities are held in a rabbi trust and will be used for future payments associated with the Company’s nonqualified 401(k) Restoration Plan and Nonqualified Deferred Compensation Plan.
Equity Securities
The Company had equity securities of $20.4 million as of September 30, 2018. These securities consist primarily of mutual funds held in a rabbi trust and will be used for future payments associated with the Company’s supplemental executive retirement plans. These securities were previously classified as available for sale and were reclassified as equity securities due to a change in accounting guidance effective January 1, 2018. The equity securities had a fair value of $20.6 million as of December 31, 2017 and are reflected accordingly as available for sale in the table below.
Available for Sale and Held to Maturity Securities
The following table presents a summary of the amortized cost, gross unrealized gains and losses, and fair value of securities available for sale and securities held to maturity for the periods indicated:
 
September 30, 2018
 
December 31, 2017
 
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
$
32,479

 
$
—

 
$
(907
)
 
$
31,572

 
$
35,475

 
$
86

 
$
(131
)
 
$
35,430

Agency mortgage-backed securities
213,159

 
874

 
(6,510
)
 
207,523

 
214,934

 
1,897

 
(1,067
)
 
215,764

Agency collateralized mortgage obligations
143,764

 
83

 
(6,202
)
 
137,645

 
124,098

 
78

 
(2,164
)
 
122,012

State, county, and municipal securities
1,973

 
8

 
—

 
1,981

 
2,237

 
37

 
—

 
2,274

Single issuer trust preferred securities issued by banks
1,000

 
4

 
—

 
1,004

 
2,012

 
4

 
—

 
2,016

Pooled trust preferred securities issued by banks and insurers
2,159

 
—

 
(359
)
 
1,800

 
2,179

 
—

 
(539
)
 
1,640

Small business administration pooled securities
55,961

 
—

 
(1,625
)
 
54,336

 
47,852

 
44

 
(118
)
 
47,778

Equity securities
—

 
—

 
—

 
—

 
19,432

 
1,594

 
(442
)
 
20,584

Total available for sale securities
$
450,495

 
$
969

 
$
(15,603
)
 
$
435,861

 
$
448,219

 
$
3,740

 
$
(4,461
)
 
$
447,498

Held to maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
1,004

 
$
2

 
$
—

 
$
1,006

 
$
1,006

 
$
29

 
$
—

 
$
1,035

Agency mortgage-backed securities
189,479

 
136

 
(5,527
)
 
184,088

 
204,768

 
1,791

 
(736
)
 
205,823

Agency collateralized mortgage obligations
336,346

 
28

 
(12,858
)
 
323,516

 
262,998

 
397

 
(4,987
)
 
258,408

Single issuer trust preferred securities issued by banks
1,500

 
—

 
(10
)
 
1,490

 
1,500

 
29

 
—

 
1,529

Small business administration pooled securities
25,376

 
—

 
(854
)
 
24,522

 
27,416

 
183

 
(200
)
 
27,399

Total held to maturity securities
$
553,705

 
$
166

 
$
(19,249
)
 
$
534,622

 
$
497,688

 
$
2,429

 
$
(5,923
)
 
$
494,194

Total
$
1,004,200

 
$
1,135

 
$
(34,852
)
 
$
970,483

 
$
945,907

 
$
6,169

 
$
(10,384
)
 
$
941,692


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 September 30, 2018 is presented below:

 
Due in one year or less
 
Due after one year to five years
 
Due after five to ten years
 
Due after ten years
 
Total
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
Amortized
Cost
 
Fair
Value
 
(Dollars in thousands)
Available for sale securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agency securities
$
—

 
$
—

 
$
20,012

 
$
19,728

 
$
12,467

 
$
11,844

 
$
—

 
$
—

 
$
32,479

 
$
31,572

Agency mortgage-backed securities
278

 
281

 
44,914

 
43,697

 
99,439

 
96,667

 
68,528

 
66,878

 
213,159

 
207,523

Agency collateralized mortgage obligations
—

 
—

 
—

 
—

 
—

 
—

 
143,764

 
137,645

 
143,764

 
137,645

State, county, and municipal securities
—

 
—

 
1,022

 
1,023

 
951

 
958

 
—

 
—

 
1,973

 
1,981

Single issuer trust preferred securities issued by banks
—

 
—

 
—

 
—

 
—

 
—

 
1,000

 
1,004

 
1,000

 
1,004

Pooled trust preferred securities issued by banks and insurers
—

 
—

 
—

 
—

 
—

 
—

 
2,159

 
1,800

 
2,159

 
1,800

Small business administration pooled securities
—

 
—

 
—

 
—

 
—

 
—

 
55,961

 
54,336

 
55,961

 
54,336

Total available for sale securities
$
278

 
$
281

 
$
65,948

 
$
64,448

 
$
112,857

 
$
109,469

 
$
271,412

 
$
261,663

 
$
450,495

 
$
435,861

Held to maturity securities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
—

 
$
—

 
$
1,004

 
$
1,006

 
$
—

 
$
—

 
$
—

 
$
—

 
$
1,004

 
$
1,006

Agency mortgage-backed securities
—

 
—

 
12,442

 
12,191

 
37,473

 
36,481

 
139,564

 
135,416

 
189,479

 
184,088

Agency collateralized mortgage obligations
—

 
—

 
—

 
—

 
941

 
936

 
335,405

 
322,580

 
336,346

 
323,516

Single issuer trust preferred securities issued by banks
—

 
—

 
—

 
—

 
1,500

 
1,490

 
—

 
—

 
1,500

 
1,490

Small business administration pooled securities
—

 
—

 
—

 
—

 
—

 
—

 
25,376

 
24,522

 
25,376

 
24,522

Total held to maturity securities
$
—

 
$
—

 
$
13,446

 
$
13,197

 
$
39,914

 
$
38,907

 
$
500,345

 
$
482,518

 
$
553,705

 
$
534,622

Inclusive in the table above is $6.3 million of callable securities at September 30, 2018.
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 $523.6 million and $547.2 million at September 30, 2018 and December 31, 2017, respectively.
At September 30, 2018 and December 31, 2017, the Company had no investments in obligations of individual states, counties, or municipalities which exceeded 10% of stockholders’ equity.
Other-Than-Temporary Impairment ("OTTI")
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 are 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:
 
September 30, 2018
 
 
 
Less than 12 months
 
12 months or longer
 
Total
 
# of holdings
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
(Dollars in thousands)
U.S. government agency securities
3

 
$
31,572

 
$
(907
)
 
$
—

 
$
—

 
$
31,572

 
$
(907
)
Agency mortgage-backed securities
154

 
284,810

 
(8,375
)
 
77,412

 
(3,662
)
 
362,222

 
(12,037
)
Agency collateralized mortgage obligations
57

 
294,626

 
(8,847
)
 
154,168

 
(10,213
)
 
448,794

 
(19,060
)
Single issuer trust preferred securities issued by banks and insurers
1

 
1,490

 
(10
)
 
—

 
—

 
1,490

 
(10
)
Pooled trust preferred securities issued by banks and insurers
1

 
—

 
—

 
1,800

 
(359
)
 
1,800

 
(359
)
Small business administration pooled securities
8

 
38,264

 
(685
)
 
40,594

 
(1,794
)
 
78,858

 
(2,479
)
Total temporarily impaired securities
224

 
$
650,762

 
$
(18,824
)
 
$
273,974

 
$
(16,028
)
 
$
924,736

 
$
(34,852
)

 
December 31, 2017
 
 
 
Less than 12 months
 
12 months or longer
 
Total
 
# 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
)

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 each security before the recovery of its amortized cost basis. As a result, the Company does not consider these investments to be OTTI and accordingly, there was no OTTI recorded and no cumulative credit related component of OTTI for the three and nine months ended September 30, 2018 and 2017. 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 September 30, 2018:
•
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.
•
Single Issuer Trust Preferred Securities: This portfolio consists of one security, which is investment grade. The unrealized loss on this security is attributable to the illiquid nature of the trust preferred market in the current economic environment. Management evaluates various financial metrics for the issuers, including regulatory capital ratios of the issuers.
•
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.