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Securities
9 Months Ended
Sep. 30, 2015
Investments, Debt and Equity Securities [Abstract]  
Securities
Securities

Amortized costs and fair values of securities held to maturity are summarized as follows.
 
September 30, 2015
(Dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Held to Maturity
 
 
 
 
 
 
 
Obligations of states and political subdivisions
$
1,500

 
$

 
$
(125
)
 
$
1,375

Total
$
1,500

 
$

 
$
(125
)
 
$
1,375


 
December 31, 2014
(Dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Held to Maturity
 
 
 
 
 
 
 
Obligations of states and political subdivisions
$
1,500

 
$

 
$
(103
)
 
$
1,397

Total
$
1,500

 
$

 
$
(103
)
 
$
1,397


The amortized cost and fair value of securities held to maturity as of September 30, 2015, by contractual maturity are shown below. 
 
September 30, 2015
(Dollars in thousands)
Amortized
Cost
 
Fair
Value
Held to Maturity
 
 
 
Due after ten years
$
1,500

 
$
1,375

Total
$
1,500

 
$
1,375




Amortized costs and fair values of securities available for sale are summarized as follows:
 
September 30, 2015
(Dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Available for Sale
 
 
 
 
 
 
 
U.S. government agencies
$
67,119

 
$
656

 
$
(58
)
 
$
67,717

U.S. Treasury securities
50

 

 

 
50

Obligations of states and political subdivisions
75,131

 
1,908

 
(470
)
 
76,569

Mortgage-backed securities:
 
 
 
 
 
 
 
Agency
137,836

 
4,282

 
(434
)
 
141,684

Non-agency
14,914

 
28

 
(60
)
 
14,882

Other asset backed securities
54,958

 
505

 
(475
)
 
54,988

Corporate securities
17,554

 
2

 
(667
)
 
16,889

Total
$
367,562

 
$
7,381

 
$
(2,164
)
 
$
372,779


 
December 31, 2014
(Dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Available for Sale
 
 
 
 
 
 
 
U.S. government agencies
$
41,317

 
$
283

 
$
(203
)
 
$
41,397

Obligations of states and political subdivisions
55,541

 
2,408

 
(209
)
 
57,740

Mortgage-backed securities:
 
 
 
 
 
 
 

Agency
169,257

 
4,698

 
(742
)
 
173,213

Non-agency
28,235

 
115

 
(227
)
 
28,123

Other asset backed securities
31,338

 
433

 
(58
)
 
31,713

Corporate securities
16,545

 
131

 
(599
)
 
16,077

Total
$
342,233

 
$
8,068

 
$
(2,038
)
 
$
348,263



The amortized cost and fair value of securities available for sale as of September 30, 2015, by contractual maturity are shown below.  Maturities may differ from contractual maturities in corporate and mortgage-backed securities because the securities and mortgages underlying the securities may be called or repaid without any penalties.  Therefore, these securities are not included in the maturity categories in the following maturity summary.
 
September 30, 2015
(Dollars in thousands)
Amortized
Cost
 
Fair
Value
Due in one year or less
$
320

 
$
321

Due after one year through five years
10,639

 
11,067

Due after five years through ten years
25,868

 
25,675

Due after ten years
123,027

 
124,162

Mortgage-backed securities
152,750

 
156,566

Other asset backed securities
54,958

 
54,988

Total
$
367,562

 
$
372,779



Proceeds from maturities, calls, principal repayments and sales of securities available for sale during the nine months ended September 30, 2015, were $82.3 million.  Gross gains of $175,000 and gross losses of $37,000 were realized, respectively.  The tax expense applicable to these net realized gains amounted to $47,000.

The carrying value of securities pledged to qualify for fiduciary powers, to secure public monies and for other purposes as required by law amounted to $109.5 million and $125.7 million at September 30, 2015 and December 31, 2014, respectively.
Investments in an unrealized loss position that are temporarily impaired are as follows:

(Dollars in thousands)
 
Less than Twelve Months
 
Twelve Months or Greater
 
Total
September 30, 2015
 
Fair Value
 
Gross
Unrealized Losses
 
Fair Value
 
Gross
Unrealized Losses
 
Fair Value
 
Gross
Unrealized Losses
Held to Maturity
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and political subdivisions
 
$
1,375

 
$
(125
)
 
$

 
$

 
$
1,375

 
$
(125
)
Total
 
$
1,375

 
$
(125
)
 
$

 
$

 
$
1,375

 
$
(125
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Available for Sale
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agencies
 
$
12,515

 
$
(24
)
 
$
2,481

 
$
(34
)
 
$
14,996

 
$
(58
)
Obligations of states and political subdivisions
 
18,340

 
(306
)
 
978

 
(164
)
 
19,318

 
(470
)
Mortgage-backed securities:
 
 

 
 

 
 

 
 

 
 

 
 

Agency
 
18,710

 
(148
)
 
9,372

 
(286
)
 
28,082

 
(434
)
Non-agency
 
9,370

 
(46
)
 
1,861

 
(14
)
 
11,231

 
(60
)
Other asset backed securities
 
21,564

 
(220
)
 
12,244

 
(255
)
 
33,808

 
(475
)
Corporate securities
 
13,193

 
(414
)
 
2,747

 
(253
)
 
15,940

 
(667
)
Total
 
$
93,692

 
$
(1,158
)
 
$
29,683

 
$
(1,006
)
 
$
123,375

 
$
(2,164
)


(Dollars in thousands)
 
Less than Twelve Months
 
Twelve Months or Greater
 
Total
December 31, 2014
 
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
Held to Maturity
 
 
 
 
 
 
 
 
 
 
 
 
Obligations of states and political subdivisions
 
$
1,397

 
$
(103
)
 
$

 
$

 
$
1,397

 
$
(103
)
Total
 
$
1,397

 
$
(103
)
 
$

 
$

 
$
1,397

 
$
(103
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Available for Sale
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agencies
 
$
15,331

 
$
(65
)
 
$
5,833

 
$
(138
)
 
$
21,164

 
$
(203
)
Obligations of states and political subdivisions
 
2,780

 
(14
)
 
3,456

 
(195
)
 
6,236

 
(209
)
Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 

 
 

Agency
 
28,065

 
(327
)
 
11,027

 
(415
)
 
39,092

 
(742
)
Non-agency
 
15,488

 
(167
)
 
4,730

 
(60
)
 
20,218

 
(227
)
Other asset backed securities
 
6,594

 
(45
)
 
1,077

 
(13
)
 
7,671

 
(58
)
Corporate securities
 
9,192

 
(391
)
 
792

 
(208
)
 
9,984

 
(599
)
Total
 
$
77,450

 
$
(1,009
)
 
$
26,915

 
$
(1,029
)
 
$
104,365

 
$
(2,038
)


A total of 145 securities have been identified by the Company as temporarily impaired at September 30, 2015.  Of the 145 securities, 143 are investment grade and two are speculative grade.  Mortgage-backed securities, municipal securities, other asset backed securities and corporate securities make up the majority of the gross unrealized losses for temporarily impaired securities at September 30, 2015.  Market prices change daily and are affected by conditions beyond the control of the Company.  Although the Company has the ability to hold these securities until the temporary loss is recovered, decisions by management may necessitate a sale before the loss is fully recovered.  No such sales were anticipated or required as of September 30, 2015.  Investment decisions reflect the strategic asset/liability objectives of the Company.  The investment portfolio is analyzed frequently by the Company and managed to provide an overall positive impact to the Company’s consolidated income statement and balance sheet.

Other-than-temporary impairment losses

At September 30, 2015, the Company evaluated the investment portfolio for possible other-than-temporary impairment losses and concluded that no adverse change in cash flows occurred and did not consider any portfolio securities to be other-than-temporarily impaired.  Based on this analysis and because the Company does not intend to sell securities prior to maturity and it is more likely than not the Company will not be required to sell any securities before recovery of amortized cost basis, which may be at maturity. For debt securities related to corporate securities, the Company determined that there was no other adverse change in the cash flows as viewed by a market participant; therefore, the Company does not consider the investments in these assets to be other-than-temporarily impaired at September 30, 2015.  However, there is a risk that the Company’s continuing reviews could result in recognition of other-than-temporary impairment charges in the future. For the three and nine months ended September 30, 2015 and the year ended December 31, 2014, no credit related impairment losses were recognized by the Company.

The Company’s investment in FHLB stock totaled $3.6 million at September 30, 2015 and December 31, 2014.  FHLB stock is generally viewed as a long-term investment and as a restricted security which is carried at cost because there is no market for the stock other than the FHLB or member institutions.  Therefore, when evaluating FHLB stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value.  The Company does not consider this investment to be other-than-temporarily impaired at September 30, 2015, and no impairment has been recognized.  FHLB stock is shown in restricted securities on the consolidated balance sheets.

The Company also has an investment in Federal Reserve Bank (“FRB”) stock which totaled $1.7 million at September 30, 2015 and December 31, 2014, respectively. The investment in FRB stock is a required investment and is carried at cost since there is no ready market. The Company does not consider this investment to be other-than-temporarily impaired at September 30, 2015 and no impairment has been recognized. FRB stock is shown in the restricted securities line item on the consolidated balance sheets.