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Securities
 9 Months Ended
Sep. 30, 2016
Investments, Debt and Equity Securities [Abstract]  
Securities
Securities

Amortized costs and fair values of securities held to maturity are summarized as follows.
 
September 30, 2016
(Dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Held to Maturity
 
 
 
 
 
 
 
Obligations of states and political subdivisions
$
6,477

 
$
180

 
$
—

 
$
6,657

Corporate securities
4,250

 
50

 
—

 
4,300

Total
$
10,727

 
$
230

 
$
—

 
$
10,957


 
December 31, 2015
(Dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Held to Maturity
 
 
 
 
 
 
 
Obligations of states and political subdivisions
$
1,457

 
$
—

 
$
(38
)
 
$
1,419

Corporate securities
2,750

 
24

 
(30
)
 
2,744

Total
$
4,207

 
$
24

 
$
(68
)
 
$
4,163


The amortized cost and fair value of securities held to maturity as of September 30, 2016, by contractual maturity are shown below. 
 
September 30, 2016
(Dollars in thousands)
Amortized
Cost
 
Fair
Value
Held to Maturity
 
 
 
Due after five years through ten years
$
4,250

 
$
4,300

Due after ten years
6,477

 
6,657

Total
$
10,727

 
$
10,957



Amortized costs and fair values of securities available for sale are summarized as follows:
 
September 30, 2016
(Dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Available for Sale
 
 
 
 
 
 
 
U.S. government agencies
$
69,635

 
$
827

 
$
(163
)
 
$
70,299

Obligations of states and political subdivisions
66,146

 
2,055

 
(103
)
 
68,098

Mortgage-backed securities:
 
 
 
 
 
 
 
Agency
131,134

 
3,267

 
(513
)
 
133,888

Non-agency
11,273

 
43

 
(94
)
 
11,222

Other asset backed securities
53,085

 
652

 
(465
)
 
53,272

Corporate securities
16,652

 
38

 
(851
)
 
15,839

Total
$
347,925

 
$
6,882

 
$
(2,189
)
 
$
352,618


 
December 31, 2015
(Dollars in thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
Available for Sale
 
 
 
 
 
 
 
U.S. government agencies
$
79,005

 
$
315

 
$
(380
)
 
$
78,940

Obligations of states and political subdivisions
74,071

 
1,956

 
(434
)
 
75,593

Mortgage-backed securities:
 
 
 
 
 
 
 

Agency
129,360

 
3,046

 
(745
)
 
131,661

Non-agency
12,782

 
33

 
(38
)
 
12,777

Other asset backed securities
58,958

 
426

 
(603
)
 
58,781

Corporate securities
17,557

 
22

 
(760
)
 
16,819

Total
$
371,733

 
$
5,798

 
$
(2,960
)
 
$
374,571



The amortized cost and fair value of securities available for sale as of September 30, 2016, 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, 2016
(Dollars in thousands)
Amortized
Cost
 
Fair
Value
Due in one year or less
$
580

 
$
583

Due after one year through five years
8,964

 
9,266

Due after five years through ten years
24,328

 
24,024

Due after ten years
118,561

 
120,363

Mortgage-backed securities
142,407

 
145,110

Other asset backed securities
53,085

 
53,272

Total
$
347,925

 
$
352,618



Proceeds from sales of securities available for sale during the nine months ended September 30, 2016 and 2015 were $43.9 million and $11.60 million, respectively. Proceeds from calls and principal repayments of securities available for sale during the nine months ended September 30, 2016, and 2015 were $58.7 million and $70.7 million, respectively.  For the nine months ended September 30, 2016 and 2015, gross gains of $534,000 and $175,000 and gross losses of $23,000 and $37,000, respectively, were realized.  The tax expense applicable to these net realized gains amounted to $174,000 and $47,000 for the nine months ended September 31, 2016 and 2015, respectively.

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 $120.0 million and $113.1 million at September 30, 2016 and December 31, 2015, 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, 2016
 
Fair Value
 
Gross
Unrealized Losses
 
Fair Value
 
Gross
Unrealized Losses
 
Fair Value
 
Gross
Unrealized Losses
Available for Sale
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agencies
 
$
18,090

 
$
(99
)
 
$
5,052

 
$
(64
)
 
$
23,142

 
$
(163
)
Obligations of states and political subdivisions
 
1,334

 
(15
)
 
7,432

 
(88
)
 
8,766

 
(103
)
Mortgage-backed securities:
 
 

 
 

 
 

 
 

 
 

 
 

Agency
 
17,246

 
(90
)
 
12,728

 
(423
)
 
29,974

 
(513
)
Non-agency
 
5,616

 
(84
)
 
1,940

 
(10
)
 
7,556

 
(94
)
Other asset backed securities
 
9,206

 
(178
)
 
20,487

 
(287
)
 
29,693

 
(465
)
Corporate securities
 
1,994

 
(60
)
 
11,266

 
(791
)
 
13,260

 
(851
)
Total
 
$
53,486

 
$
(526
)
 
$
58,905

 
$
(1,663
)
 
$
112,391

 
$
(2,189
)


(Dollars in thousands)
 
Less than Twelve Months
 
Twelve Months or Greater
 
Total
December 31, 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
 
$
1,419

 
$
(38
)
 
$
—

 
$
—

 
$
1,419

 
$
(38
)
Corporate securities
 
1,970

 
(30
)
 
—

 
—

 
1,970

 
(30
)
Total
 
$
3,389

 
$
(68
)
 
$
—

 
$
—

 
$
3,389

 
$
(68
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Available for Sale
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government agencies
 
$
46,000

 
$
(304
)
 
$
4,223

 
$
(76
)
 
$
50,223

 
$
(380
)
Obligations of states and political subdivisions
 
16,559

 
(324
)
 
1,082

 
(110
)
 
17,641

 
(434
)
Mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 

 
 

Agency
 
27,627

 
(402
)
 
9,911

 
(343
)
 
37,538

 
(745
)
Non-agency
 
7,842

 
(37
)
 
671

 
(1
)
 
8,513

 
(38
)
Other asset backed securities
 
25,399

 
(276
)
 
12,037

 
(327
)
 
37,436

 
(603
)
Corporate securities
 
10,740

 
(378
)
 
4,866

 
(382
)
 
15,606

 
(760
)
Total
 
$
134,167

 
$
(1,721
)
 
$
32,790

 
$
(1,239
)
 
$
166,957

 
$
(2,960
)


A total of 141 securities have been identified by the Company as temporarily impaired at September 30, 2016.  Of the 141 securities, 136 are investment grade and five are speculative grade.  Mortgage-backed securities, other asset backed securities and corporate securities make up the majority of the gross unrealized losses for temporarily impaired securities at September 30, 2016.  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, 2016.  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.

At September 30, 2016, the Company evaluated the investment portfolio for possible other-than-temporary impairment losses and concluded that no adverse change in cash flows occurred. Based on this analysis and because the Company does not intend to sell securities in an unrealized loss position 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, the Company does not consider any portfolio securities to be other-than-temporarily impaired. 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, 2016.  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, 2016 and the year ended December 31, 2015, no credit related impairment losses were recognized by the Company.

Restricted securities
The Company’s investment in FHLB stock totaled $3.9 million and $4.7 million at September 30, 2016 and December 31, 2015, respectively.  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, 2016, 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, 2016 and December 31, 2015, 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, 2016, and no impairment has been recognized. FRB stock is shown in restricted securities on the consolidated balance sheets.