Quarterly report pursuant to Section 13 or 15(d)

SECURITIES

v2.4.0.8
SECURITIES
9 Months Ended
Sep. 30, 2014
SECURITIES [Abstract]  
SECURITIES

 

3.SECURITIES

 

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities available for sale as of September 30, 2014 and December 31, 2013 are summarized as follows (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized

 

Gross Unrealized

 

Estimated

 

Cost

 

Gains

 

(Losses)

 

Fair Value

September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency securities

$

1,328 

 

$

603 

 

$

 -

 

$

1,931 

Obligations of states and political subdivisions

 

419,525 

 

 

17,545 

 

 

(1,413)

 

 

435,657 

Corporate and other bonds

 

79,069 

 

 

264 

 

 

(434)

 

 

78,899 

Mortgage-backed securities

 

562,229 

 

 

8,605 

 

 

(1,506)

 

 

569,328 

Other securities

 

9,823 

 

 

33 

 

 

(35)

 

 

9,821 

Total securities

$

1,071,974 

 

$

27,050 

 

$

(3,388)

 

$

1,095,636 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

U.S. government and agency securities

$

1,654 

 

$

499 

 

$

 -

 

$

2,153 

Obligations of states and political subdivisions

 

255,335 

 

 

6,107 

 

 

(6,612)

 

 

254,830 

Corporate and other bonds

 

9,479 

 

 

115 

 

 

(160)

 

 

9,434 

Mortgage-backed securities

 

405,389 

 

 

4,954 

 

 

(2,981)

 

 

407,362 

Other securities

 

3,617 

 

 

26 

 

 

(74)

 

 

3,569 

Total securities

$

675,474 

 

$

11,701 

 

$

(9,827)

 

$

677,348 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due to restrictions placed upon the Bank’s common stock investment in the Federal Reserve Bank and FHLB, these securities have been classified as restricted equity securities and carried at cost.  These restricted securities are not subject to the investment security classifications and are included as a separate line item on the Company’s Consolidated Balance Sheets.  The FHLB requires the Bank to maintain stock in an amount equal to 4.5% of outstanding borrowings and a specific percentage of the Bank’s total assets.  The Federal Reserve Bank requires the Bank to maintain stock with a par value equal to 6% of its outstanding capital.  Restricted equity securities consist of Federal Reserve Bank stock in the amount of $23.8 million and $6.7 million as of September 30, 2014 and December 31, 2013 and FHLB stock in the amount of $24.7 million and $19.3 million as of September 30, 2014 and December 31, 2013, respectively. 

The following table shows the gross unrealized losses and fair value (in thousands) of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired.  These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Less than 12 months

 

More than 12 months

 

Total

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of states and political subdivisions

$

5,156 

 

$

(62)

 

$

53,000 

 

$

(1,351)

 

$

58,156 

 

$

(1,413)

Mortgage-backed securities

 

142,368 

 

 

(507)

 

 

45,989 

 

 

(999)

 

 

188,357 

 

 

(1,506)

Corporate bonds and other securities

 

32,090 

 

 

(154)

 

 

4,477 

 

 

(315)

 

 

36,567 

 

 

(469)

Totals

$

179,614 

 

$

(723)

 

$

103,466 

 

$

(2,665)

 

$

283,080 

 

$

(3,388)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Obligations of states and political subdivisions

$

80,368 

 

$

(5,504)

 

$

8,886 

 

$

(1,108)

 

$

89,254 

 

$

(6,612)

Mortgage-backed securities

 

168,297 

 

 

(2,806)

 

 

24,254 

 

 

(175)

 

 

192,551 

 

 

(2,981)

Corporate bonds and other securities

 

6,804 

 

 

(80)

 

 

1,720 

 

 

(154)

 

 

8,524 

 

 

(234)

Totals

$

255,469 

 

$

(8,390)

 

$

34,860 

 

$

(1,437)

 

$

290,329 

 

$

(9,827)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of September  30, 2014, there were $103.5 million, or 75 issues, of individual securities that had been in a continuous loss position for more than 12 months.  Additionally, these securities had an unrealized loss of $2.7 million and consisted of municipal obligations, mortgage-backed securities, corporate bonds, and other securities.  As of December 31, 2013, there were $34.9 million, or 23 issues, of individual securities that had been in a continuous loss position for more than 12 months.  Additionally, these securities had an unrealized loss of $1.4 million and consisted of municipal obligations, mortgage-backed securities, corporate bonds, and other securities.

 

The following table presents the amortized cost and estimated fair value of securities as of September 30, 2014 and December 31, 2013, by contractual maturity (dollars in thousands).  Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

December 31, 2013

 

Amortized

 

Estimated

 

Amortized

 

Estimated

 

Cost

 

Fair Value

 

Cost

 

Fair Value

Due in one year or less

$

17,809 

 

$

17,855 

 

$

6,791 

 

$

6,796 

Due after one year through five years

 

37,812 

 

 

38,801 

 

 

21,666 

 

 

22,497 

Due after five years through ten years

 

282,900 

 

 

289,141 

 

 

116,735 

 

 

119,269 

Due after ten years

 

733,453 

 

 

749,839 

 

 

530,282 

 

 

528,786 

Total securities available for sale

$

1,071,974 

 

$

1,095,636 

 

$

675,474 

 

$

677,348 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities with a carrying value of $371.1 million and $188.2 million as of September 30, 2014 and December 31, 2013, respectively, were pledged to secure public deposits, repurchase agreements, and for other purposes.

 

During each quarter, the Company conducts an assessment of the securities portfolio for OTTI consideration.  The assessment considers factors such as external credit ratings, delinquency coverage ratios, market price, management’s judgment, expectations of future performance, and relevant industry research and analysis.  An impairment is other-than-temporary if any of the following conditions exist: the entity intends to sell the security; it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis; or the entity does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell).  If a credit loss exists, but an entity does not intend to sell the impaired debt security and is not more likely than not to be required to sell before recovery, the impairment is other-than-temporary and should be separated into a credit portion to be recognized in earnings and the remaining amount relating to all other factors recognized as other comprehensive loss.  Based on the assessment for the quarter ended September  30, 2014, and in accordance with the guidance, no OTTI was recognized.

 

Based on the assessment for the quarter ended September 30, 2011 and in accordance with the guidance, the Company determined that a single issuer trust preferred security incurred credit-related OTTI of $400,000, which was recognized in earnings for the quarter ended September 30, 2011.  During the quarter ended June 30, 2014, the trust preferred security was called at a premium.  As a result, the Company recognized a gain on the call of the previously written down security of $400,000 in the second quarter of 2014.

 

OTTI recognized for the periods presented is summarized as follow (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTTI Losses

 

Cumulative credit losses on investment securities, through December 31, 2013

 

$

400 

 

Reductions for securities sold during the period (realized)

 

 

 

(400)

 

Cumulative credit losses on investment securities, through September 30, 2014

 

$

 -