Investments

12 Months Ended

Dec. 31, 2019

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

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



	December 31, 2019
($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	9,954	$	92	$	—		$	10,046
Obligations of states and political subdivisions	207,269		6,118		(363		)	213,024
Agency mortgage-backed securities	888,129		15,083		(1,191		)	902,021
U.S. Treasury Bills	9,971		255		—			10,226
Total securities available-for-sale	$	1,115,323	$	21,548	$	(1,554	)	$	1,135,317

Held-to-maturity securities:
Obligations of states and political subdivisions	$	11,704	$	170	$	—		$	11,874
Agency mortgage-backed securities	46,346		675		—			47,021
Corporate debt securities	123,116		128		(200		)	123,044
Total securities held-to-maturity	$	181,166	$	973	$	(200	)	$	181,939

	December 31, 2018
($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Obligations of U.S. Government-sponsored enterprises	$	99,926	$	—	$	(1,428	)	$	98,498
Obligations of states and political subdivisions	26,566		327		(83		)	26,810
Agency mortgage-backed securities	596,825		1,160		(11,849		)	586,136
U.S. Treasury Bills	9,962		—		(37		)	9,925
Total securities available-for-sale	$	733,279	$	1,487	$	(13,397	)	$	721,369

Held-to-maturity securities:
Obligations of states and political subdivisions	$	12,506	$	16	$	(114	)	$	12,408
Agency mortgage-backed securities	53,173		—		(1,647		)	51,526
Total securities held-to-maturity	$	65,679	$	16	$	(1,761	)	$	63,934

During the fourth quarter of 2019, the Company transferred corporate debt securities with a book value of $116.3 million and fair value of $123.2 million from available to sale to held-to-maturity. The Company believes the held-to-maturity category is more consistent with the Company’s intent for these securities. The transfer of securities was made at fair value at the time of transfer. The unamortized portion of the $6.9 million unrealized holding gain at the time of transfer is retained in accumulated other comprehensive income and in the carrying value of held-to-maturity securities. Accordingly, the balance of held-to-maturity securities in the “Amortized cost” column in the table above includes a net unamortized unrealized gain of $6.8 million at December 31, 2019. Such amounts are amortized over the remaining life of the securities.

At December 31, 2019, and 2018, there were no holdings of securities of any one issuer in an amount greater than 10% of shareholders’ equity, other than the U.S. Government agencies and sponsored enterprises. The agency mortgage-backed securities are all issued by U.S. Government-sponsored enterprises. Securities having a fair value of $484.8 million and $433.7 million at December 31, 2019, and December 31, 2018, respectively, were pledged as collateral to secure deposits of public institutions and for other purposes as required by law or contract provisions.

The amortized cost and estimated fair value of debt securities at December 31, 2019, by contractual maturity, are shown below. 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. The weighted average life of the agency mortgage-backed securities is approximately 4 years.



	Available-for-sale				Held-to-maturity
($ in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	959	$	978	$	—	$	—
Due after one year through five years	26,825		27,355		4,167		4,234
Due after five years through ten years	8,646		8,945		130,653		130,684
Due after ten years	190,764		196,018		—		—
Agency mortgage-backed securities	888,129		902,021		46,346		47,021
	$	1,115,323	$	1,135,317	$	181,166	$	181,939

The Company owned 73 and 131 securities that were in a loss position as of December 31, 2019 and December 31, 2018, respectively. The following table represents a summary of investment securities that had an unrealized loss:



	December 31, 2019
	Less than 12 months				12 months or more				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of states and political subdivisions	$	56,327	$	363	$	—	$	—	$	56,327	$	363
Agency mortgage-backed securities	131,693		756		41,491		435		173,184		1,191
Corporate debt securities	67,964		200		—		—		67,964		200
	$	255,984	$	1,319	$	41,491	$	435	$	297,475	$	1,754

	December 31, 2018
	Less than 12 months				12 months or more				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government-sponsored enterprises	$	19,622	$	322	$	78,876	$	1,106	$	98,498	$	1,428
Obligations of states and political subdivisions	3,102		15		14,156		182		17,258		197
Agency mortgage-backed securities	87,357		2,211		389,770		11,285		477,127		13,496
U.S. Treasury Bills	—		—		9,925		37		9,925		37
	$	110,081	$	2,548	$	492,727	$	12,610	$	602,808	$	15,158

The unrealized losses at both December 31, 2019, and 2018, were primarily attributable to changes in market interest rates since the securities were purchased. Management systematically evaluates investment securities for other-than-temporary declines in fair value on a quarterly basis. This analysis requires management to consider various factors, which include among other considerations (1) the present value of the cash flows expected to be collected compared to the amortized cost of the security, (2) duration and magnitude of the decline in value, (3) the financial condition of the issuer or issuers, (4) structure of the security, and (5) the intent to sell the security or whether it is more likely than

not that the Company would be required to sell the security before its anticipated recovery in market value. At December 31, 2019 and 2018, management performed its quarterly analysis of all securities with an unrealized loss and concluded no individual securities were other-than-temporarily impaired.

The gross gains and losses realized from sales of available-for-sale investment securities were as follows:



	December 31,
($ in thousands)	2019			2018		2017
Gross gains realized	$	400		$	9	$	22
Gross losses realized	(449		)	—		—
Proceeds from sales	357,976			1,451		144,076

Other Investments

At both December 31, 2019, and 2018, other investments totaled $38.0 million. As a member of the FHLB system administered by the Federal Housing Finance Agency, the Bank is required to maintain a minimum investment in capital stock with the FHLB Des Moines and the FHLB Dallas consisting of membership stock and activity-based stock. The FHLB capital stock of $15.7 million, and $9.2 million at December 31, 2019, and 2018, respectively, is recorded at cost, which represents redemption value, and is included in other investments in the consolidated balance sheets. The remaining amounts in other investments primarily include various investments in SBICs and the Company’s investment in unconsolidated trusts used to issue preferred securities to third parties, see “Note 11 – Subordinated Debentures.”