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Investment Securities | 12 Months Ended
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Dec. 31, 2016
Investments, Debt and Equity Securities [Abstract] |
Investment Securities | The amortized cost, gross unrealized gains and losses and estimated fair values for available-for-sale and held-to-maturity securities by major security type at December 31, 2016 and December 31, 2015 were as follows (in thousands):
December 31, 2016 | Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized (Losses) |  | Fair Value
Available-for-sale: |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations & agencies | $ | 138,819 |  |  | $ | 13 |  |  | $ | (2,508 | ) |  | $ | 136,324 |
Obligations of states and political subdivisions | 164,163 |  |  | 1,346 |  |  | (2,804 | ) |  | 162,705 |
Mortgage-backed securities: GSE residential | 318,829 |  |  | 531 |  |  | (4,369 | ) |  | 314,991 |
Trust preferred securities | 3,050 |  |  | — |  |  | (1,398 | ) |  | 1,652 |
Other securities | 4,034 |  |  | 147 |  |  | (5 | ) |  | 4,176 |
Total available-for-sale | $ | 628,895 |  |  | $ | 2,037 |  |  | $ | (11,084 | ) |  | $ | 619,848 |
Held-to-maturity: |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations & agencies | $ | 74,231 |  |  | $ | 203 |  |  | $ | (1,338 | ) |  | $ | 73,096 |
December 31, 2015 |  |  |  |  |  |  |
Available-for-sale: |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations & agencies | $ | 90,368 |  |  | $ | 41 |  |  | $ | (268 | ) |  | $ | 90,141 |
Obligations of states and political subdivisions | 107,164 |  |  | 3,608 |  |  | (55 | ) |  | 110,717 |
Mortgage-backed securities: GSE residential | 312,132 |  |  | 1,374 |  |  | (1,452 | ) |  | 312,054 |
Trust preferred securities | 3,130 |  |  | — |  |  | (1,224 | ) |  | 1,906 |
Other securities | 4,035 |  |  | 29 |  |  | (34 | ) |  | 4,030 |
Total available-for-sale | $ | 516,829 |  |  | $ | 5,052 |  |  | $ | (3,033 | ) |  | $ | 518,848 |
Held-to-maturity: |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations & agencies | $ | 85,208 |  |  | $ | 743 |  |  | $ | (214 | ) |  | $ | 85,737 |
During the third quarter of 2014, management evaluated its available-for-sale portfolio and transferred obligations of U.S. government corporations & agencies securities with a fair value of $53.6 million from available-for-sale to held-to-maturity to reduce price volatility. Management determined it had both the intent and ability to hold these securities to maturity. Transfers of investment securities into the held-to-maturity category from available-for-sale are made at fair value on the date of transfer. There were no gains or losses recognized as a result of this transfer. The related $1.4 million of unrealized holding loss that was included in the transfer is retained in the carrying value of the held-to-maturity securities and in other comprehensive income net of deferred taxes. These amounts are being amortized into net interest income over the remaining life of the related securities as a yield adjustment, resulting in no impact on future net income. Trust preferred securities at December 31, 2016, is one trust preferred pooled security issued by First Tennessee Financial (“FTN”). The unrealized loss of this security, which has a maturity of twenty-one years, is primarily due to its long-term nature, a lack of demand or inactive market for the security, and concerns regarding the underlying financial institutions that have issued the trust preferred security. See the heading “Trust Preferred Securities” below for further information regarding this security. Proceeds from sales of investment securities, realized gains and losses and income tax expense and benefit were as follows during the years ended December 31, 2016, 2015 and 2014 (in thousands):
| 2016 |  | 2015 |  | 2014
Proceeds from sales | $ | 70,757 |  |  | $ | 19,380 |  |  | $ | 75,618 |
Gross gains | 1,192 |  |  | 452 |  |  | 1,452 |
Gross losses | — |  |  | — |  |  | 737 |
Income tax expense | 465 |  |  | 176 |  |  | 279 |
The following table indicates the expected maturities of investment securities classified as available-for-sale presented at fair value, and held-to-maturity presented at amortized cost at December 31, 2016 and the weighted average yield for each range of maturities (in thousands):
| One year or less |  | After 1 through 5 years |  | After 5 through 10 years |  | After ten years |  | Total
Available-for-sale: |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 67,138 |  |  | $ | 42,647 |  |  | $ | 26,539 |  |  | $ | — |  |  | $ | 136,324 |
Obligations of state and political subdivisions | 14,860 |  |  | 83,676 |  |  | 63,382 |  |  | 787 |  |  | 162,705 |
Mortgage-backed securities: GSE residential | 572 |  |  | 125,297 |  |  | 189,122 |  |  | — |  |  | 314,991 |
Trust preferred securities | — |  |  | — |  |  | — |  |  | 1,652 |  |  | 1,652 |
Other securities | — |  |  | 1,995 |  |  | 2,037 |  |  | 144 |  |  | 4,176 |
Total investments | $ | 82,570 |  |  | $ | 253,615 |  |  | $ | 281,080 |  |  | $ | 2,583 |  |  | $ | 619,848 |
Weighted average yield | 2.12 | % |  | 2.36 | % |  | 2.63 | % |  | 2.20 | % |  | 2.45 | %
Full tax-equivalent yield | 2.49 | % |  | 2.93 | % |  | 3.07 | % |  | 2.71 | % |  | 2.93 | %
Held-to-maturity: |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 44,992 |  |  | $ | 29,239 |  |  | $ | — |  |  | $ | — |  |  | $ | 74,231 |
Weighted average yield | 1.79 | % |  | 2.08 | % |  | — | % |  | — | % |  | 1.90 | %
Full tax-equivalent yield | 1.79 | % |  | 2.08 | % |  | — | % |  | — | % |  | 1.90 | %
The weighted average yields are calculated on the basis of the amortized cost and effective yields weighted for the scheduled maturity of each security. Tax-equivalent yields have been calculated using a 35% tax rate. With the exception of obligations of the U.S. Treasury and other U.S. government agencies and corporations, there were no investment securities of any single issuer, the book value of which exceeded 10% of stockholders' equity at December 31, 2016. Investment securities carried at approximately $509 million and $404 million at December 31, 2016 and 2015, respectively, were pledged to secure public deposits and repurchase agreements and for other purposes as permitted or required by law. The increase in pledge securities is due to the acquisition of First Clover Leaf during 2016. The following table presents the aging of gross unrealized losses and fair value by investment category as of December 31, 2016 and 2015 (in thousands):
| Less than 12 months |  | 12 months or more |  | Total
| Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
December 31, 2016 |  |  |  |  |  |  |  |  |  |  |
Available-for-sale: |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 125,257 |  |  | $ | (2,508 | ) |  | $ | — |  |  | $ | — |  |  | $ | 125,257 |  |  | $ | (2,508 | )
Obligations of states and political subdivisions | 93,405 |  |  | (2,804 | ) |  | — |  |  | — |  |  | 93,405 |  |  | (2,804 | )
Mortgage-backed securities: GSE residential | 266,319 |  |  | (4,099 | ) |  | 5,878 |  |  | (270 | ) |  | 272,197 |  |  | (4,369 | )
Trust preferred securities | — |  |  | — |  |  | 1,652 |  |  | (1,398 | ) |  | 1,652 |  |  | (1,398 | )
Other securities | — |  |  | — |  |  | 1,995 |  |  | (5 | ) |  | 1,995 |  |  | (5 | )
Total | $ | 484,981 |  |  | $ | (9,411 | ) |  | $ | 9,525 |  |  | $ | (1,673 | ) |  | $ | 494,506 |  |  | $ | (11,084 | )
Held-to-maturity: |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 53,295 |  |  | $ | (1,338 | ) |  | $ | — |  |  | $ | — |  |  | $ | 53,295 |  |  | $ | (1,338 | )
December 31, 2015 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 34,942 |  |  | $ | (142 | ) |  | $ | 12,971 |  |  | $ | (126 | ) |  | $ | 47,913 |  |  | $ | (268 | )
Obligations of states and political subdivisions | 3,168 |  |  | (32 | ) |  | 979 |  |  | (23 | ) |  | 4,147 |  |  | (55 | )
Mortgage-backed securities: GSE residential | 164,249 |  |  | (841 | ) |  | 20,011 |  |  | (611 | ) |  | 184,260 |  |  | (1,452 | )
Trust preferred securities | — |  |  | — |  |  | 1,906 |  |  | (1,224 | ) |  | 1,906 |  |  | (1,224 | )
Other securities | 1,966 |  |  | (34 | ) |  | — |  |  | — |  |  | 1,966 |  |  | (34 | )
Total | $ | 204,325 |  |  | $ | (1,049 | ) |  | $ | 35,867 |  |  | $ | (1,984 | ) |  | $ | 240,192 |  |  | $ | (3,033 | )
Held-to-maturity: |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities and obligations of U.S. government corporations and agencies | $ | 35,845 |  |  | $ | (214 | ) |  | $ | — |  |  | $ | — |  |  | $ | 35,845 |  |  | $ | (214 | )
U.S. Treasury Securities and Obligations of U.S. Government Corporations and Agencies. At December 31, 2016, there were no available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies in a continuous unrealized loss position for twelve months or more. At December 31, 2015 there were six available-for-sale U.S. Treasury securities and obligations of U.S. government corporations and agencies with a fair value of $12,971,000 and unrealized losses of $126,000 in a continuous unrealized loss position for twelve months or more. At December 31, 2016 and December 31, 2015 there were no held-to maturity U.S. Treasury securities and obligations of U.S. government corporations and agencies in a continuous unrealized loss position for twelve months or more. Obligations of states and political subdivisions. At December 31, 2016 there were no obligations of states and political subdivisions in a continuous unrealized loss position for twelve months or more. At December 31, 2015, there were two obligations of states and political subdivisions with a fair value of $979,000 and unrealized losses of $23,000 in a continuous unrealized loss position for twelve months or more. Mortgage-backed Securities: GSE Residential. At December 31, 2016 there were two mortgage-backed securities with a fair value of $5,878,000 and unrealized losses of $270,000 in a continuous unrealized loss position for twelve months or more. At December 31, 2015, there were seven mortgage-backed security with a fair value of $20,011,000 and unrealized losses of $611,000 in a continuous unrealized loss position for twelve months or more. Trust Preferred Securities. At December 31, 2016, there was one trust preferred security with a fair value of $1,652,000 and unrealized losses of $1,398,000 in a continuous unrealized loss position for twelve months or more. At December 31, 2015, there was one trust preferred securities with a fair value of $1,906,000 and unrealized losses of $1,224,000 in a continuous unrealized loss position for twelve months or more. These unrealized losses were primarily due to the long-term nature of the trust preferred securities, a lack of demand or inactive market for these securities, the impending change to the regulatory treatment of these securities, and concerns regarding the underlying financial institutions that have issued the trust preferred securities. The Company recorded no other-than-temporary impairment (OTTI) for these securities during 2016 or 2015. Because the Company does not intend to sell the remaining security and it is not more-likely-than-not that the Company will be required to sell this securities before recovery of its amortized cost basis, which may be maturity, the Company does not consider the remainder of the investment in this security to be other-than-temporarily impaired at December 31, 2016. However, future downgrades or additional deferrals and defaults in the security could result in additional OTTI and consequently, have a material impact on future earnings. Following are the details for the impaired trust preferred security remaining as of December 31, 2016 (in thousands):
| Book Value |  | Market Value |  | Unrealized Gains (Losses) |  | Other-than- temporary Impairment Recorded To-date
PreTSL XXVIII | $ | 3,050 |  |  | $ | 1,652 |  |  | $ | (1,398 | ) |  | $ | (1,111 | )
Other securities. At December 31, 2016 and 2015, there was one other security with a fair value of $1,995,000 and unrealized losses of $5,000 in a continuous unrealized loss position for twelve months or more. At December 31, 2015, there were no corporate bonds in a continuous unrealized loss position for twelve months or more. The Company does not believe any other individual unrealized loss as of December 31, 2016 represents OTTI. However, given the continued disruption in the financial markets, the Company may be required to recognize OTTI losses in future periods with respect to its available for sale investment securities portfolio. The amount and timing of any additional OTTI will depend on the decline in the underlying cash flows of the securities. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in the period the other-than-temporary impairment is identified. Other-than-temporary Impairment Upon acquisition of a security, the Company determines whether it is within the scope of the accounting guidance for investments in debt and equity securities or whether it must be evaluated for impairment under the accounting guidance for beneficial interests in securitized financial assets. The Company conducts periodic reviews to evaluate its investment securities to determine whether OTTI has occurred. While all securities are considered, the securities primarily impacted by OTTI evaluation are pooled trust preferred securities. For the pooled trust preferred security currently in the investment portfolio, an extensive review is conducted to determine if any additional OTTI has occurred. The Company utilizes an independent third-party to perform the OTTI evaluation. The Company's management reviews the assumption inputs and methodology with the third-party to obtain an understanding of them and determine if they are appropriate for the evaluation. Economic models are used to project future cash flows for the security based on current assumptions for discount rate, prepayments, default and deferral rates and recoveries. These assumptions are determined based on the structure of the issuance, the specific collateral underlying the security, historical performance of trust preferred securities and general state of the economy. The OTTI test compares the present value of the cash flows from quarter to quarter to determine if there has been an adverse change which could indicate additional OTTI. The discount rate assumption used in the cash flow model is equal to the current yield used to accrete the beneficial interest. The Company’s current trust preferred security investment has a floating rate coupon of 3-month LIBOR plus 90 basis points. Since the estimate of 3-month LIBOR is based on the forward curve on the measurement date, and is therefore variable, the discount assumption for this security is a range of projected coupons over the expected life of the security. The Company considers the likelihood that issuers will prepay their securities which changes the amount of expected cash flows. Factors such as the coupon rates of collateral, economic conditions and regulatory changes, such as the Dodd-Frank Act and Basel III, are considered. The trust preferred security includes collateral issued by financial institutions and insurance companies. To identify bank issuers with a high risk of near term default or deferral, a credit model developed by the third-party is utilized that scores each bank issuer based on 29 different ratios covering capital adequacy, asset quality, earnings, liquidity, the Texas Ratio, and sensitivity to interest rates. To account for longer term bank default risk not captured by the credit model, it is assumed that banks will default at a rate of 2% annually for the first two years of the cash flow projection, and 36 basis points in each year thereafter. To project defaults for insurance issuers, each issuer’s credit rating is mapped to its idealized default rate, which is AM Best’s estimate of the historical default rate for insurance companies with that rating. Lastly, it is assumed that trust preferred securities issued by banks that have already failed will have no recoveries, and that banks projected to default will have recoveries of 10%. Additionally, the 10% recovery assumption, incorporates the potential for cures by banks that are currently in deferral. If the Company determines that a given pooled trust preferred security position will be subject to a write-down or loss, the Company records the expected credit loss as a charge to earnings. Credit Losses Recognized on Investments As described above, some of the Company’s investments in trust preferred securities have experienced fair value deterioration due to credit losses but are not otherwise other-than-temporarily impaired. The following table provides information about those trust preferred securities for which only a credit loss was recognized in income and other losses are recorded in other comprehensive income (loss) for the years ended December 31, 2016, 2015 and 2014 (in thousands).
| Accumulated Credit Losses as of December 31:
| 2016 |  | 2015 |  | 2014
Credit losses on trust preferred securities held: |  |  |  |  |
Beginning of period | $ | 1,111 |  |  | $ | 1,111 |  |  | $ | 1,111 |
Additions related to OTTI losses not previously recognized | — |  |  | — |  |  | — |
Reductions due to sales / (recoveries) | — |  |  | — |  |  | — |
Reductions due to change in intent or likelihood of sale | — |  |  | — |  |  | — |
Additions related to increases in previously recognized OTTI losses | — |  |  | — |  |  | — |
Reductions due to increases in expected cash flows | — |  |  | — |  |  | — |
End of period | $ | 1,111 |  |  | $ | 1,111 |  |  | $ | 1,111 |
Maturities of investment securities were as follows at December 31, 2016 (in thousands):
|  | Amortized Cost |  | Estimated Fair Value
Available-for-sale: |  |  |  |
Due in one year or less |  | $ | 83,588 |  |  | $ | 81,998 |
Due after one-five years |  | 128,818 |  |  | 128,318 |
Due after five-ten years |  | 93,754 |  |  | 91,958 |
Due after ten years |  | 3,906 |  |  | 2,583 |
|  | 310,066 |  |  | 304,857 |
Mortgage-backed securities: GSE residential |  | 318,829 |  |  | 314,991 |
Total available-for-sale |  | 628,895 |  |  | 619,848 |
Held-to-maturity: |  |  |  |
Due in one year or less |  | 44,992 |  |  | 43,798 |
Due after one-five years |  | 29,239 |  |  | 29,298 |
Due after five-ten years |  | — |  |  | — |
Due after ten years |  | — |  |  | — |
Total held-to-maturity |  | 74,231 |  |  | $ | 73,096 |
Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

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- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -Glossary Debt Security -URI http://asc.fasb.org/extlink&oid=6509901 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27290-111563 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6379141&loc=d3e15032-111544 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27232-111563 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -Glossary Equity Security -URI http://asc.fasb.org/extlink&oid=6511694 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27161-111563 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27357-111563 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=73527792&loc=d3e27405-111563 + Details
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