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INVESTMENT SECURITIES | 12 Months Ended
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Dec. 31, 2017
Investments, Debt and Equity Securities [Abstract] |
INVESTMENT SECURITIES | 3. INVESTMENT SECURITIES A summary of our investment securities portfolio as of December 31, 2017 and 2016 is as follows:
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
| (Dollars in thousands)
December 31, 2017 |  |  |  |  |  |  |
Held-to-Maturity: |  |  |  |  |  |  |
Mortgage-backed securities: |  |  |  |  |  |  |
Residential-U.S. Government sponsored entities | $ | 100,279 |  |  | $ | 106 |  |  | $ | (2,222 | ) |  | $ | 98,163 |
Commercial-U.S. Government sponsored entities | 91,474 |  |  | — |  |  | (436 | ) |  | 91,038 |
Total held-to-maturity investment securities | $ | 191,753 |  |  | $ | 106 |  |  | $ | (2,658 | ) |  | $ | 189,201 |
Available-for-Sale: |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |
States and political subdivisions | $ | 178,459 |  |  | $ | 2,041 |  |  | $ | (719 | ) |  | $ | 179,781 |
Corporate securities | 73,772 |  |  | 582 |  |  | (76 | ) |  | 74,278 |
U.S. Treasury obligations and direct obligations of U.S Government agencies | 25,519 |  |  | 60 |  |  | (69 | ) |  | 25,510 |
Mortgage-backed securities: |  |  |  |  |  |  |
Residential-U.S. Government sponsored entities | 808,242 |  |  | 2,230 |  |  | (9,789 | ) |  | 800,683 |
Residential-Non-government sponsored entities | 45,679 |  |  | 1,084 |  |  | — |  |  | 46,763 |
Commercial-U.S. Government agencies and sponsored entities | 40,012 |  |  | — |  |  | (287 | ) |  | 39,725 |
Commercial-Non-government sponsored entities | 135,058 |  |  | 2,461 |  |  | (193 | ) |  | 137,326 |
Other | 686 |  |  | 139 |  |  | — |  |  | 825 |
Total available-for-sale investment securities | $ | 1,307,427 |  |  | $ | 8,597 |  |  | $ | (11,133 | ) |  | $ | 1,304,891 |
| Amortized Cost |  | Gross Unrealized Gains |  | Gross Unrealized Losses |  | Fair Value
| (Dollars in thousands)
December 31, 2016 |  |  |  |  |  |  |
Held-to-Maturity: |  |  |  |  |  |  |
Mortgage-backed securities: |  |  |  |  |  |  |
Residential-U.S. Government sponsored entities | $ | 124,082 |  |  | $ | 92 |  |  | $ | (2,474 | ) |  | $ | 121,700 |
Commercial-U.S. Government sponsored entities | 93,586 |  |  | — |  |  | (920 | ) |  | 92,666 |
Total held-to-maturity investment securities | $ | 217,668 |  |  | $ | 92 |  |  | $ | (3,394 | ) |  | $ | 214,366 |
Available-for-Sale: |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |
States and political subdivisions | $ | 184,836 |  |  | $ | 2,002 |  |  | $ | (1,797 | ) |  | $ | 185,041 |
Corporate securities | 98,596 |  |  | 974 |  |  | (181 | ) |  | 99,389 |
Mortgage-backed securities: |  |  |  |  |  |  |
Residential-U.S. Government sponsored entities | 775,803 |  |  | 3,698 |  |  | (9,515 | ) |  | 769,986 |
Residential-Non-government sponsored entities | 51,681 |  |  | 627 |  |  | (761 | ) |  | 51,547 |
Commercial-Non-government sponsored entities | 135,248 |  |  | 2,387 |  |  | (411 | ) |  | 137,224 |
Other | 564 |  |  | 96 |  |  | — |  |  | 660 |
Total available-for-sale investment securities | $ | 1,246,728 |  |  | $ | 9,784 |  |  | $ | (12,665 | ) |  | $ | 1,243,847 |
The amortized cost and estimated fair value of our investment securities at December 31, 2017 by contractual maturity are shown below. Actual maturities may differ from contractual maturities as issuers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.
| December 31, 2017
| Amortized Cost |  | Fair Value
| (Dollars in thousands)
Held-to-Maturity: |  |  |
Mortgage-backed securities: |  |  |
Residential-U.S. Government-sponsored entities | $ | 100,279 |  |  | $ | 98,163 |
Commercial-U.S. Government-sponsored entities | 91,474 |  |  | 91,038 |
Total held-to-maturity investment securities | $ | 191,753 |  |  | $ | 189,201 |
Available-for-Sale: |  |  |
Due in one year or less | $ | 8,796 |  |  | $ | 8,799 |
Due after one year through five years | 165,356 |  |  | 166,447 |
Due after five years through ten years | 40,762 |  |  | 41,166 |
Due after ten years | 62,836 |  |  | 63,157 |
Mortgage-backed securities |  |  |
Residential-U.S. Government-sponsored entities | 808,242 |  |  | 800,683 |
Residential-Non-government agencies | 45,679 |  |  | 46,763 |
Commercial-U.S. Government agencies and sponsored entities | 40,012 |  |  | 39,725 |
Commercial-Non-government agencies | 135,058 |  |  | 137,326 |
Other | 686 |  |  | 825 |
Total available-for-sale investment securities | $ | 1,307,427 |  |  | $ | 1,304,891 |
In the second quarter of 2017, we completed an investment portfolio repositioning strategy designed to enhance potential prospective earnings and improve net interest margin. In connection with the repositioning, we sold $97.7 million in lower-yielding available-for-sale securities, and purchased $97.4 million in higher-yielding, longer duration investment securities. The investment securities sold had a duration of 3.3 years and an average yield of 1.91%. Gross proceeds of the sale of $96.0 million were immediately reinvested back into investment securities with a duration of 4.6 years and an average yield of 2.57%. The new securities were classified in the available-for-sale portfolio. There were no gross realized gains on the sale of the investment securities. Gross realized losses on the sale of the investment securities were $1.6 million. The specific identification method was used as the basis for determining the cost of all securities sold. There were no investment security sales in 2016. In the second quarter of 2015, we completed an investment portfolio repositioning strategy designed to reduce net interest income volatility and enhance the potential prospective earnings and an improved net interest margin. In connection with the repositioning, we sold $119.4 million in lower-yielding available-for-sale non-agency collateralized mortgage obligation securities, and purchased $120.6 million in higher yielding, longer duration mortgage-backed securities. The securities sold had an average net yield of 1.35% and a weighted average life of 4.4 years. Gross proceeds of the sale of $117.5 million were reinvested into agency mortgage-backed securities with an average net yield of 2.71% and weighted average life of 7.6 years. The new securities were classified in the available-for-sale portfolio. There were no gross realized gains on the sale of the available-for-sale investment securities. Gross realized losses on the sale of the available-for-sale investment securities were $1.9 million. The specific identification method was used as the basis for determining the cost of all securities sold. Investment securities of $1.08 billion and $1.05 billion at December 31, 2017 and 2016, respectively, were pledged to secure public funds on deposit and other long-term and short-term borrowings. At December 31, 2017 and 2016, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders' equity. There were a total of 223 and 242 securities in an unrealized or unrecognized loss position at December 31, 2017 and 2016, respectively. The following table summarizes securities which were in an unrealized or unrecognized loss position at December 31, 2017 and 2016, aggregated by major security type and length of time in a continuous unrealized or unrecognized loss position:
| Less Than 12 Months |  | 12 Months or Longer |  | Total
Description of Securities | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
| (Dollars in thousands)
December 31, 2017 |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 53,811 |  |  | $ | (305 | ) |  | $ | 15,403 |  |  | $ | (414 | ) |  | $ | 69,214 |  |  | $ | (719 | )
Corporate securities | — |  |  | — |  |  | 5,307 |  |  | (76 | ) |  | 5,307 |  |  | (76 | )
U.S. Treasury obligations and direct obligations of U.S Government agencies | 10,740 |  |  | (69 | ) |  | — |  |  | — |  |  | 10,740 |  |  | (69 | )
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
Residential-U.S. Government sponsored entities | 335,883 |  |  | (3,372 | ) |  | 340,219 |  |  | (8,639 | ) |  | 676,102 |  |  | (12,011 | )
Commercial-U.S. Government sponsored entities | 130,763 |  |  | (723 | ) |  | — |  |  | — |  |  | 130,763 |  |  | (723 | )
Commercial-Non-government sponsored entities | 28,490 |  |  | (193 | ) |  | — |  |  | — |  |  | 28,490 |  |  | (193 | )
Total temporarily impaired securities | $ | 559,687 |  |  | $ | (4,662 | ) |  | $ | 360,929 |  |  | $ | (9,129 | ) |  | $ | 920,616 |  |  | $ | (13,791 | )
| Less Than 12 Months |  | 12 Months or Longer |  | Total
Description of Securities | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses |  | Fair Value |  | Unrealized Losses
| (Dollars in thousands)
December 31, 2016 |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 85,288 |  |  | $ | (1,797 | ) |  | $ | — |  |  | $ | — |  |  | $ | 85,288 |  |  | $ | (1,797 | )
Corporate securities | 20,357 |  |  | (181 | ) |  | — |  |  | — |  |  | 20,357 |  |  | (181 | )
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
Residential-U.S. Government sponsored entities | 648,923 |  |  | (11,766 | ) |  | 3,978 |  |  | (223 | ) |  | 652,901 |  |  | (11,989 | )
Residential-Non-government sponsored entities | 30,596 |  |  | (761 | ) |  | — |  |  | — |  |  | 30,596 |  |  | (761 | )
Commercial-U.S. Government sponsored entities | 92,666 |  |  | (920 | ) |  | — |  |  | — |  |  | 92,666 |  |  | (920 | )
Commercial-Non-government sponsored entities | 52,880 |  |  | (411 | ) |  | — |  |  | — |  |  | 52,880 |  |  | (411 | )
Total temporarily impaired securities | $ | 930,710 |  |  | $ | (15,836 | ) |  | $ | 3,978 |  |  | $ | (223 | ) |  | $ | 934,688 |  |  | $ | (16,059 | )
The unrealized losses on the Company's investment securities were caused by market conditions. Investment securities are evaluated on a quarterly basis, and include evaluating the changes in the investment securities' ratings issued by rating agencies and changes in the financial condition of the issuer, and for mortgage related securities, delinquency and loss information with respect to the underlying collateral, changes in levels of subordination for the Company's particular position within the repayment structure, and remaining credit enhancement as compared to projected credit losses of the security. All of these investment securities continue to be investment grade rated by one or more major rating agencies. Other-than-temporary impairment ("OTTI") Unrealized losses for all investment securities are reviewed to determine whether the losses are "other-than-temporary." Investment securities are evaluated for OTTI on at least a quarterly basis and more frequently when economic or market conditions warrant such an evaluation to determine whether a decline in their value below amortized cost is other-than-temporary. In conducting this assessment, we evaluate a number of factors including, but not limited to:
• | The length of time and the extent to which fair value has been less than the amortized cost basis;
• | Adverse conditions specifically related to the security, an industry, or a geographic area;
• | The historical and implied volatility of the fair value of the security;
• | The payment structure of the debt security and the likelihood of the issuer being able to make payments;
• | Failure of the issuer to make scheduled interest or principal payments;
• | Any rating changes by a rating agency; and
• | Recoveries or additional decline in fair value subsequent to the balance sheet date.
The term "other-than-temporary" is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value are not necessarily favorable, or that there is a general lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other-than-temporary, the value of the security is reduced and a corresponding charge to earnings is recognized for anticipated credit losses. The declines in market value were primarily attributable to changes in interest rates and volatility in the credit and financial markets. Because we have no intent to sell securities in an unrealized loss position and it is not more likely than not that we will be required to sell such securities before recovery of its amortized cost basis, we do not consider our investments to be other-than-temporarily impaired.

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