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Investment Securities Available-for-Sale

9 Months Ended

Sep. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Investment Securities Available-for-Sale

Note 3. Investment Securities Available-for-Sale

Amortized cost and estimated fair value of securities available-for-sale are summarized as follows:

September 30, 2018 (dollars in thousands)		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value
U. S. agency securities		$	236,853			$	—			$	6,528			$	230,325
Residential mortgage backed securities			448,335				140				12,126				436,349
Municipal bonds			48,203				391				858				47,736
Corporate bonds			8,004				61				19				8,046
Other equity investments			218				—				—				218
		$	741,613			$	592			$	19,531			$	722,674

December 31, 2017 (dollars in thousands)		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Estimated Fair Value
U. S. agency securities		$	198,115			$	283			$	2,414			$	195,984
Residential mortgage backed securities			322,067				187				4,418				317,836
Municipal bonds			60,976				1,295				214				62,057
Corporate bonds			13,010				163				—				13,173
Other equity investments			218				—				—				218
		$	594,386			$	1,928			$	7,046			$	589,268

In addition, at September 30, 2018 and December 31, 2017 the Company held $37.3 million and $36.3 million, respectively, in equity securities in a combination of Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stocks, which are required to be held for regulatory purposes and which are not marketable, and therefore are carried at cost.

Gross unrealized losses and fair value by length of time that the individual available-for-sale securities have been in a continuous unrealized loss position are as follows:

						Less than 12 Months								12 Months or Greater								Total
September 30, 2018 (dollars in thousands)		Number of Securities				Estimated Fair Value				Unrealized Losses				Estimated Fair Value				Unrealized Losses				Estimated Fair Value				Unrealized Losses
U. S. agency securities			61			$	111,702			$	1,909			$	115,678			$	4,619			$	227,380			$	6,528
Residential mortgage backed securities			184				237,720				3,938				190,668				8,188				428,388				12,126
Municipal bonds			16				16,388				352				10,440				506				26,828				858
Corporate bonds			2				2,981				19				—				—				2,981				19
			263			$	368,791			$	6,218			$	316,786			$	13,313			$	685,577			$	19,531

						Less than 12 Months								12 Months or Greater								Total
December 31, 2017 (dollars in thousands)		Number of Securities				Estimated Fair Value				Unrealized Losses				Estimated Fair Value				Unrealized Losses				Estimated Fair Value				Unrealized Losses
U. S. agency securities			38			$	102,264			$	1,073			$	55,093			$	1,341			$	157,357			$	2,414
Residential mortgage backed securities			137				152,350				1,306				147,953				3,112				300,303				4,418
Municipal bonds			8				17,446				214				—				—				17,446				214
			183			$	272,060			$	2,593			$	203,046			$	4,453			$	475,106			$	7,046

The unrealized losses that exist are generally the result of changes in market interest rates and interest spread relationships since original purchases. The weighted average duration of debt securities, which comprise 99.9% of total investment securities, is relatively short at 3.9 years. If quoted prices are not available, fair value is measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. The Company does not believe that the investment securities that were in an unrealized loss position as of September 30, 2018 represent an other-than-temporary impairment. The Company does not intend to sell the investments and it is more likely than not that the Company will not have to sell the securities before recovery of its amortized cost basis, which may be at maturity.

The amortized cost and estimated fair value of investments available-for-sale at September 30, 2018 and December 31, 2017 by contractual maturity are shown in the table below. Expected maturities for residential mortgage backed securities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

		September 30, 2018								December 31, 2017
(dollars in thousands)		Amortized Cost				Estimated Fair Value				Amortized Cost				Estimated Fair Value
U. S. agency securities maturing:
One year or less		$	119,017			$	114,692			$	109,893			$	108,198
After one year through five years			104,464				102,953				74,106				73,916
Five years through ten years			13,372				12,680				14,116				13,870
Residential mortgage backed securities			448,335				436,349				322,067				317,836
Municipal bonds maturing:
One year or less			9,882				9,969				5,068				5,171
After one year through five years			15,579				15,541				19,405				19,879
Five years through ten years			21,675				21,094				35,432				35,846
After ten years			1,067				1,132				1,071				1,161
Corporate bonds maturing:
After one year through five years			6,504				6,546				11,510				11,673
After ten years			1,500				1,500				1,500				1,500
Other equity investments			218				218				218				218
		$	741,613			$	722,674			$	594,386			$	589,268

For the nine months ended September 30, 2018, gross realized gains on sales of investments securities were $93 thousand and gross realized losses on sales of investment securities were $25 thousand. For the nine months ended September 30, 2017, gross realized gains on sales of investments securities were $795 thousand and gross realized losses on sales of investment securities were $254 thousand.

Proceeds from sales and calls of investment securities for the nine months ended September 30, 2018 were $32.0 million compared to $70.1 million for the same period in 2017.

The carrying value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase, and certain lines of credit with correspondent banks at September 30, 2018 and December 31, 2017 was $486.9 million and $465.4 million, respectively, which is well in excess of required amounts in order to operationally provide significant reserve amounts for new business. As of September 30, 2018 and December 31, 2017, there were no holdings of securities of any one issuer, other than the U.S. Government and U.S. agency securities, which exceeded ten percent of shareholders’ equity.