Investment Securities

12 Months Ended

Dec. 31, 2018

(3.)INVESTMENT SECURITIES

The amortized cost and estimated fair value of investment securities are summarized below (in thousands).

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2018
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	155,102	$	-	$	3,074	$	152,028
Mortgage-backed securities:
Federal National Mortgage Association		258,984		44		6,325		252,703
Federal Home Loan Mortgage Corporation		35,962		13		1,275		34,700
Government National Mortgage Association		5,364		21		76		5,309
Collateralized mortgage obligations:
Federal National Mortgage Association		133		-		-		133
Federal Home Loan Mortgage Corporation		37		-		-		37
Privately issued		-		767		-		767
Total mortgage-backed securities		300,480		845		7,676		293,649
Total available for sale securities	$	455,582	$	845	$	10,750	$	445,677
Securities held to maturity:
State and political subdivisions	$	234,845	$	876	$	1,211	$	234,510
Mortgage-backed securities:
Federal National Mortgage Association		11,602		8		261		11,349
Federal Home Loan Mortgage Corporation		4,583		-		193		4,390
Government National Mortgage Association		37,450		14		923		36,541
Collateralized mortgage obligations:
Federal National Mortgage Association		62,103		1		2,179		59,925
Federal Home Loan Mortgage Corporation		78,200		-		2,597		75,603
Government National Mortgage Association		17,798		-		535		17,263
Total mortgage-backed securities		211,736		23		6,688		205,071
Total held to maturity securities	$	446,581	$	899	$	7,899	$	439,581

December 31, 2017
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	163,025	$	122	$	1,258	$	161,889
Mortgage-backed securities:
Federal National Mortgage Association		311,830		313		3,220		308,923
Federal Home Loan Mortgage Corporation		41,290		76		675		40,691
Government National Mortgage Association		12,051		193		12		12,232
Collateralized mortgage obligations:
Federal National Mortgage Association		217		1		1		217
Federal Home Loan Mortgage Corporation		45		-		-		45
Privately issued		-		976		-		976
Total mortgage-backed securities		365,433		1,559		3,908		363,084
Total available for sale securities	$	528,458	$	1,681	$	5,166	$	524,973

(3.)INVESTMENT SECURITIES (Continued)

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
December 31, 2017 (continued)
Securities held to maturity:
State and political subdivisions	$	283,557	$	2,317	$	662	$	285,212
Mortgage-backed securities:
Federal National Mortgage Association		9,732		16		88		9,660
Federal Home Loan Mortgage Corporation		3,213		-		119		3,094
Government National Mortgage Association		26,841		-		330		26,511
Collateralized mortgage obligations:
Federal National Mortgage Association		76,432		-		1,958		74,474
Federal Home Loan Mortgage Corporation		93,810		3		2,165		91,648
Government National Mortgage Association		22,881		5		502		22,384
Total mortgage-backed securities		232,909		24		5,162		227,771
Total held to maturity securities	$	516,466	$	2,341	$	5,824	$	512,983

Investment securities with a total fair value of $751.0 million and $838.4 million at December 31, 2018 and 2017, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

Interest and dividends on securities for the years ended December 31 are summarized as follows (in thousands):

	2018		2017		2016
Taxable interest and dividends	$	16,510	$	17,886	$	17,025
Tax-exempt interest and dividends		5,091		5,869		5,892
Total interest and dividends on securities	$	21,601	$	23,755	$	22,917

Sales and calls of securities available for sale for the years ended December 31 were as follows (in thousands):

	2018		2017		2016
Proceeds from sales	$	29,851	$	50,084	$	95,261
Gross realized gains		73		1,266		2,695
Gross realized losses		200		6		-

(3.)INVESTMENT SECURITIES (Continued)

The scheduled maturities of securities available for sale and securities held to maturity at December 31, 2018 are shown below. Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations (in thousands).

	Amortized Cost		Fair Value
Debt securities available for sale:
Due in one year or less	$	40,353	$	40,005
Due from one to five years		143,746		141,408
Due after five years through ten years		187,690		182,642
Due after ten years		83,793		81,622
	$	455,582	$	445,677
Debt securities held to maturity:
Due in one year or less	$	48,079	$	48,143
Due from one to five years		149,885		150,339
Due after five years through ten years		76,754		74,641
Due after ten years		171,863		166,458
	$	446,581	$	439,581

(3.)INVESTMENT SECURITIES (Continued)

Unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31 are summarized as follows (in thousands):

	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2018
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	-	$	-	$	152,028	$	3,074	$	152,028	$	3,074
Mortgage-backed securities:
Federal National Mortgage Association		251		1		247,615		6,324		247,866		6,325
Federal Home Loan Mortgage Corporation		-		-		33,918		1,275		33,918		1,275
Government National Mortgage Association		-		-		4,667		76		4,667		76
Collateralized mortgage obligations:
Federal National Mortgage Association		-		-		56		-		56		-
Federal Home Loan Mortgage Corporation		-		-		6		-		6		-
Total mortgage-backed securities		251		1		286,262		7,675		286,513		7,676
Total available for sale securities		251		1		438,290		10,749		438,541		10,750
Securities held to maturity:
State and political subdivisions		35,751		91		49,534		1,120		85,285		1,211
Mortgage-backed securities:
Federal National Mortgage Association		1,518		3		8,695		258		10,213		261
Federal Home Loan Mortgage Corporation		1,467		5		2,923		188		4,390		193
Government National Mortgage Association		11,783		82		22,516		841		34,299		923
Collateralized mortgage obligations:
Federal National Mortgage Association		-		-		57,973		2,179		57,973		2,179
Federal Home Loan Mortgage Corporation		-		-		75,603		2,597		75,603		2,597
Government National Mortgage Association		-		-		17,263		535		17,263		535
Total mortgage-backed securities		14,768		90		184,973		6,598		199,741		6,688
Total held to maturity securities		50,519		181		234,507		7,718		285,026		7,899
Total temporarily impaired securities	$	50,770	$	182	$	672,797	$	18,467	$	723,567	$	18,649

December 31, 2017
Securities available for sale:
U.S. Government agencies and government sponsored enterprises	$	95,046	$	571	$	31,561	$	687	$	126,607	$	1,258
Mortgage-backed securities:
Federal National Mortgage Association		201,754		1,855		67,383		1,365		269,137		3,220
Federal Home Loan Mortgage Corporation		20,446		192		15,601		483		36,047		675
Government National Mortgage Association		2,432		-		880		12		3,312		12
Collateralized mortgage obligations:
Federal National Mortgage Association		-		-		119		1		119		1
Federal Home Loan Mortgage Corporation		-		-		8		-		8		-
Total mortgage-backed securities		224,632		2,047		83,991		1,861		308,623		3,908
Total available for sale securities		319,678		2,618		115,552		2,548		435,230		5,166

(3.)INVESTMENT SECURITIES (Continued)

	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
December 31, 2017 (continued)
Securities held to maturity:
State and political subdivisions		36,368		295		14,492		367		50,860		662
Mortgage-backed securities:
Federal National Mortgage Association		3,766		29		2,694		59		6,460		88
Federal Home Loan Mortgage Corporation		-		-		3,094		119		3,094		119
Government National Mortgage Association		17,327		136		9,184		194		26,511		330
Collateralized mortgage obligations:
Federal National Mortgage Association		16,830		202		57,645		1,756		74,475		1,958
Federal Home Loan Mortgage Corporation		23,727		337		66,467		1,828		90,194		2,165
Government National Mortgage Association		15,401		340		5,635		162		21,036		502
Total mortgage-backed securities		77,051		1,044		144,719		4,118		221,770		5,162
Total held to maturity securities		113,419		1,339		159,211		4,485		272,630		5,824
Total temporarily impaired securities	$	433,097	$	3,957	$	274,763	$	7,033	$	707,860	$	10,990

The total number of security positions in the investment portfolio in an unrealized loss position at December 31, 2018 was 571 compared to 411 at December 31, 2017. At December 31, 2018, the Company had positions in 435 investment securities with a fair value of $672.8 million and a total unrealized loss of $18.5 million that have been in a continuous unrealized loss position for more than 12 months. At December 31, 2018, there were a total of 136 securities positions in the Company’s investment portfolio with a fair value of $50.8 million and a total unrealized loss of $182 thousand that had been in a continuous unrealized loss position for less than 12 months. At December 31, 2017, the Company had positions in 172 investment securities with a fair value of $274.8 million and a total unrealized loss of $7.0 million that have been in a continuous unrealized loss position for more than 12 months. At December 31, 2017, there were a total of 239 securities positions in the Company’s investment portfolio with a fair value of $433.1 million and a total unrealized loss of $4.0 million that had been in a continuous unrealized loss position for less than 12 months. The unrealized loss on investment securities was predominantly caused by changes in market interest rates subsequent to purchase. The fair value of most of the investment securities in the Company’s portfolio fluctuates as market interest rates change.

The Company reviews investment securities on an ongoing basis for the presence of other than temporary impairment (“OTTI”) with formal reviews performed quarterly. When evaluating debt securities for OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intention to sell the debt security or whether it is more likely than not that it will be required to sell the debt security before its anticipated recovery. The assessment of whether OTTI exists involves a high degree of subjectivity and judgment and is based on the information available to management. No impairment was recorded during the years ended December 31, 2018, 2017 and 2016.

Based on management’s review and evaluation of the Company’s debt securities as of December 31, 2018, the debt securities with unrealized losses were not considered to be OTTI. As of December 31, 2018, the Company does not have the intent to sell any of the securities in a loss position and believes that it is not likely that it will be required to sell any such securities before the anticipated recovery of amortized cost. Accordingly, as of December 31, 2018, management has concluded that unrealized losses on its investment securities are temporary and no further impairment loss has been realized in the Company’s consolidated statements of income.