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Investments | 9 Months Ended
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Sep. 30, 2014
Investments [Abstract] |
Investments | Note 10 – Investments Although the Company currently has the intent and the ability to hold the securities in its investment portfolio to maturity, the securities are all marketable and are classified as “available for sale” to allow maximum flexibility with regard to interest rate risk and liquidity management. Pursuant to FASB's guidance on accounting for debt and equity securities, available for sale securities are carried on the Company's financial statements at their estimated fair market values, with monthly tax-effected “mark-to-market” adjustments made vis-à-vis accumulated other comprehensive income in shareholders' equity.
Amortized Cost And Estimated Fair Value
The amortized cost and estimated fair value of investment securities available-for-sale are as follows (dollars in thousands, unaudited): |  |  |  |  |  |  |  |  |  |  |  |
|  | September 30, 2014 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
US Government agencies |  | $ | 4,464 |  |  | $ | 6 |  |  | $ | (81 | ) |  | $ | 4,389 |
Mortgage-backed securities |  |  | 359,954 |  |  |  | 3,804 |  |  |  | (1,644 | ) |  |  | 362,114 |
State and poltical subdivisions |  |  | 96,199 |  |  |  | 2,923 |  |  |  | (499 | ) |  |  | 98,623 |
Equity securities |  |  | 1,373 |  |  |  | 1,189 |  |  |  | - |  |  |  | 2,562 |
Total investment securities |  | $ | 461,990 |  |  | $ | 7,922 |  |  | $ | (2,224 | ) |  | $ | 467,688 |
|  | December 31, 2013 |
|  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |
US Government agencies |  | $ | 5,395 |  |  | $ | 18 |  |  | $ | (109 | ) |  | $ | 5,304 |
Mortgage-backed securities |  |  | 320,223 |  |  |  | 3,269 |  |  |  | (2,771 | ) |  |  | 320,721 |
State and political subdivisons |  |  | 97,361 |  |  |  | 1,723 |  |  |  | (2,521 | ) |  |  | 96,563 |
Equity securities |  |  | 1,336 |  |  |  | 1,120 |  |  |  | - |  |  |  | 2,456 |
Total investment securities |  | $ | 424,315 |  |  | $ | 6,130 |  |  | $ | (5,401 | ) |  | $ | 425,044 |
At September 30, 2014 and December 31, 2013, the Company had 164 securities and 197 securities, respectively, with unrealized losses. Management has evaluated those securities as of the respective dates, and does not believe that any of the associated unrealized losses are other than temporary. Gross unrealized losses on our investment securities as of the indicated dates are disclosed in the table below, categorized by investment type and by the duration of time that loss positions on individual securities have continuously existed (over or under twelve months).
Investment Portfolio - Unrealized Losses |  |  |  |  |  |  |  |  |  |  |  |
(dollars in thousands, unaudited) |  | September 30, 2014 |
|  | Less than Twelve Months |  |  | Over Twelve Months |
|  | Gross Unrealized Losses |  |  | Fair Value |  |  | Gross Unrealized Losses |  |  | Fair Value |
US Government agencies |  | $ | (19 | ) |  | $ | 1,260 |  |  | $ | (62 | ) |  | $ | 1,937 |
Mortgage-backed securities |  |  | (576 | ) |  |  | 99,447 |  |  |  | (1,068 | ) |  |  | 68,444 |
State and political subdivisions |  |  | (10 | ) |  |  | 2,451 |  |  |  | (489 | ) |  |  | 23,571 |
Other securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | (605 | ) |  | $ | 103,158 |  |  | $ | (1,619 | ) |  | $ | 93,952 |
|  | December 31, 2013 |
|  | Less than Twelve Months |  |  | Over Twelve Months |
|  | Gross Unrealized Losses |  |  | Fair Value |  |  | Gross Unrealized Losses |  |  | Fair Value |
US Government agencies |  | $ | (92 | ) |  | $ | 1,913 |  |  | $ | (17 | ) |  | $ | 1,920 |
Mortgage-backed securities |  |  | (642 | ) |  |  | 21,747 |  |  |  | (2,129 | ) |  |  | 124,317 |
State and political subdivisions |  |  | (461 | ) |  |  | 6,799 |  |  |  | (2,060 | ) |  |  | 38,083 |
Other securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total |  | $ | (1,195 | ) |  | $ | 30,459 |  |  | $ | (4,206 | ) |  | $ | 164,320 |
The table below summarizes the Company's gross realized gains and losses as well as gross proceeds from the sales of securities, for the periods indicated:
Investment Portfolio - Realized Gains/(Losses) |  |  |  |  |  |  |  |  |  |  |  |
(dollars in thousands, unaudited) |  |  |  |  |  |  |  |  |  |  |  |
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2014 |  |  | 2013 |  |  | 2014 |  |  | 2013 |
Proceeds from sales of securities available for sale |  | $ | - |  |  | $ | - |  |  | $ | 8,360 |  |  | $ | 723 |
Gross gains on sale of securities available for sale |  | $ | - |  |  | $ | - |  |  | $ | 289 |  |  | $ | 6 |
Gross losses on sale of securities available for sale |  |  | - |  |  |  | - |  |  |  | (2 | ) |  |  | - |
Net gains on sale of securities available for sale |  | $ | - |  |  | $ | - |  |  | $ | 287 |  |  | $ | 6 |
The amortized cost and estimated fair value of investment securities available-for-sale at September 30, 2014 and December 31, 2013 are shown below, by the remaining time to contractual maturity dates. The expected life of investment securities may not be consistent with contractual maturity dates, since the issuers of the securities could have the right to call or prepay obligations with or without penalties.
Estimated Fair Value of Contractual Maturities |  |  |  |  |  |
(dollars in thousands, unaudited) |  | September 30, 2014 |
|  | Amortized Cost |  |  | Fair Value |
Maturing within one year |  | $ | 1,204 |  |  | $ | 1,212 |
Maturing after one year through five years |  |  | 213,652 |  |  |  | 216,249 |
Maturing after five years through ten years |  |  | 76,629 |  |  |  | 77,761 |
Maturing after ten years |  |  | 50,748 |  |  |  | 51,294 |
Investment securities not due at a single maturity date: |  |  |  |  |  |  |  |
U.S Government agencies collateralized by |  |  |  |  |  |  |  |
mortgage obligations |  |  | 118,384 |  |  |  | 118,610 |
Other securities |  |  | 1,373 |  |  |  | 2,562 |
|  | $ | 461,990 |  |  | $ | 467,688 |
|  | December 31, 2013 |
|  | Amortized Cost |  |  | Fair Value |
Maturing within one year |  | $ | 2,294 |  |  | $ | 2,316 |
Maturing after one year through five years |  |  | 241,396 |  |  |  | 242,493 |
Maturing after five years through ten years |  |  | 59,572 |  |  |  | 59,402 |
Maturing after ten years |  |  | 49,674 |  |  |  | 47,737 |
Investment securities not due at a single maturity date: |  |  |  |  |  |  |  |
U.S Government agencies collateralized by |  |  |  |  |  |  |  |
mortgage obligations |  |  | 70,043 |  |  |  | 70,640 |
Other securities |  |  | 1,336 |  |  |  | 2,456 |
|  | $ | 424,315 |  |  | $ | 425,044 |
At September 30, 2014, the Company's investment portfolio included securities issued by 268 different government municipalities and agencies located within 27 states with a fair value of $98.6 million. The largest exposure to any single municipality or agency was a $4.5 million (fair value) bond issued for water utility improvements by the Arizona State Water Infrastructure Finance Authority, to be repaid by future water revenue. The Company's investments in bonds issued by states, municipalities and political subdivisions are evaluated in accordance with Supervision and Regulation Letter 12-15 (SR 12-15) issued by the Board of Governors of the Federal Reserve System, “Investing in Securities without Reliance on Nationally Recognized Statistical Rating Organization Ratings”, and other regulatory guidance. Credit ratings are considered in our analysis only as a guide to the historical default rate associated with similarly-rated bonds. There have been no significant differences in our internal analyses compared with the ratings assigned by the third party credit rating agencies. The following table summarizes the amortized cost and fair values of general obligation and revenue bonds in the Company's investment securities portfolio at the indicated dates, identifying the state in which the issuing municipality or agency operates for our largest geographic concentrations:
Revenue and General Obligation Bonds by Location |  |  |  |  |  |  |  |  |
dollars in thousands, unaudited |  | September 30, 2014 |  |  | December 31, 2013 |
|  | Amortized |  |  | Fair Market |  |  | Amortized |  |  | Fair Market |
General obligation bonds |  | Cost |  |  | Value |  |  | Cost |  |  | Value |
State of issuance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
California |  | $ | 20,026 |  |  | $ | 21,219 |  |  | $ | 20,638 |  |  | $ | 21,272 |
Texas |  |  | 12,831 |  |  |  | 12,958 |  |  |  | 11,340 |  |  |  | 11,024 |
Illinois |  |  | 8,287 |  |  |  | 8,392 |  |  |  | 8,965 |  |  |  | 8,702 |
Ohio |  |  | 7,640 |  |  |  | 7,703 |  |  |  | 7,659 |  |  |  | 7,485 |
Washington |  |  | 5,981 |  |  |  | 6,109 |  |  |  | 5,487 |  |  |  | 5,340 |
Arizona |  |  | 2,077 |  |  |  | 2,417 |  |  |  | 2,100 |  |  |  | 2,050 |
Other states |  |  | 19,776 |  |  |  | 19,930 |  |  |  | 20,666 |  |  |  | 20,429 |
Total General Obligation Bonds |  |  | 76,618 |  |  |  | 78,728 |  |  |  | 76,855 |  |  |  | 76,302 |
Revenue bonds |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
State of issuance |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Arizona |  |  | 4,617 |  |  |  | 4,508 |  |  |  | 4,700 |  |  |  | 4,341 |
Texas |  |  | 3,284 |  |  |  | 3,394 |  |  |  | 2,762 |  |  |  | 2,719 |
California |  |  | 2,219 |  |  |  | 2,284 |  |  |  | 2,519 |  |  |  | 2,579 |
Washington |  |  | 1,168 |  |  |  | 1,204 |  |  |  | 1,170 |  |  |  | 1,211 |
Ohio |  |  | 322 |  |  |  | 335 |  |  |  | 324 |  |  |  | 339 |
Other states |  |  | 7,971 |  |  |  | 8,170 |  |  |  | 6,758 |  |  |  | 6,742 |
Total Revenue Bonds |  |  | 19,581 |  |  |  | 19,895 |  |  |  | 18,233 |  |  |  | 17,931 |
Certificates of participation (All California) |  |  | - |  |  |  | - |  |  |  | 2,273 |  |  |  | 2,330 |
Total Obligations of States |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
and Political Subdivisions |  | $ | 96,199 |  |  | $ | 98,623 |  |  | $ | 97,361 |  |  | $ | 96,563 |
The revenue bonds in the Company's investment securities portfolios were issued by government municipalities and agencies to fund public services such as utilities (water, sewer, and power), educational facilities, and general public and economic improvements. The primary sources of revenue for these bonds are delineated in the table below, which shows the amortized cost and fair market values for the largest revenue concentrations as of the indicated dates.
Revenue Bonds by Type |  |  |  |  |  |
dollars in thousands, unaudited |  | September 30, 2014 |  |  | December 31, 2013 |
|  | Amortized |  |  | Fair Market |  |  | Amortized |  |  | Fair Market |
Revenue bonds |  | Cost |  |  | Value |  |  | Cost |  |  | Value |
Revenue source: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Water |  | $ | 8,010 |  |  | $ | 8,010 |  |  | $ | 7,409 |  |  | $ | 7,144 |
College & University |  |  | 2,731 |  |  |  | 2,840 |  |  |  | 2,203 |  |  |  | 2,187 |
Electric & Power |  |  | 1,882 |  |  |  | 1,921 |  |  |  | 1,888 |  |  |  | 1,895 |
Sales Tax |  |  | 1,672 |  |  |  | 1,715 |  |  |  | 1,673 |  |  |  | 1,688 |
Lease |  |  | 1,356 |  |  |  | 1,344 |  |  |  | 1,155 |  |  |  | 1,063 |
Other sources |  |  | 3,930 |  |  |  | 4,065 |  |  |  | 3,905 |  |  |  | 3,954 |
Total Revenue Bonds |  | $ | 19,581 |  |  | $ | 19,895 |  |  | $ | 18,233 |  |  | $ | 17,931 |

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- Definition The entire disclosure for investments, including all tables. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Article 6 -Section 10 -Paragraph (c) -Subparagraph (1) + Details
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