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Investment Securities
 9 Months Ended
Sep. 30, 2017
Investments Debt And Equity Securities [Abstract]  
Investment Securities
(4) Investment Securities

 

The amortized cost and fair value of debt securities classified as available-for-sale at September 30, 2017 and December 31, 2016 were as follows:

 

    Total                    
    Amortized     Gross Unrealized     Fair  
(in thousands)   Cost     Gains     Losses     Value  
September 30, 2017                        
U.S. government and federal agency obligations   $ 12,653     $ 0     $ (180 )   $ 12,473  
Government sponsored enterprises     32,854       0       (235 )     32,619  
Obligations of states and political subdivisions     47,730       246       (250 )     47,726  
Mortgage-backed securities:                                
Residential - government agencies     119,961       140       (1,265 )     118,836  
Commercial - government agencies     987       9       0       996  
Total mortgage-backed securities     120,948       149       (1,265 )     119,832  
Total available-for-sale securities   $ 214,185     $ 395     $ (1,930 )   $ 212,650  
                                 
December 31, 2016                                
U.S. government and federal agency obligations   $ 13,667     $ 0     $ (303 )   $ 13,364  
Government sponsored enterprises     32,786       2       (329 )     32,459  
Obligations of states and political subdivisions     42,666       123       (757 )     42,032  
Mortgage-backed securities:                                
Residential - government agencies     127,527       124       (1,995 )     125,656  
Commercial - government agencies     989       12       0       1,001  
Total mortgage-backed securities     128,516       136       (1,995 )     126,657  
Total available-for-sale securities   $ 217,635     $ 261     $ (3,384 )   $ 214,512  

 

All of the Company’s investment securities are classified as available for sale. Agency bonds and notes, small business administration guaranteed loan certificates (SBA), residential and commercial agency mortgage-backed securities, and agency collateralized mortgage obligations (CMO) include securities issued by the Government National Mortgage Association (GNMA), a U.S. government agency, and the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC) and the Federal Home Loan Bank (FHLB), which are U.S. government-sponsored enterprises.

  

Other Investments and securities primarily consist of Federal Home Loan Bank stock, subordinated debt equity securities, and the Company’s interest in statutory trusts. These securities are reported at cost in other assets in the amount of $9.8 million as of both September 30, 2017 and December 31, 2016, respectively.

 

Debt securities with carrying values aggregating approximately $173.1 million and $167.6 million at September 30, 2017 and December 31, 2016, respectively, were pledged to secure public funds, securities sold under agreements to repurchase, and for other purposes as required or permitted by law.

 

The amortized cost and fair value of debt securities classified as available-for-sale at September 30, 2017, by contractual maturity are shown below. Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without prepayment penalties.

 

    Amortized     Fair  
(in thousands)   Cost     Value  
Due in one year or less   $ 6,864     $ 6,858  
Due after one year through five years     56,996       56,846  
Due after five years through ten years     25,307       25,081  
Due after ten years     4,070       4,033  
Total     93,237       92,818  
Mortgage-backed securities     120,948       119,832  
Total available-for-sale securities   $ 214,185     $ 212,650  

 

Gross unrealized losses on debt 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, at September 30, 2017 and December 31, 2016 were as follows:

 

    Less than 12 months     12 months or more     Total     Total  
    Fair     Unrealized     Fair     Unrealized     Fair     Unrealized  
(in thousands)   Value     Losses     Value     Losses     Value     Losses  
At September 30, 2017                                    
U.S. government and federal agency obligations   $ 486     $ 0     $ 11,987     $ (180 )   $ 12,473     $ (180 )
Government sponsored enterprises     16,278       (69 )     16,041       (166 )     32,319       (235 )
Obligations of states and political subdivisions     10,820       (35 )     12,535       (215 )     23,355       (250 )
Mortgage-backed securities:                                                
Residential - government agencies     48,651       (341 )     51,735       (924 )     100,386       (1,265 )
Total   $ 76,235     $ (445 )   $ 92,298     $ (1,485 )   $ 168,533     $ (1,930 )
                                                 
(in thousands)                                                
At December 31, 2016                                                
U.S. government and federal agency obligations   $ 13,365     $ (303 )   $ 0     $ 0     $ 13,365     $ (303 )
Government sponsored enterprises     29,432       (329 )     0       0       29,432       (329 )
Obligations of states and political subdivisions     32,318       (757 )     0       0       32,318       (757 )
Mortgage-backed securities:                                                
Residential - government agencies     109,772       (1,848 )     3,742       (147 )     113,514       (1,995 )
Total   $ 184,887     $ (3,237 )   $ 3,742     $ (147 )   $ 188,629     $ (3,384 )

 

The total available for sale portfolio consisted of approximately 329 securities at September 30, 2017. The portfolio included 204 securities having an aggregate fair value of $168.5 million that were in a loss position at September 30, 2017. Securities identified as temporarily impaired which had been in a loss position for 12 months or longer totaled $92.3 million at fair value. The $1.9 million aggregate unrealized loss included in accumulated other comprehensive income at September 30, 2017 was caused by interest rate fluctuations.

  

The total available for sale portfolio consisted of approximately 298 securities at December 31, 2016. The portfolio included 216 securities having an aggregate fair value of $188.6 million that were in a loss position at December 31, 2016. Securities identified as temporarily impaired which had been in a loss position for 12 months or longer had a fair value of $3.7 million at December 31, 2016. The $3.4 million aggregate unrealized loss included in accumulated other comprehensive income at December 31, 2016 was caused by interest rate fluctuations.

 

Because the decline in fair value is attributable to changes in interest rates and not credit quality, these investments were not considered other-than-temporarily impaired at September 30, 2017 and December 31, 2016, respectively. In the absence of changes in credit quality of these investments, the fair value is expected to recover on all debt securities as they approach their maturity date or re-pricing date, or if market yields for such investments decline. In addition, the Company does not have the intent to sell these investments over the period of recovery, and it is not more likely than not that the Company will be required to sell such investment securities.

 

The table presents the components of investment securities gains and losses, which have been recognized in earnings:

 

    Three Months Ended September 30,     Nine Months Ended September 30,  
(in thousands)   2017     2016     2017     2016  
Gains realized on sales   $ 12     $ 132     $ 12     $ 623  
Losses realized on sales     (12 )     (21 )     (12 )     (21 )
Other-than-temporary impairment recognized     0       0       0       0  
Investment securities gains   $ 0     $ 111     $ 0     $ 602