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Securities
 6 Months Ended
Jun. 30, 2014
Investments debt and equity securities [Abstract]  
Investments In Debt And Marketable Equity Securities And Certain Trading Assets Disclosure Text Block

NOTE 4: SECURITIES

At June 30, 2014 and December 31, 2013, respectively, all securities within the scope of ASC 320, Investments – Debt and Equity Securities, were classified as available-for-sale. The fair value and amortized cost for securities available-for-sale by contractual maturity at June 30, 2014 and December 31, 2013, respectively, are presented below.

1 year1 to 55 to 10After 10FairGross Unrealized Amortized
(Dollars in thousands)or lessyearsyearsyearsValueGainsLossesCost
June 30, 2014
Agency obligations (a)$ — 13,306 34,535 22,910 70,751 293 1,914$ 72,372
Agency RMBS (a) — — 7,535 133,470 141,005 2,009 1,523 140,519
State and political subdivisions — 679 17,898 46,620 65,197 2,977 42 62,262
Total available-for-sale$ — 13,985 59,968 203,000 276,953 5,279 3,479$ 275,153
December 31, 2013
Agency obligations (a)$ — — 23,247 21,275 44,522 — 4,557$ 49,079
Agency RMBS (a) — — 8,306 154,052 162,358 976 4,733 166,115
State and political subdivisions — 1,735 21,366 41,238 64,339 1,560 459 63,238
Total available-for-sale$ — 1,735 52,919 216,565 271,219 2,536 9,749$ 278,432
(a) Includes securities issued by U.S. government agencies or government sponsored entities.

Securities with aggregate fair values of $137.4 million and $120.5 million at June 30, 2014 and December 31, 2013, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase, Federal Home Loan Bank (“FHLB”) advances, and for other purposes required or permitted by law.

Included in other assets are cost-method investments. The carrying amounts of cost-method investments were $1.6 million and $1.8 million at June 30, 2014 and December 31, 2013, respectively. Cost-method investments primarily include non-marketable equity investments, such as FHLB of Atlanta stock and Federal Reserve Bank (“FRB”) stock.

Gross Unrealized Losses and Fair Value

The fair values and gross unrealized losses on securities at June 30, 2014 and December 31, 2013, respectively, segregated by those securities that have been in an unrealized loss position for less than 12 months and 12 months or longer, are presented below.

Less than 12 Months12 Months or LongerTotal
FairUnrealizedFairUnrealizedFairUnrealized
(Dollars in thousands)ValueLossesValueLossesValueLosses
June 30, 2014:
Agency obligations $ — —42,1721,914$42,1721,914
Agency RMBS — —67,0631,52367,0631,523
State and political subdivisions1,892252,290174,18242
Total $1,89225111,5253,454$113,4173,479
December 31, 2013:
Agency obligations $35,9333,1828,5901,376$44,5234,558
Agency RMBS109,7744,3937,683339117,4574,732
State and political subdivisions9,575459 — —9,575459
Total $155,2828,03416,2731,715$171,5559,749

For the securities in the previous table, the Company does not have the intent to sell and has determined it is not more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis, which may be maturity. On a quarterly basis, the Company assesses each security for credit impairment. For debt securities, the Company evaluates, where necessary, whether credit impairment exists by comparing the present value of the expected cash flows to the securities’ amortized cost basis. For cost-method investments, the Company evaluates whether an event or change in circumstances has occurred during the reporting period that may have a significant adverse effect on the fair value of the investment.

In determining whether a loss is temporary, the Company considers all relevant information including:

  • the length of time and the extent to which the fair value has been less than the amortized cost basis;
  • adverse conditions specifically related to the security, an industry, or a geographic area (for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, in the financial condition of the underlying loan obligors, including changes in technology or the discontinuance of a segment of the business that may affect the future earnings potential of the issuer or underlying loan obligors of the security or changes in the quality of the credit enhancement);
  • 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 that increase in the future;
  • failure of the issuer of the security to make scheduled interest or principal payments;
  • any changes to the rating of the security by a rating agency; and
  • recoveries or additional declines in fair value subsequent to the balance sheet date.

Agency obligations

The unrealized losses associated with agency obligations were primarily driven by changes in interest rates and not due to the credit quality of the securities. These securities were issued by U.S. government agencies or government-sponsored entities and did not have any credit losses given the explicit government guarantee or other government support.

Agency RMBS

The unrealized losses associated with agency RMBS were primarily driven by changes in interest rates and not due to the credit quality of the securities. These securities were issued by U.S. government agencies or government-sponsored entities and did not have any credit losses given the explicit government guarantee or other government support.

Securities of U.S. states and political subdivisions

The unrealized losses associated with securities of U.S. states and political subdivisions were primarily driven by changes in interest rates and were not due to the credit quality of the securities. Some of these securities are guaranteed by a bond insurer, but management did not rely on the guarantee in making its investment decision. These securities will continue to be monitored as part of the Company’s quarterly impairment analysis, but are expected to perform even if the rating agencies reduce the credit rating of the bond insurers. As a result, the Company expects to recover the entire amortized cost basis of these securities.

Cost-method investments

At June 30, 2014, cost-method investments with an aggregate cost of $1.6 million were not evaluated for impairment because the Company did not identify any events or changes in circumstances that may have a significant adverse effect on the fair value of these cost-method investments.

Other-Than-Temporarily Impaired Securities

The following table presents a roll-forward of the credit loss component of the amortized cost of debt securities that the Company has written down for other-than-temporary impairment and has recognized the credit component of the loss in earnings (referred to as “credit-impaired” debt securities). Other-than-temporary impairments recognized in earnings for credit-impaired debt securities are presented as additions in two components based upon whether the current period is the first time the debt security was credit-impaired (initial credit impairment) or is not the first time the debt security was credit-impaired (subsequent credit impairments). The credit loss component is reduced if the Company sells, intends to sell, or believes it will be required to sell previously credit-impaired debt securities. Additionally, the credit loss component is reduced if the Company receives cash flows in excess of what it expected to receive over the remaining life of the credit-impaired debt security, the security matures or the security is fully written-down and deemed worthless. Changes in the credit loss component of credit-impaired debt securities for the respective periods are presented below.

Quarter ended June 30,Six Months Ended June 30,
(Dollars in thousands)2014201320142013
Balance, beginning of period$ —$ 1,257$ —$ 1,257
Reductions:
Securities fully written down and deemed worthless — 500 — 500
Balance, end of period$ —$ 757$ —$ 757

Other-Than-Temporary Impairment

The following table presents details of the other-than-temporary impairment related to securities.

Quarter ended June 30,Six Months Ended June 30,
(Dollars in thousands)2014201320142013
Other-than-temporary impairment charges
Debt securities:
Agency RMBS$ —$ —$333$ —
Total debt securities — —333 —
Total other-than-temporary impairment charges$ —$ —$333$ —
Other-than-temporary impairment on debt securities:
Recorded as part of gross realized losses:
Securities with intent to sell — —333 —
Total other-than-temporary impairment on debt securities$ —$ —$333$ —
Realized Gains and Losses
The following table presents the gross realized gains and losses on sales and other-than-temporary impairment charges
related to securities.
Quarter ended June 30,Six Months Ended June 30,
(Dollars in thousands)2014201320142013
Gross realized gains$12$ 524$ 38$ 685
Gross realized losses — (6) — (6)
Other-than-temporary impairment charges — — (333) —
Realized gains (losses), net$12$ 518$ (295)$ 679