Quarterly report pursuant to Section 13 or 15(d)

Securities

v3.2.0.727
Securities
6 Months Ended
Jun. 30, 2015
Investments, Debt and Equity Securities [Abstract]  
Securities
Securities

The following is a summary of securities available for sale as of June 30, 2015 and December 31, 2014: 
 
Amortized Cost
 
Gross Unrealized Gain
 
Gross Unrealized Loss
 
Estimated Fair Value
 
(in thousands)
June 30, 2015
 
 
 
 
 
 
 
Mortgage-backed securities (1) (2)
$
379,574

 
$
1,374

 
$
1,380

 
$
379,568

Collateralized mortgage obligations (1)
154,968

 
1,061

 
660

 
155,369

U.S. government agency securities
63,969

 
4

 
1,312

 
62,661

SBA loan pool securities
71,960

 
83

 
357

 
71,686

Municipal bonds-tax exempt
3,589

 
37

 

 
3,626

Municipal bonds-taxable
15,607

 
271

 
46

 
15,832

Corporate bonds
17,019

 
1

 
44

 
16,976

U.S. treasury securities
161

 
1

 

 
162

Other securities
22,916

 

 
113

 
22,803

Total securities available for sale
$
729,763

 
$
2,832

 
$
3,912

 
$
728,683

December 31, 2014
 
 
 
 
 
 
 
Mortgage-backed securities (1) (2)
$
571,678

 
$
2,811

 
$
1,203

 
$
573,286

Collateralized mortgage obligations (1)
188,704

 
417

 
1,074

 
188,047

U.S. government agency securities
129,857

 
172

 
1,822

 
128,207

SBA loan pool securities
109,983

 
52

 
588

 
109,447

Municipal bonds-tax exempt
4,319

 
71

 

 
4,390

Municipal bonds-taxable
16,615

 
398

 
91

 
16,922

Corporate bonds
17,018

 
2

 
72

 
16,948

U.S. treasury securities
163

 

 

 
163

Other securities
22,916

 
57

 
80

 
22,893

Equity securities
450

 

 
36

 
414

Total securities available for sale
$
1,061,703

 
$
3,980

 
$
4,966

 
$
1,060,717

                              
(1) 
Collateralized by residential mortgages and guaranteed by U.S. government sponsored entities
(2) 
A portion of the mortgage-backed securities is comprised of home mortgage-backed securities backed by home equity conversion mortgages

The amortized cost and estimated fair value of securities as of June 30, 2015, by contractual maturity, are shown below. Although mortgage-backed securities and collateralized mortgage obligations have contractual maturities through 2064, expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.
 
Available for Sale
 
Amortized Cost
 
Estimated Fair Value
 
(in thousands)
Within one year
$
11,998

 
$
11,973

Over one year through five years
17,329

 
17,208

Over five years through ten years
98,196

 
97,498

Over ten years
44,782

 
44,264

Mortgage-backed securities
379,574

 
379,568

Collateralized mortgage obligations
154,968

 
155,369

Other securities
22,916

 
22,803

Total
$
729,763

 
$
728,683


FASB ASC 320, Investments – Debt and Equity Securities, requires us to periodically evaluate our investments for other-than-temporary impairment (“OTTI”). There was no OTTI charge during the six months ended June 30, 2015 and 2014.
    
Gross unrealized losses on securities available for sale, the estimated fair value of the related securities and the number of securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows as of June 30, 2015 and December 31, 2014
 
Holding Period
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Gross Unrealized Loss
 
Estimated Fair Value
 
Number of Securities
 
Gross Unrealized Loss
 
Estimated Fair Value
 
Number of Securities
 
Gross Unrealized Loss
 
Estimated Fair Value
 
Number of Securities
 
(in thousands, except number of securities)
June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
$
595

 
$
94,908

 
32

 
$
785

 
$
22,781

 
9

 
$
1,380

 
$
117,689

 
41

Collateralized mortgage obligations
114

 
28,201

 
8

 
546

 
28,654

 
12

 
660

 
56,855

 
20

U.S. government agency securities
394

 
29,596

 
11

 
918

 
30,061

 
10

 
1,312

 
59,657

 
21

SBA loan pool securities
19

 
13,971

 
3

 
338

 
11,362

 
4

 
357

 
25,333

 
7

Municipal bonds-taxable
46

 
6,086

 
5

 

 

 

 
46

 
6,086

 
5

Corporate bonds
17

 
5,004

 
1

 
27

 
7,971

 
2

 
44

 
12,975

 
3

Other securities
25

 
21,861

 
3

 
88

 
937

 
3

 
113

 
22,798

 
6

Total
$
1,210

 
$
199,627

 
63

 
$
2,702

 
$
101,766

 
40

 
$
3,912

 
$
301,393

 
103

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed securities
$
288

 
$
102,704

 
21

 
$
915

 
$
50,625

 
19

 
$
1,203

 
$
153,329

 
40

Collateralized mortgage obligations
350

 
78,191

 
21

 
724

 
33,308

 
13

 
1,074

 
111,499

 
34

U.S. government agency securities

 
5,000

 
1

 
1,822

 
73,142

 
26

 
1,822

 
78,142

 
27

SBA loan pool securities
155

 
85,062

 
15

 
433

 
11,975

 
4

 
588

 
97,037

 
19

Municipal bonds-taxable

 

 

 
91

 
5,538

 
5

 
91

 
5,538

 
5

Corporate bonds
4

 
5,021

 
1

 
68

 
7,925

 
2

 
72

 
12,946

 
3

Other securities

 

 

 
80

 
1,945

 
4

 
80

 
1,945

 
4

Equity securities
36

 
214

 
1

 

 

 

 
36

 
214

 
1

Total
$
833

 
$
276,192

 
60

 
$
4,133

 
$
184,458

 
73

 
$
4,966

 
$
460,650

 
133



All individual securities that have been in a continuous unrealized loss position for 12 months or longer as of June 30, 2015 and December 31, 2014 had investment grade ratings upon purchase. The issuers of these securities have not established any cause for default on these securities and the various rating agencies have reaffirmed these securities’ long-term investment grade status as of June 30, 2015 and December 31, 2014. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated.

FASB ASC 320 requires OTTI securities to be written down when fair value is below amortized cost in circumstances where: (1) an entity has the intent to sell a security; (2) it is more likely than not that an entity will be required to sell the security before recovery of its amortized cost basis; or (3) an entity does not expect to recover the entire amortized cost basis of the security. If an entity intends to sell a security or if it is more likely than not the entity will be required to sell the security before recovery, an OTTI write-down is recognized in earnings equal to the entire difference between the security’s amortized cost basis and its fair value. If an entity does not intend to sell the security or it is not more likely than not that it will be required to sell the security before recovery, the OTTI write-down is separated into an amount representing credit loss, which is recognized in earnings, and the amount related to all other factors, which is recognized in other comprehensive income.

The Company does not intend to sell these securities and it is more likely than not that we will not be required to sell the investments before the recovery of its amortized cost basis. In addition, the unrealized losses on municipal and corporate bonds are not considered other-than-temporarily impaired, as the bonds are rated investment grade and there are no credit quality concerns with the issuers. Interest payments have been made as scheduled, and management believes this will continue in the future and that the bonds will be repaid in full as scheduled. Therefore, in management’s opinion, all securities that have been in a continuous unrealized loss position for the past 12 months or longer as of June 30, 2015 and December 31, 2014 were not other-than-temporarily impaired, and therefore, no impairment charges as of June 30, 2015 and December 31, 2014 were warranted.

Realized gains and losses on sales of securities and proceeds from sales of securities were as follows for the periods indicated:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2015
 
2014
 
2015
 
2014
 
(in thousands)
Gross realized gains on sales of securities
$
2,067

 
$
365

 
$
4,262

 
$
1,786

Gross realized losses on sales of securities
(155
)
 
(1
)
 
(166
)
 
(1
)
Net realized gains on sales of securities
$
1,912

 
$
364

 
$
4,096

 
$
1,785

Proceeds from sales of securities
$
130,594

 
$
40,822

 
$
307,442

 
$
126,056


For the three months ended June 30, 2015, there was a $1.9 million net gain in earnings resulting from the sale of securities that had previously been recorded as net unrealized gains of $4.1 million in comprehensive income. For the three months ended June 30, 2014, there was a $364,000 net gain in earnings resulting from the sale of securities that had previously been recorded as net unrealized gains of $100,000 in comprehensive income.

For the six months ended June 30, 2015, there was a $4.1 million net gain in earnings resulting from the sale of securities that had previously been recorded as net unrealized gains of $1.2 million in comprehensive income. For the three months ended June 30, 2014, there was a $1.8 million net gain in earnings resulting from the sale of securities that had previously been recorded as net unrealized losses of $177,000 in comprehensive income.

Securities available for sale with market values of $71.1 million and $76.2 million as of June 30, 2015 and December 31, 2014, respectively, were pledged to secure FHLB advances, public deposits and for other purposes as required or permitted by law.