Securities

At December 31, 2011 the Company's securities portfolio primarily consisted of securities issued by U.S. government agencies, U.S. government-sponsored enterprises and state and municipalities. All of the Company’s mortgage-backed securities and collateralized mortgage obligations are issued by U.S. government agencies and U.S. government-sponsored enterprises and are implicitly guaranteed by the U.S. government. The Company did not have any other issuances in its portfolio which exceeded ten percent of shareholders’ equity.

The following table summarizes the amortized cost, gross unrealized gains and losses and the resulting fair value of securities available for sale:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2011	(in thousands)
U.S. government agency and government-sponsored enterprise mortgage-backed securities and collateralized mortgage obligations	$	678,631	$	19,323	$	(2,000	)	$	695,954
State and municipal securities	263,075		22,746		(58		)	285,763
U.S. government agency and government-sponsored enterprise securities	42,558		505		—			43,063
Other securities	3,296		64		(30		)	3,330
Total	$	987,560	$	42,638	$	(2,088	)	$	1,028,110
December 31, 2010
U.S. government agency and government-sponsored enterprise mortgage-backed securities and collateralized mortgage obligations	$	491,530	$	16,139	$	(1,027	)	$	506,642
State and municipal securities	249,117		7,247		(2,383		)	253,981
Other securities	3,281		—		(38		)	3,243
Total	$	743,928	$	23,386	$	(3,448	)	$	763,866

Gross realized losses amounted to $250 thousand, $148 thousand, and $10 thousand for the years ended December 31, 2011, 2010 and 2009, respectively. Gross realized gains amounted to $384 thousand, $206 thousand, and $1.1 million for the years ended December 31, 2011, 2010 and 2009, respectively. The following table summarizes the amortized cost and fair value of securities available for sale by contractual maturity groups:



	December 31, 2011
	Amortized Cost		Fair Value
	(in thousands)
Due within one year	$	18,310	$	18,610
Due after one year through five years	52,418		54,635
Due after five years through ten years	204,470		212,605
Due after ten years	709,066		738,930
Total investment securities available-for-sale	$	984,264	$	1,024,780

The following table summarizes, as of December 31, 2011 and 2010, the carrying value of securities pledged as collateral to secure public deposits, borrowings and other purposes as permitted or required by law:



	December 31, 2011		December 31, 2010
	(in thousands)
To Washington and Oregon State to secure public deposits	$	225,345	$	153,328
To Federal Home Loan Bank to secure advances	91,097		110,780
To Federal Reserve Bank to secure borrowings	56,347		149,315
Other securities pledged	47,454		45,109
Total securities pledged as collateral	$	420,243	$	458,532

The following tables show the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2011 and 2010:



	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2011	(in thousands)
U.S. government agency and government-sponsored enterprise mortgage-backed securities and collateralized mortgage obligations	$	238,875	$	(1,999	)	$	196	$	(1	)	$	239,071	(2,000		)
State and municipal securities	3,820		(24		)	950		(34		)	4,770		(58		)
Other securities	—		—			970		(30		)	970		(30		)
Total	$	242,695	$	(2,023	)	$	2,116	$	(65	)	$	244,811	$	(2,088	)
December 31, 2010
U.S. government agency and government-sponsored enterprise mortgage-backed securities and collateralized mortgage obligations	$	86,529	$	(1,025	)	$	588	$	(2	)	$	87,117	$	(1,027	)
State and municipal securities	74,755		(2,099		)	2,792		(284		)	77,547		(2,383		)
Other securities	2,275		(6		)	968		(32		)	3,243		(38		)
Total	$	163,559	$	(3,130	)	$	4,348	$	(318	)	$	167,907	$	(3,448	)

At December 31, 2011, there were eight state and municipal government securities in an unrealized loss position, of which one was in a continuous loss position for 12 months or more. The unrealized losses on state and municipal securities were caused by interest rate changes or widening of market spreads subsequent to the purchase of the individual securities. Management monitors published credit ratings of these securities for adverse changes. As of December 31, 2011 none of the rated obligations of state and local government entities held by the Company had an adverse credit rating. Because the credit quality of these securities are investment grade and the Company does not intend to sell these securities nor does the Company consider it more likely than not that it will be required to sell these securities before the recovery of amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2011.

At December 31, 2011, there were 35 U.S. government agency and government-sponsored enterprise mortgage-backed securities & collateralized mortgage obligations securities in an unrealized loss position, of which two were in a continuous loss position for 12 months or more. The decline in fair value is attributable to changes in interest rates relative to where these investments fall within the yield curve and their individual characteristics. Because the Company does not intend to sell these securities nor does the Company consider it more likely than not that it will be required to sell these securities before the recovery of amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2011.

At December 31, 2011, there was one other security, a mortgage-backed securities fund in a continuous unrealized loss position for 12 months or more. The decline in fair value is attributable to changes in interest rates and the additional risk premium investors are demanding for investment securities with these characteristics. The Company does not consider this investment to be other-than-temporarily impaired at December 31, 2011 as it has the intent and ability to hold the investment for sufficient time to allow for recovery in the market value.

Securities Deemed to be Other-Than-Temporarily Impaired

During 2011, the Company determined that one of its state and municipal securities with a par amount of $3.0 million was other-than-temporarily impaired due to it maturing during the period without repaying the principal amount. The defaulted security was issued in 2008 by a municipality located in the state of Washington. In accordance with ASC 320-10-35, the Company determined that the entire amount of the other-than-temporary impairment was credit-related as the present value of the expected future cash flows for the defaulted security was zero. The significant inputs used to determine the expected future cash flows were the default on principal repayment and there being no insurance on the defaulted security. The credit-related other-than-temporary impairment of $3.0 million was recorded in the consolidated statements of income.