5.	INVESTMENT SECURITIES

A summary of our investment securities portfolio as of December 31, 2011 and 2010 is as follows:

			Gross		Gross
	Amortized		unrealized		unrealized			Estimated
	cost		gains		losses			fair value
	(Dollars in thousands)
2011
Held to Maturity:
U.S. Government sponsored entities mortgage-backed securities	$	931	$	45	$	-		$	976

Available for Sale:
U.S. Government sponsored entities debt securities	$	370,184	$	2,993	$	-		$	373,177
States and political subdivisions		12,265		729		-			12,994
U.S. Government sponsored entities mortgage-backed securities		1,077,146		20,981		(825	)		1,097,302
Corporate securities		8,403		148		-			8,551
Other		985		-		(15	)		970
Total	$	1,468,983	$	24,851	$	(840	)	$	1,492,994

2010
Held to Maturity:
States and political subdivisions	$	500	$	4	$	-		$	504
U.S. Government sponsored entities mortgage-backed securities		2,328		81		-			2,409
Total	$	2,828	$	85	$	-		$	2,913

Available for Sale:
U.S. Government sponsored entities debt securities	$	202,192	$	306	$	(643	)	$	201,855
States and political subdivisions		12,619		-		-			12,619
U.S. Government sponsored entities mortgage-backed securities		483,647		6,653		(3,336	)		486,964
Non-agency collateralized mortgage obligations		17		-		-			17
Other		1,057		5		-			1,062
Total	$	699,532	$	6,964	$	(3,979	)	$	702,517

The amortized cost and estimated fair value of our investment securities at December 31, 2011 by contractual maturity are shown below. Actual maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	December 31, 2011
	Amortized		Estimated
	cost		fair value
	(Dollars in thousands)
Held to Maturity
Mortgage-backed securities	$	931	$	976

Available for Sale
Due in one year or less	$	75,087	$	75,319
Due after one year through five years		297,116		300,376
Due after five years through ten years		13,443		13,740
Due after ten years		5,206		5,287
Mortgage-backed securities		1,077,146		1,097,302
Other		985		970
Total	$	1,468,983	$	1,492,994

Proceeds from sales of investment securities available for sale were $138.0 million, $439.4 million and $86.2 million in 2011, 2010 and 2009, respectively, resulting in gross realized gains of $1.4 million, $9.6 million and $0.6 million in 2011, 2010 and 2009, respectively, and gross realized losses of $0.1 million, $8.8 million, and $0.7 million in 2011, 2010 and 2009, respectively. The specific identification method was used as the basis for determining the cost of all securities sold.

Investment securities of $938.0 million and $613.5 million at December 31, 2011 and 2010, respectively, were pledged to secure public funds on deposit, securities sold under agreements to repurchase and other long-term and short-term borrowings.

In the first quarter of 2010, we transferred certain securities formerly classified as available for sale to trading securities as we intended to sell these securities in the near-term as part of our recovery plan. In the second quarter of 2010, we sold $23.2 million of these trading securities and in the fourth quarter of 2010, we sold the remaining $21.6 million of securities classified as trading. Gross realized gains and losses on the sale of these securities were $0.8 million and $0.1 million, respectively. The transfer of these securities to the trading category was accounted for at fair value.

There were a total of 9 and 18 securities in an unrealized loss position at December 31, 2011 and 2010, respectively. Provided below is a summary of investment securities which were in an unrealized loss position at December 31, 2011 and 2010:

	Less than 12 months					12 months or longer				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Losses			Value		Losses		Value		Losses
	(Dollars in thousands)
At December 31, 2011:
U.S. Government sponsored entities
mortgage-backed securities	$	144,520	$	(825	)	$	-	$	-	$	144,520	$	(825	)
Other		970		(15	)		-		-		970		(15	)
Total temporarily impaired securities	$	145,490	$	(840	)	$	-	$	-	$	145,490	$	(840	)

At December 31, 2010:
U.S. Government sponsored entities
debt securities	$	83,973	$	(643	)	$	-	$	-	$	83,973	$	(643	)
U.S. Government sponsored entities
mortgage-backed securities		194,756		(3,336	)		-		-		194,756		(3,336	)
Non-agency collateralized mortgage obligations		17		-			-		-		17		-
Total temporarily impaired securities	$	278,746	$	(3,979	)	$	-	$	-	$	278,746	$	(3,979	)

The declines in market value were primarily attributable to changes in interest rates and not credit quality.

U.S. Government Sponsored Entities Debt Securities

The unrealized losses on our investment in debt securities issued by U.S. Government sponsored entities were primarily driven by changes in interest rates. All debt securities issued by U.S. Government sponsored entities are rated AA+ according to Standard & Poor's (“S&P”) and AAA by Moody's. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the current par value.

U.S. Government Sponsored Entities Mortgage-Backed Securities

The unrealized losses on our investment in U.S. Government sponsored entities mortgage-backed securities were primarily driven by changes in interest rates and not due to credit losses given the explicit or implicit guarantees provided by the U.S. Government.

Non-Agency Collateralized Mortgage Obligations

At December 31, 2010, there was one non-agency collateralized mortgage obligation that was securitized in 1991 with an unpaid principal balance, amortized cost and estimated fair value of $17 thousand, and an unrealized loss of $300. This security was subsequently paid off at par value in 2011.

Other

Unrealized losses relate primarily to equity securities held under our Director's Deferred Compensation Plan which have declined in value during the year.

Other-than-temporary impairment (“OTTI”)

Unrealized losses for all investment securities are reviewed to determine whether the losses are “other-than-temporary.” Investment securities are evaluated for OTTI on at least a quarterly basis and more frequently when economic or market conditions warrant such an evaluation to determine whether a decline in their value below amortized cost is other-than-temporary. In conducting this assessment, we evaluate a number of factors including, but not limited to:

·	The length of time and the extent to which fair value has been less than the amortized cost basis;

·	Adverse conditions specifically related to the security, an industry, or a geographic area;

·	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;

·	Failure of the issuer to make scheduled interest or principal payments;

·	Any rating changes by a rating agency; and

·	Recoveries or additional decline in fair value subsequent to the balance sheet date.

The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value are not necessarily favorable, or that there is a general lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other-than-temporary, the value of the security is reduced and a corresponding charge to earnings is recognized for anticipated credit losses.

The declines in market value were primarily attributable to changes in interest rates and disruptions in the credit and financial markets. Because we have no intent to sell securities in an unrealized loss position and it is not more likely than not that we will be required to sell such securities before recovery of its amortized cost basis, we do not consider our investments to be other-than-temporarily impaired.

During 2009, we identified three available for sale non-agency collateralized mortgage obligations that were considered other-than-temporarily impaired. The total OTTI on these securities as of December 31, 2009 was approximately $7.7 million, of which $2.6 million was determined to be credit related and recognized through earnings in 2009. The remaining $5.2 million was recognized as a component of AOCI.