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Securities

6 Months Ended

Jun. 30, 2012

Securities [Abstract]

SECURITIES

4. SECURITIES

Securities available for sale at June 30, 2012 and December 31, 2011 are as follows:


		June 30, 2012																December 31, 2011
		Amortized Cost				Unrealized								Fair Value				Amortized Cost				Unrealized								Fair Value
		Amortized Cost				Gains				Losses				Fair Value				Amortized Cost				Gains				Losses				Fair Value
U.S. Treasury		$	6,036			$	33			$	0			$	6,069			$	8,064			$	66			$	0			$	8,130
U.S. Gov’t sponsored entities			107,398				5,641				(9	)			113,030				102,258				5,249				(15	)			107,492
State & political subdivisions			151,321				10,316				(54	)			161,583				149,685				8,844				(92	)			158,437
Residential mortgage & asset backed			363,792				8,923				(279	)			372,436				292,297				8,043				(214	)			300,126
Commercial mortgage & asset backed			2,071				61				0				2,132				2,077				45				0				2,122
Corporate notes & bonds			16,364				62				(3,010	)			13,416				17,358				50				(3,548	)			13,860
Pooled trust preferred			800				0				(440	)			360				800				0				(460	)			340
Pooled SBA			43,062				1,830				(9	)			44,883				44,851				1,282				(77	)			46,056
Other securities			1,521				22				0				1,543				1,521				23				0				1,544

Total		$	692,365			$	26,888			$	(3,801	)		$	715,452			$	618,911			$	23,602			$	(4,406	)		$	638,107

At June 30, 2012, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.

Trading securities accounted for under the fair value option at June 30, 2012 and December 31, 2011 are as follows:


		June 30, 2012				December 31, 2011

Corporate equity securities		$	2,297			$	1,959
Certificates of deposit			382				255
International mutual funds			252				257
Large cap growth mutual funds			147				145
Money market mutual funds			108				241
Large cap value mutual funds			103				105
Corporate notes and bonds			101				100
Real estate investment trust mutual funds			64				68
U.S. Government sponsored entities			56				55
Small cap mutual funds			25				25
Mid cap mutual funds			25				23


Total		$	3,560			$	3,233

Securities with unrealized losses at June 30, 2012 and December 31, 2011, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):


June 30, 2012		Less than 12 Months								12 Months or More								Total
Description of Securities		Fair Value				Unrealized Loss				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss

U.S. Treasury		$	0			$	0			$	0			$	0			$	0			$	0
U.S. Gov’t sponsored entities			5,989				(9	)			0				0				5,989				(9	)
State & political subdivisions			5,046				(53	)			1,591				(1	)			6,637				(54	)
Residential mortgage & asset backed			42,816				(276	)			743				(3	)			43,559				(279	)
Commercial mortgage & asset backed			0				0				0				0				0				0
Corporate notes & bonds			1,949				(51	)			9,492				(2,959	)			11,441				(3,010	)
Pooled trust preferred			0				0				360				(440	)			360				(440	)
Pooled SBA			2,022				(9	)			0				0				2,022				(9	)
Other securities			0				0				0				0				0				0

		$	57,822			$	(398	)		$	12,186			$	(3,403	)		$	70,008			$	(3,801	)


		Less than 12 Months								12 Months or More								Total
		Fair Value				Unrealized Loss				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss
December 31, 2011

U.S. Treasury		$	0			$	0			$	0			$	0			$	0			$	0
U.S. Gov’t sponsored entities			7,671				(15	)			0				0				7,671				(15	)
State & political subdivisions			5,314				(92	)			0				0				5,314				(92	)
Residential mortgage & asset backed			36,626				(162	)			9,485				(52	)			46,111				(214	)
Commercial mortgage & asset backed			0				0				0				0				0				0
Corporate notes & bonds			2,860				(139	)			8,841				(3,409	)			11,701				(3,548	)
Pooled trust preferred			0				0				340				(460	)			340				(460	)
Pooled SBA			8,139				(77	)			0				0				8,139				(77	)
Other securities			0				0				0				0				0				0

		$	60,610			$	(485	)		$	18,666			$	(3,921	)		$	79,276			$	(4,406	)

The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

At June 30, 2012, the Corporation held one structured pooled trust preferred security with an adjusted amortized cost of $800 and a fair value of $360. The Corporation evaluated this security for other-than-temporary impairment by estimating the cash flows expected to be received, taking into account future estimated levels of deferrals and defaults by the underlying issuers, and discounting those cash flows at the appropriate accounting yield. For the three and six months ended June 30, 2012, no other-than-temporary impairment was required to be realized in earnings. For the three and six months ended June 30, 2011, other-than-temporary impairment of $0 and $398, respectively, was realized in earnings. At June 30, 2012 and December 31, 2011, the Corporation held four structured pooled trust preferred securities with an adjusted amortized cost of zero.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the three and six months ended June 30, 2012 is as follows:


Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in other comprehensive income, beginning of period		$	4,054
Additional credit loss for which other-than-temporary impairment was not previously recognized			0
Additional credit loss for which other-than-temporary impairment was previously recognized			0


Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in other comprehensive income, end of period		$	4,054

A roll-forward of the other-than-temporary impairment amount related to credit losses for the three months ended June 30, 2011 is as follows:


Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in other comprehensive income, beginning of period		$	4,054
Additional credit loss for which other-than-temporary impairment was not previously recognized			0
Additional credit loss for which other-than-temporary impairment was previously recognized			0


Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in other comprehensive income, end of period		$	4,054

A roll-forward of the other-than-temporary impairment amount related to credit losses for the six months ended June 30, 2011 is as follows:


Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in other comprehensive income, beginning of period		$	3,656
Additional credit loss for which other-than-temporary impairment was not previously recognized			0
Additional credit loss for which other-than-temporary impairment was previously recognized			398


Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in other comprehensive income, end of period		$	4,054

Due to the insignificance of the adjusted amortized cost and other-than-temporary impairment charges to the consolidated financial statements, no further disclosures are required with respect to the Corporation’s structured pooled trust preferred securities.

For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for other-than-temporary impairment. For financial institution issuers, management also monitors information from quarterly “call” report filings that are used to generate Uniform Bank Performance Reports. When reviewing this information, management considers the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred. Management also considers the length of time and extent to which fair value has been less than cost and the intent and ability of the Corporation to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

As of June 30, 2012 and December 31, 2011, management concluded that the securities described in the previous paragraph were not other-than-temporarily impaired for the following reasons:

•

There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.

•

The unrealized losses are predominantly attributable to liquidity disruptions within the credit markets and the generally stressed condition of the financial services industry.

•

All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.

The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis.

Information pertaining to security sales is as follows:


		Proceeds				Gross Gains				Gross Losses
Three months ended June 30, 2012		$	46,468			$	810			$	(79	)
Six months ended June 30, 2012			88,617				1,446				(149	)
Three months ended June 30, 2011			0				0				0
Six months ended June 30, 2011			23,610				146				(72	)

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at June 30, 2012:


		Amortized Cost				Fair Value
1 year or less		$	22,131			$	22,295
1 year – 5 years			80,606				83,067
5 years – 10 years			128,463				138,447
After 10 years			93,781				95,532

			324,981				339,341
Residential mortgage & asset backed securities			363,792				372,436
Commercial mortgage & asset backed securities			2,071				2,132


Total debt securities		$	690,844			$	713,909

Mortgage and asset backed securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

On June 30, 2012 and December 31, 2011, securities carried at $250,338 and $264,166, respectively, were pledged to secure public deposits and for other purposes as provided by law.

- Definition

Tabular disclosure of marketable securities. This may consist of investments in certain debt and equity securities, short-term investments and other assets.

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