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Investment Securities
3 Months Ended
Sep. 30, 2011
Investment Securities [Abstract] 
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 7: INVESTMENT SECURITIES

 

 

September 30, 2011

 

 

 

Gross

 

Gross

 

 

 

Tax

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Equivalent

 

Cost

 

Gains

 

Losses

 

Value

 

Yield

 

(In Thousands)

 

 

 

 

 

 

 

 

 

 

AVAILABLE-FOR-SALE SECURITIES:

 

 

 

 

 

 

 

 

U.S. government agencies

$23,953

 

$110

 

$—

 

$24,063

 

2.56%

Collateralized mortgage obligations

1,757

 

—

 

365

 

1,392

 

12.53

Mortgage-backed securities

592,843

 

14,199

 

730

 

606,312

 

3.23

Small Business Administration

 

 

 

 

 

 

 

 

 

loan pools

56,779

 

1,118

 

—

 

57,897

 

1.74

States and political subdivisions

100,937

 

3,719

 

1,084

 

103,572

 

6.14

Corporate bonds

49

 

372

 

—

 

421

 

40.56

Equity securities

1,230

 

601

 

84

 

1,747

 

—

 

$777,548

 

$20,119

 

$2,263

 

$795,404

 

3.49%

 

 

 

 

 

 

 

 

 

 

HELD-TO-MATURITY SECURITIES:

 

 

 

 

 

 

 

 

States and political subdivisions

$1,865

 

$277

 

$—

 

$2,142

 

4.34%

 

 

 

December 31, 2010

 

 

 

Gross

 

Gross

 

 

 

Tax

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Equivalent

 

Cost

 

Gains

 

Losses

 

Value

 

Yield

 

(In Thousands)

 

 

 

 

 

 

 

 

 

 

AVAILABLE-FOR-SALE SECURITIES:

 

 

 

 

 

 

 

 

U.S. government agencies

$4,000

 

$—

 

$20

 

$3,980

 

2.35%

Collateralized mortgage obligations

8,311

 

183

 

814

 

7,680

 

6.48

Mortgage-backed securities

590,085

 

10,879

 

1,753

 

599,211

 

3.30

Small Business Administration

 

 

 

 

 

 

 

 

 

loan pools

60,063

 

851

 

—

 

60,914

 

1.93

States and political subdivisions

99,314

 

378

 

4,075

 

95,617

 

6.16

Corporate bonds

49

 

—

 

28

 

21

 

74.97

Equity securities

1,230

 

893

 

—

 

2,123

 

0.18

 

$763,052

 

$13,184

 

$6,690

 

$769,546

 

3.59%

 

 

 

 

 

 

 

 

 

 

HELD-TO-MATURITY SECURITIES:

 

 

 

 

 

 

 

 

States and political subdivisions

$1,125

 

$175

 

$—

 

$1,300

 

7.31%

 

 

The amortized cost and fair value of available-for-sale securities at September 30, 2011, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

 

Amortized

 

Fair

 

Cost

 

Value

 

(In Thousands)

 

 

 

 

One year or less

$1,033

 

$1,034

After one through five years

6,229

 

6,282

After five through ten years

9,411

 

9,641

After ten years

165,045

 

168,996

Securities not due on a single maturity date

594,600

 

607,704

Equity securities

1,230

 

1,747

 

 

 

 

 

$777,548

 

$795,404

 

 

 

 

 

 

The held-to-maturity securities at September 30, 2011, by contractual maturity, are shown below.  Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

 

Amortized

 

Fair

 

Cost

 

Value

 

(In Thousands)

 

 

 

 

One year or less

$840

 

$955

After five through ten years

1,025

 

1,187

 

 

 

 

 

$1,865

 

$2,142

 

Certain investments in debt and marketable equity securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at September 30, 2011 and December 31, 2010, respectively, was approximately $179,698,000 and $298,813,000, which is approximately 22.54% and 38.77% of the Company’s available-for-sale and held-to-maturity investment portfolio, respectively.

 

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these debt securities are temporary at September 30, 2011.

 

During the nine months ended September 30, 2011, the Company determined that the impairment of a non-agency collateralized mortgage obligation with a book value of $1.8 million had become other-than-temporary.  Consequently, the Company recorded a $400,000 pre-tax charge to income.  Based on evaluations of investment securities during the three months ended September 30, 2011 and the three and nine months ended September 30, 2010, none were determined to be other-than-temporarily impaired.

 

The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2011 and December 31, 2010:

 

 

 

September 30, 2011

 

 

Less than 12 Months

 

12 Months or More

 

Total

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

Description of Securities

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

 

 

(In Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

Collateralized mortgage

 

 

 

 

 

 

 

 

 

 

 

 

obligations

 

$—

 

$—

 

$1,757

 

$365

 

$1,757

 

$365

Mortgage-backed securities

 

91,132

 

266

 

75,488

 

464

 

166,620

 

730

States and political

 

 

 

 

 

 

 

 

 

 

 

 

subdivisions

 

2,984

 

57

 

7,954

 

1,027

 

10,938

 

1,084

Equity securities

 

383

 

84

 

—

 

—

 

383

 

84

 

 

$94,499

 

$407

 

$85,199

 

$1,856

 

$179,698

 

$2,263

 

 

 

December 31, 2010

 

 

Less than 12 Months

 

12 Months or More

 

Total

 

 

Fair

 

Unrealized

 

Fair

 

Unrealized

 

Fair

 

Unrealized

Description of Securities

 

Value

 

Losses

 

Value

 

Losses

 

Value

 

Losses

 

 

(In Thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. government agencies

 

$3,980

 

$20

 

$—

 

$—

 

$3,980

 

$20

Collateralized mortgage

 

 

 

 

 

 

 

 

 

 

 

 

obligations

 

—

 

—

 

1,809

 

814

 

1,809

 

814

Mortgage-backed securities

 

231,524

 

1,753

 

—

 

—

 

231,524

 

1,753

States and political

 

 

 

 

 

 

 

 

 

 

 

 

subdivisions

 

56,221

 

2,328

 

5,257

 

1,747

 

61,478

 

4,075

Corporate bonds

 

8

 

24

 

14

 

4

 

22

 

28

 

 

$291,733

 

$4,125

 

$7,080

 

$2,565

 

$298,813

 

$6,690

 

Gross gains of $483,000 and $5.4 million and gross losses of $0 and $13,000 resulting from sales of available-for-sale securities were realized for the three months ended September 30, 2011 and 2010, respectively. Gross gains of $483,000 and $8.9 million and gross losses of $0 and $13,000 resulting from sales of available-for-sale securities were realized for the nine months ended September 30, 2011 and 2010, respectively.  Gains and losses on sales of securities are determined on the specific-identification method.

 

Other-than-temporary Impairment.  Upon acquisition of a security, the Company decides whether it is within the scope of the accounting guidance for beneficial interests in securitized financial assets or will be evaluated for impairment under the accounting guidance for investments in debt and equity securities.

 

The accounting guidance for beneficial interests in securitized financial assets provides incremental impairment guidance for a subset of the debt securities within the scope of the guidance for investments in debt and equity securities.  For securities where the security is a beneficial interest in securitized financial assets, the Company uses the beneficial interests in securitized financial asset impairment model.  For securities where the security is not a beneficial interest in securitized financial assets, the Company uses the debt and equity securities impairment model.  The Company does not currently have securities within the scope of this guidance for beneficial interests in securitized financial assets.

 

The Company conducts periodic reviews to identify and evaluate each investment security to determine whether an other-than-temporary impairment has occurred.  The Company considers the length of time a security has been in an unrealized loss position, the relative amount of the unrealized loss compared to the carrying value of the security, the type of security and other factors.  If certain criteria are met, the Company performs additional review and evaluation using observable market values or various inputs in economic models to determine if an unrealized loss is other-than-temporary.  The Company uses quoted market prices for marketable equity securities and uses broker pricing quotes based on observable inputs for equity investments that are not traded on a stock exchange.  For non-agency collateralized mortgage obligations, to determine if the unrealized loss is other-than-temporary, the Company projects total estimated defaults of the underlying assets (mortgages) and multiplies that calculated amount by an estimate of realizable value upon sale in the marketplace (severity) in order to determine the projected collateral loss.  The Company also evaluates any current credit enhancement underlying these securities to determine the impact on cash flows.  If the Company determines that a given security position will be subject to a write-down or loss, the Company records the expected credit loss as a charge to earnings.

 

Credit Losses Recognized on Investments.  Certain debt securities have experienced fair value deterioration due to credit losses. 

 

The following table provides information about debt securities for which only a credit loss was recognized in income and other losses are recorded in other comprehensive income.

 

Accumulated

 

Credit Losses

 

(In Thousands)

Credit losses on debt securities held

 

July 1, 2011

$3,383

Additions related to other-than-temporary losses not previously recognized

—

Additions related to increases in credit losses on debt securities for which

 

other-than-temporary impairment losses were previously recognized

—

Reductions due to sales

  —

 

 

September 30, 2011

$3,383

 

 

Accumulated

 

Credit Losses

 

(In Thousands)

Credit losses on debt securities held

 

July 1, 2010

$2,983

Additions related to other-than-temporary losses not previously recognized

—

Reductions due to sales

  —

 

 

September 30, 2010

$2,983

 

 

Accumulated

 

Credit Losses

 

(In Thousands)

Credit losses on debt securities held

 

January 1, 2011

$2,983

Additions related to other-than-temporary losses not previously recognized

—

Additions related to increases in credit losses on debt securities for which

 

other-than-temporary impairment losses were previously recognized

400

Reductions due to sales

  —

 

 

September 30, 2011

$3,383

 

 

Accumulated

 

Credit Losses

 

(In Thousands)

Credit losses on debt securities held

 

January 1, 2010

$2,983

Additions related to other-than-temporary losses not previously recognized

—

Reductions due to sales

  —

 

 

September 30, 2010

$2,983