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Investment Securities
 3 Months Ended
Mar. 31, 2012
Investment Securities [Abstract]  
Investment Securities

NOTE 6: INVESTMENT SECURITIES

 

 

March 31, 2012

 

 

 

Gross

 

Gross

 

 

 

Tax

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Equivalent

 

Cost

 

Gains

 

Losses

 

Value

 

Yield

 

(In Thousands)

 

 

 

 

 

 

 

 

 

 

AVAILABLE-FOR-SALE SECURITIES:

 

 

 

 

 

 

 

 

U.S. government agencies

$20,000

 

$21

 

$--

 

$20,021

 

1.12%

Collateralized mortgage obligations

5,187

 

230

 

332

 

5,085

 

5.24

Mortgage-backed securities

633,867

 

14,314

 

277

 

647,904

 

3.01

Small Business Administration

 

 

 

 

 

 

 

 

 

loan pools

53,618

 

1,221

 

--

 

54,839

 

1.78

States and political subdivisions

138,668

 

5,995

 

858

 

143,805

 

5.69

Corporate bonds

49

 

246

 

--

 

295

 

47.36

Equity securities

1,230

 

1,094

 

--

 

2,324

 

--

 

$852,619

 

$23,121

 

$1,467

 

$874,273

 

3.34%

 

 

 

 

 

 

 

 

 

 

HELD-TO-MATURITY SECURITIES:

 

 

 

 

 

 

 

 

States and political subdivisions

$1,865

 

$178

 

$--

 

$2,043

 

4.40%

 

 

December 31, 2011

 

 

 

Gross

 

Gross

 

 

 

Tax

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Equivalent

 

Cost

 

Gains

 

Losses

 

Value

 

Yield

 

(In Thousands)

 

 

 

 

 

 

 

 

 

 

AVAILABLE-FOR-SALE SECURITIES:

 

 

 

 

 

 

 

 

U.S. government agencies

$20,000

 

$60

 

$--

 

$20,060

 

1.12%

Collateralized mortgage obligations

5,220

 

--

 

380

 

4,840

 

  5.53

Mortgage-backed securities

628,729

 

13,728

 

802

 

641,655

 

3.12

Small Business Administration

 

 

 

 

 

 

 

 

 

loan pools

55,422

 

1,070

 

--

 

56,492

 

1.68

States and political subdivisions

145,663

 

5,478

 

903

 

150,238

 

5.72

Corporate bonds

50

 

245

 

--

 

295

 

39.65

Equity securities

1,230

 

601

 

--

 

1,831

 

           --

 

$856,314

 

$21,182

 

$2,085

 

$875,411

 

3.44%

 

 

 

 

 

 

 

 

 

 

HELD-TO-MATURITY SECURITIES:

 

 

 

 

 

 

 

 

States and political subdivisions

$1,865

 

$236

 

$--

 

$2,101

 

4.39%

 

The amortized cost and fair value of available-for-sale securities at March 31, 2012, 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

$1,209

 

$1,208

After one through five years

1,445

 

1,465

After five through ten years

12,151

 

12,545

After ten years

197,530

 

203,742

Securities not due on a single maturity date

639,054

 

652,989

Equity securities

1,230

 

2,324

 

 

 

 

 

$852,619

 

$874,273

 

 

 

 

 

The held-to-maturity securities at March 31, 2012, 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

 

$840

After five through ten years

1,025

 

1,203

 

 

 

 

 

$1,865

 

$2,043

 

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at March 31, 2012 and December 31, 2011, respectively, was approximately $150.1 million and $172.6 million, which is approximately 17.1% and 19.7% 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 March 31, 2012.

 

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 March 31, 2012 and December 31, 2011:

 

 

 

March 31, 2012

 

 

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

 

$--

 

$--

 

$1,094

 

$(332)

 

$1,094

 

$(332)

Mortgage-backed securities

 

74,622

 

(163)

 

46,839

 

(114)

 

121,461

 

(277)

States and political

 

 

 

 

 

 

 

 

 

 

 

 

subdivisions

 

23,345

 

(313)

 

4,205

 

(545)

 

27,550

 

(858)

 

 

$97,967

 

$(476)

 

$52,138

 

$(991)

 

$150,105

 

$(1,467)

 

 

 

December 31, 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

 

$3,760

 

$(110)

 

$1,460

 

$(270)

 

$5,220

 

$(380)

Mortgage-backed securities

 

61,720

 

(365)

 

91,824

 

(437)

 

153,544

 

(802)

States and political

 

 

 

 

 

 

 

 

 

 

 

 

subdivisions

 

6,436

 

(44)

 

7,381

 

(859)

 

13,817

 

(903)

 

 

$71,916

 

$(519)

 

$100,665

 

$(1,566)

 

$172,581

 

$(2,085)

 

Gross gains of $28,000 and $0 and gross losses of $0 and $0 resulting from sales of available-for-sale securities were realized for the three months ended March 31, 2012 and 2011, 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.

 

During the three months ended March 31, 2012 and 2011, no securities were determined to have impairment that was other-than-temporary. 

 

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

 

January 1, 2012

$3,598

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

---

 

 

March 31, 2012

$3,598

 

 

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

---

Reductions due to sales

---

 

 

March 31, 2011

$2,983