XML 160 R13.htm IDEA: XBRL DOCUMENT v2.4.0.8
Note 6: Investment Securities
 3 Months Ended
Jun. 30, 2013
Notes  
Note 6: Investment Securities

NOTE 6: INVESTMENT SECURITIES

 

 

 

June 30, 2013

 

 

 

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

 

$--

 

$856

 

$19,144

 

2.00%

Mortgage-backed securities

549,434

 

10,003

 

1,647

 

557,790

 

2.04

Small Business Administration

 

 

 

 

 

 

 

 

 

loan pools

47,539

 

2,009

 

--

 

49,548

 

1.90

States and political subdivisions

112,767

 

3,454

 

738

 

115,483

 

5.53

Equity securities

847

 

1,627

 

--

 

2,474

 

--

 

$730,587

 

$17,093

 

$3,241

 

$744,439

 

2.56%

 

 

December 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

$30,000

 

$40

 

$--

 

$30,040

 

1.25%

Collateralized mortgage obligations

3,939

 

576

 

8

 

4,507

 

1.72

Mortgage-backed securities

582,039

 

14,861

 

814

 

596,086

 

2.42

Small Business Administration

 

 

 

 

 

 

 

 

 

loan pools

50,198

 

1,295

 

--

 

51,493

 

1.99

States and political subdivisions

114,372

 

8,506

 

--

 

122,878

 

5.61

Equity securities

847

 

1,159

 

--

 

2,006

 

--

 

$781,395

 

$26,437

 

$822

 

$807,010

 

2.80%

 

 

 

 

 

 

June 30, 2013

 

 

 

Gross

 

Gross

 

 

 

Tax

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Equivalent

 

Cost

 

Gains

 

Losses

 

Value

 

Yield

(In Thousands)

 

 

 

 

 

 

 

 

 

HELD-TO-MATURITY SECURITIES:

 

 

 

 

 

 

 

 

 

States and political subdivisions

$805

 

$113

 

$--

 

$918

 

7.37%

 

 

December 31, 2012

 

 

 

Gross

 

Gross

 

 

 

Tax

 

Amortized

 

Unrealized

 

Unrealized

 

Fair

 

Equivalent

 

Cost

 

Gains

 

Losses

 

Value

 

Yield

(In Thousands)

 

 

 

 

 

 

 

 

 

HELD-TO-MATURITY SECURITIES:

 

 

 

 

 

 

 

 

 

States and political subdivisions

$920

 

$164

 

$--

 

$1,084

 

7.37%

 

 

 

The amortized cost and fair value of available-for-sale securities at June 30, 2013, 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

$110

 

$110

After one through five years

468

 

473

After five through ten years

9,591

 

9,803

After ten years

170,137

 

173,789

Securities not due on a single maturity date

549,434

 

557,790

Equity securities

847

 

2,474

 

 

 

 

 

$730,587

 

$744,439

 

 

The held-to-maturity securities at June 30, 2013, 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)

 

 

 

After five through ten years

$805

 

$918

 

 

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 June 30, 2013 and December 31, 2012, respectively, was approximately $215.8 million and $106.6 million, which is approximately 29.0% and 13.2% of the Company’s available-for-sale and held-to-maturity investment portfolio, respectively.

 

Based on an 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 June 30, 2013.

 

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 June 30, 2013 and December 31, 2012:

 

 

 

 

June 30, 2013

 

 

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

 

$20,000

 

$(856)

 

$--

 

$--

 

$20,000

 

$(856)

Mortgage-backed securities

 

163,381

 

(1,647)

 

1

 

--

 

163,382

 

(1,647)

State and political

 

 

 

 

 

 

 

 

 

 

 

 

subdivisions

 

32,435

 

(738)

 

--

 

--

 

32,435

 

(738)

 

 

$215,816

 

$(3,241)

 

$1

 

$--

 

$215,817

 

$(3,241)

 

 

 

December 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

 

$--

 

$--

 

$414

 

$(8)

 

$414

 

$(8)

Mortgage-backed securities

 

106,136

 

(814)

 

--

 

--

 

106,136

 

(814)

 

 

$106,136

 

$(814)

 

$414

 

$(8)

 

$106,550

 

$(822)

 

 

 

Gross gains of $117,000 and $151,000 and gross losses of $20,000 and $20,000 resulting from sales of available-for-sale securities were realized for the three and six months ended June 30, 2013.  Gross gains of $2.1 million and gross losses of $559,000 resulting from sales of available-for-sale securities were realized for the three and six months ended June 30, 2012.  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 routinely 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 and six months ended June 30, 2013, no securities were determined to have impairment that was other than temporary.  During the three and six months ended June 30, 2012, the Company determined that the impairment of a non-agency collateralized mortgage obligation with a book value of $962,000 had become other than temporary.  Consequently, the Company recorded a $262,000 pre-tax charge to income. 

 

Credit Losses Recognized on Investments.  Certain debt securities have experienced fair value deterioration due to credit losses, as well as due to other market factors, but are not otherwise other-than-temporarily impaired. 

 

 

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

 

April 1, 2013

$4,176

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 final principal payments

(4,176)

 

 

June 30, 2013

$--

 

 

Accumulated

 

Credit Losses

(In Thousands)

 

Credit losses on debt securities held

 

April 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

262

Reductions due to sales

--

 

 

June 30, 2012

$3,860

 

 

Accumulated

 

Credit Losses

(In Thousands)

 

Credit losses on debt securities held

 

January 1, 2013

$4,176

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 final principal payments

(4,176)

 

 

June 30, 2013

$--

 

 

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

262

Reductions due to sales

--

 

 

June 30, 2012

$3,860

 

 

Amounts Reclassified Out of Accumulated Other Comprehensive Income.  Amounts reclassified from accumulated other comprehensive income and the affected line items in the statements of income during the three and six months ended June 30, 2013 and 2012, were as follows (in thousands): 

 

 

 

 

Amounts Reclassified from Other Comprehensive Income

Three Months Ended June 30,

 

 

 

Affected Line Item in the Statements of Income

 

2013

 

2012

(In Thousands)

 

 

 

 

Unrealized gains (losses) on available-

 

 

 

Net realized gains on available-

for-sale securities

$97

 

$1,251

for-sale securities

 

 

 

 

(Total reclassified amount before tax)

Income Taxes

(34)

 

(437)

Provision for income taxes

Total reclassifications out of accumulated

 

 

 

 

other comprehensive income

$63

 

$814

 

 

 

 

 

 

 

 

Amounts Reclassified from Other Comprehensive Income

Six Months Ended June 30,

 

 

 

Affected Line Item in the Statements of Income

 

2013

 

2012

(In Thousands)

 

 

 

 

Unrealized gains (losses) on available-

 

 

 

Net realized gains on available-

for-sale securities

$131

 

$1,280

for-sale securities

 

 

 

 

(Total reclassified amount before tax)

Income Taxes

(46)

 

(448)

Provision for income taxes

Total reclassifications out of accumulated

 

 

 

 

other comprehensive income

$85

 

$832