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Investment Securities | 12 Months Ended
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Dec. 31, 2011
Investment Securities [Abstract] |
Investment Securities |
Note 3. | Investment Securities
The amortized cost and estimated fair value of securities, with gross unrealized gains and losses, classified as available-for-sale at December 31, 2011 and 2010, were as follows:
|  | December 31, 2011 |
|  | Amortized Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Fair Value |  |  | OTTI in AOCI (1) |
(Amounts in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 131,498 |  |  | $ | 6,317 |  |  | $ | — |  |  | $ | 137,815 |  |  | $ | — |
Single issue trust preferred securities |  |  | 55,649 |  |  |  | — |  |  |  | (15,405 | ) |  |  | 40,244 |  |  |  | — |
Corporate FDIC insured securities |  |  | 13,685 |  |  |  | 33 |  |  |  | — |  |  |  | 13,718 |  |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 274,384 |  |  |  | 6,003 |  |  |  | (285 | ) |  |  | 280,102 |  |  |  | — |
Non-Agency Alt-A residential |  |  | 15,980 |  |  |  | — |  |  |  | (5,950 | ) |  |  | 10,030 |  |  |  | (5,950 | )
Total mortgage-backed securities |  |  | 290,364 |  |  |  | 6,003 |  |  |  | (6,235 | ) |  |  | 290,132 |  |  |  | (5,950 | )
Equity securities |  |  | 419 |  |  |  | 206 |  |  |  | (104 | ) |  |  | 521 |  |  |  | — |
Total |  | $ | 491,615 |  |  | $ | 12,559 |  |  | $ | (21,744 | ) |  | $ | 482,430 |  |  | $ | (5,950 | )
|  | December 31, 2010 |
|  | Amortized Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Fair Value |  |  | OTTI in AOCI (1) |
(Amounts in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agency securities |  | $ | 10,000 |  |  | $ | — |  |  | $ | (168 | ) |  | $ | 9,832 |  |  | $ | — |
States and political subdivisions |  |  | 178,149 |  |  |  | 2,649 |  |  |  | (4,660 | ) |  |  | 176,138 |  |  |  | — |
Trust preferred securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single issue |  |  | 55,594 |  |  |  | — |  |  |  | (14,350 | ) |  |  | 41,244 |  |  |  | — |
Pooled |  |  | 23 |  |  |  | 241 |  |  |  | — |  |  |  | 264 |  |  |  | — |
Total trust preferred securities |  |  | 55,617 |  |  |  | 241 |  |  |  | (14,350 | ) |  |  | 41,508 |  |  |  | — |
Corporate FDIC insured securities |  |  | 25,282 |  |  |  | 378 |  |  |  | — |  |  |  | 25,660 |  |  |  | — |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 209,281 |  |  |  | 7,039 |  |  |  | (1,307 | ) |  |  | 215,013 |  |  |  | — |
Non-Agency Alt-A residential |  |  | 19,181 |  |  |  | — |  |  |  | (7,904 | ) |  |  | 11,277 |  |  |  | (7,904 | )
Total mortgage-backed securities |  |  | 228,462 |  |  |  | 7,039 |  |  |  | (9,211 | ) |  |  | 226,290 |  |  |  | (7,904 | )
Equity securities |  |  | 495 |  |  |  | 206 |  |  |  | (65 | ) |  |  | 636 |  |  |  | — |
Total |  | $ | 498,005 |  |  | $ | 10,513 |  |  | $ | (28,454 | ) |  | $ | 480,064 |  |  | $ | (7,904 | )
(1) | Other-than-temporary impairment in accumulated other comprehensive income
The amortized cost, fair value, and weighted-average yield of available-for-sale securities by contractual maturity at December 31, 2011, 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.
(Amounts in thousands) |  | States and Political Subdivisions |  |  | Corporate Notes |  |  | Total |  |  | Tax Equivalent Purchase Yield (1) |
Available-for-Sale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortized cost maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 115 |  |  | $ | 13,685 |  |  | $ | 13,800 |  |  |  | 0.51 | %
After one year through five years |  |  | 16,562 |  |  |  | — |  |  |  | 16,562 |  |  |  | 5.78 | %
After five years through ten years |  |  | 17,333 |  |  |  | — |  |  |  | 17,333 |  |  |  | 6.28 | %
After ten years |  |  | 97,488 |  |  |  | 55,649 |  |  |  | 153,137 |  |  |  | 3.87 | %
Amortized cost |  | $ | 131,498 |  |  | $ | 69,334 |  |  |  | 200,832 |  |  |  |  |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  | 290,364 |  |  |  | 2.78 | %
Equity securities |  |  |  |  |  |  |  |  |  |  | 419 |  |  |  | 2.14 | %
Total amortized cost |  |  |  |  |  |  |  |  |  | $ | 491,615 |  |  |  |  |
Tax equivalent purchase yield |  |  | 5.45 | % |  |  | 1.27 | % |  |  | 3.28 | % |  |  |  |
Average contractual maturity (in years) |  |  | 11.00 |  |  |  | 12.96 |  |  |  | 17.61 |  |  |  |  |
Fair value maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Within one year |  | $ | 117 |  |  | $ | 13,718 |  |  | $ | 13,835 |  |  |  |  |
After one year through five years |  |  | 17,305 |  |  |  | — |  |  |  | 17,305 |  |  |  |  |
After five years through ten years |  |  | 18,194 |  |  |  | — |  |  |  | 18,194 |  |  |  |  |
After ten years |  |  | 102,199 |  |  |  | 40,244 |  |  |  | 142,443 |  |  |  |  |
Fair value |  | $ | 137,815 |  |  | $ | 53,962 |  |  |  | 191,777 |  |  |  |  |
Mortgage-backed securities |  |  |  |  |  |  |  |  |  |  | 290,132 |  |  |  |  |
Equity securities |  |  |  |  |  |  |  |  |  |  | 521 |  |  |  |  |
Total fair value |  |  |  |  |  |  |  |  |  | $ | 482,430 |  |  |  |  |
(1) | Fully taxable equivalent at the rate of 35%.
The amortized cost and estimated fair value of securities, with gross unrealized gains and losses, classified as held-to-maturity at December 31, 2011 and 2010, were as follows:
|  | December 31, 2011 |
|  | Amortized Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Fair Value |
(Amounts in thousands) |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 3,490 |  |  | $ | 42 |  |  | $ | — |  |  | $ | 3,532 |
Total |  | $ | 3,490 |  |  | $ | 42 |  |  | $ | — |  |  | $ | 3,532 |
|  | December 31, 2010 |
|  | Amortized Cost |  |  | Unrealized Gains |  |  | Unrealized Losses |  |  | Fair Value |
(Amounts in thousands) |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions |  | $ | 4,637 |  |  | $ | 67 |  |  | $ | — |  |  | $ | 4,704 |
Total |  | $ | 4,637 |  |  | $ | 67 |  |  | $ | — |  |  | $ | 4,704 |
The amortized cost, fair value, and weighted-average yield of securities by contractual maturity at December 31, 2011, 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.
(Amounts in thousands) |  | States and Political Subdivisions |  |  | Tax Equivalent Purchase Yield (1) |
Held-to-Maturity |  |  |  |  |  |  |  |
Amortized cost maturity: |  |  |  |  |  |  |  |
Within one year |  | $ | 1,048 |  |  |  | 7.59 | %
After one year through five years |  |  | 2,442 |  |  |  | 8.16 | %
After five years through ten years |  |  | — |  |  |  | 0.00 | %
After ten years |  |  | — |  |  |  | 0.00 | %
Total amortized cost |  | $ | 3,490 |  |  |  |  |
Tax equivalent purchase yield |  |  | 7.99 | % |  |  |  |
Average contractual maturity (in years) |  |  | 2.08 |  |  |  |  |
Fair value maturity: |  |  |  |  |  |  |  |
Within one year |  | $ | 1,054 |  |  |  |  |
After one year through five years |  |  | 2,478 |  |  |  |  |
After five years through ten years |  |  | — |  |  |  |  |
After ten years |  |  | — |  |  |  |  |
Total fair value |  | $ | 3,532 |  |  |  |  |
(1) | Fully taxable equivalent at the rate of 35%.
The carrying value of securities pledged to secure public deposits and for other purposes required by law were $288.80 million and $302.67 million at December 31, 2011 and 2010, respectively. The following table details the gains and losses from the sale of securities:
|  | 2011 |  |  | 2010 |  |  | 2009 |
(Amounts in thousands) |  |  |  |  |  |  |  |  |
Gross gains |  | $ | 6,963 |  |  | $ | 8,969 |  |  | $ | 4,111 |
Gross losses |  |  | (1,699 | ) |  |  | (696 | ) |  |  | (15,784 | )
Net gains (losses) on sales of securities |  | $ | 5,264 |  |  | $ | 8,273 |  |  | $ | (11,673 | )
The following tables reflect those investments, both available-for-sale and held-to-maturity, in a continuous unrealized loss position for less than 12 months and for 12 months or longer at December 31, 2011 and 2010. There were 14 securities in a continuous unrealized loss position for 12 or more months for which the Company does not intend to sell any and has determined that it is more likely than not going to be required to sell at December 31, 2011, until the security matures or recovers in value.
|  | December 31, 2011 |
|  | Less than 12 Months |  |  | 12 Months or longer |  |  | Total |
Description of Securities |  | Fair Value |  |  | Unrealized Losses |  |  | Fair Value |  |  | Unrealized Losses |  |  | Fair Value |  |  | Unrealized Losses |
(Amounts in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Single issue trust preferred securities |  | $ | — |  |  | $ | — |  |  | $ | 40,244 |  |  | $ | (15,405 | ) |  | $ | 40,244 |  |  | $ | (15,405 | )
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 52,300 |  |  |  | (285 | ) |  |  | — |  |  |  | — |  |  |  | 52,300 |  |  |  | (285 | )
Non-Agency Alt-A residential |  |  | — |  |  |  | — |  |  |  | 10,030 |  |  |  | (5,950 | ) |  |  | 10,030 |  |  |  | (5,950 | )
Total mortgage-backed securities |  |  | 52,300 |  |  |  | (285 | ) |  |  | 10,030 |  |  |  | (5,950 | ) |  |  | 62,330 |  |  |  | (6,235 | )
Equity securities |  |  | — |  |  |  | — |  |  |  | 188 |  |  |  | (104 | ) |  |  | 188 |  |  |  | (104 | )
Total |  | $ | 52,300 |  |  | $ | (285 | ) |  | $ | 50,462 |  |  | $ | (21,459 | ) |  | $ | 102,762 |  |  | $ | (21,744 | )
|  | December 31, 2010 |
|  | Less than 12 Months |  |  | 12 Months or longer |  |  | Total |
Description of Securities |  | Fair Value |  |  | Unrealized Losses |  |  | Fair Value |  |  | Unrealized Losses |  |  | Fair Value |  |  | Unrealized Losses |
(Amounts in thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agency securities |  | $ | 9,832 |  |  | $ | (168 | ) |  | $ | — |  |  | $ | — |  |  | $ | 9,832 |  |  | $ | (168 | )
States and political subdivisions |  |  | 80,420 |  |  |  | (4,660 | ) |  |  | — |  |  |  | — |  |  |  | 80,420 |  |  |  | (4,660 | )
Single issue trust preferred securities |  |  | 3,390 |  |  |  | (1,517 | ) |  |  | 37,854 |  |  |  | (12,833 | ) |  |  | 41,244 |  |  |  | (14,350 | )
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency |  |  | 71,613 |  |  |  | (1,307 | ) |  |  | 18 |  |  |  | — |  |  |  | 71,631 |  |  |  | (1,307 | )
Non-Agency Alt-A residential |  |  | — |  |  |  | — |  |  |  | 11,277 |  |  |  | (7,904 | ) |  |  | 11,277 |  |  |  | (7,904 | )
Total mortgage-backed securities |  |  | 71,613 |  |  |  | (1,307 | ) |  |  | 11,295 |  |  |  | (7,904 | ) |  |  | 82,908 |  |  |  | (9,211 | )
Equity securities |  |  | 155 |  |  |  | (55 | ) |  |  | 93 |  |  |  | (10 | ) |  |  | 248 |  |  |  | (65 | )
Total |  | $ | 165,410 |  |  | $ | (7,707 | ) |  | $ | 49,242 |  |  | $ | (20,747 | ) |  | $ | 214,652 |  |  | $ | (28,454 | )
At December 31, 2011, the combined depreciation in value of the 28 individual securities in an unrealized loss position was 4.51% of the combined reported value of the aggregate securities portfolio. At December 31, 2010, the combined depreciation in value of the 214 individual securities in an unrealized loss position was 5.93% of the combined reported value of the aggregate securities portfolio. The Company reviews its investment portfolio on a quarterly basis for indications of other-than-temporary impairment (“OTTI”). The analysis differs depending upon the type of investment security being analyzed. For debt securities, the Company has determined that it does not intend to sell securities that are impaired and has asserted that it is not more likely than not that the Company will have to sell impaired securities before recovery of the impairment occurs. This determination is based upon the Company’s investment strategy for the particular type of debt security and its cash flow needs, liquidity position, capital adequacy and interest rate risk position. For non-beneficial interest debt securities, the Company analyzes several qualitative factors such as the severity and duration of the impairment, adverse conditions within the issuing industry, prospects for the issuer, performance of the security, changes in rating by rating agencies and other qualitative factors to determine if the impairment will be recovered. Non-beneficial interest debt securities consist of U.S. government agency securities, states and political subdivisions, and single issue trust preferred securities. If it is determined that there is evidence that the impairment will not be recovered, the Company performs a present value calculation to determine the amount of credit related impairment and records any credit related OTTI through earnings and the non-credit related OTTI through other comprehensive income (“OCI”). During the years ended December 31, 2011 and 2010, the Company incurred no OTTI charges related to non-beneficial interest debt securities. The temporary impairment on these securities is primarily related to changes in interest rates, certain disruptions in the credit markets, destabilization in the Eurozone, and other current economic factors. At December 31, 2011, the Company’s investment in single issue trust preferred securities is comprised of investments in 5 of the nation’s 25 largest bank holding companies. For beneficial interest debt securities, the Company reviews cash flow analyses on each applicable security to determine if an adverse change in cash flows expected to be collected has occurred. Beneficial interest debt securities consist of pooled trust preferred securities, corporate FDIC insured securities, and mortgage-backed securities (“MBS”). An adverse change in cash flows expected to be collected has occurred if the present value of cash flows previously projected is greater than the present value of cash flows projected at the current reporting date and less than the current book value. If an adverse change in cash flows is deemed to have occurred, then an OTTI has occurred. The Company then compares the present value of cash flows using the current yield for the current reporting period to the reference amount, or current net book value, to determine the credit-related OTTI. The credit-related OTTI is then recorded through earnings and the non-credit related OTTI is accounted for in OCI. During the years ended December 31, 2011 and 2010, the Company incurred credit-related OTTI charges related to beneficial interest debt securities of $2.29 million and $134 thousand, respectively. These charges were related to a non-Agency Alt-A residential MBS in 2011 and two pooled trust preferred security holdings in 2010. For the non-Agency Alt-A residential MBS, the Company models cash flows using the following assumptions: voluntary constant prepayment speed of 5, a customized constant default rate scenario that assumes 15% of the remaining underlying mortgages will default within the next three years, and a loss severity of 60. The following table provides a cumulative roll forward of credit losses recognized in earnings for debt securities for which a portion of an OTTI is recognized in OCI:
|  | December 31, 2011 |  |  | December 31, 2010 |
(Amounts in thousands) |  |  |  |  |  |
Estimated credit losses, beginning balance (1) |  | $ | 4,251 |  |  | $ | 4,251 |
Additions for credit losses on securities not previously recognized |  |  | — |  |  |  | — |
Additions for credit losses on securities previously recognized |  |  | 2,285 |  |  |  | — |
Reduction for increases in cash flows |  |  | — |  |  |  | — |
Reduction for securities management no longer intends to hold to recovery |  |  | — |  |  |  | — |
Reduction for securities sold/realized losses |  |  | — |  |  |  | — |
Estimated credit losses, ending balance |  | $ | 6,536 |  |  | $ | 4,251 |
(1) | The beginning balance includes credit related losses included in OTTI charges recognized on debt securities in prior periods.
For equity securities, the Company reviews for OTTI based upon the prospects of the underlying companies, analysts’ expectations, and certain other qualitative factors to determine if impairment is recoverable over a foreseeable period of time. During 2011, the Company recognized no OTTI charges on equity securities. During 2010, the Company recognized OTTI charges of $51 thousand on certain of its equity positions.

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- Definition Tabular disclosure of investments in certain debt and equity securities (and certain other trading assets) which include all debt and equity securities (other than those equity securities accounted for under the equity or cost methods of accounting) with readily determinable fair values. Other trading assets include assets that are carried on the balance sheet at fair value and held for trading purposes. A debt security represents a creditor relationship with an enterprise that is in the form of a security. Debt securities include, among other items, US Treasury securities, US government securities, municipal securities, corporate bonds, convertible debt, commercial paper, and all securitized debt instruments. An equity security represents an ownership interest in an enterprise or the right to acquire or dispose of an ownership interest in an enterprise at fixed or determinable prices. Equity securities include, among other things, common stock, certain preferred stock, warrant rights, call options, and put options, but do not include convertible debt. An entity may opt to provide the reader with additional narrative text to better understand the nature of investments in debt and equity securities (and other trading assets). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27405-111563 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6379141&loc=d3e15032-111544 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Equity Security -URI http://asc.fasb.org/extlink&oid=6511694 -Topic 320 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27161-111563 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Glossary Debt Security -URI http://asc.fasb.org/extlink&oid=6509901 -Topic 320 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 115 -Paragraph 3, 19, 20, 21, 22, 137 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27232-111563 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27357-111563 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6957658&loc=d3e62557-112803 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6872113&loc=d3e27290-111563 + Details
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