Investments (Tables)

9 Months Ended

Sep. 30, 2014

The following table shows a comparison of amortized cost and fair values of investment securities at September 30, 2014 and December 31, 2013:



(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		OTTI in AOCI
September 30, 2014
Available for Sale:
U.S. Treasuries	$	29,631	$	4	$	17	$	29,618	$	0
U.S. government agencies		39,088		82		411		38,759		0
Residential mortgage-backed agencies		46,573		276		726		46,123		0
Commercial mortgage-backed agencies		26,737		58		250		26,545		0
Collateralized mortgage obligations		9,286		89		7		9,368		0
Obligations of states and political subdivisions		46,784		1,466		234		48,016		0
Collateralized debt obligations		37,066		1,223		13,883		24,406		7,056
Total available for sale	$	235,165	$	3,198	$	15,528	$	222,835	$	7,056

Held to Maturity:
U.S. government agencies	$	24,476	$	31	$	109	$	24,398	$	0
Residential mortgage-backed agencies		55,572		93		263		55,402		0
Commercial mortgage-backed agencies		16,476		145		73		16,548		0
Collateralized mortgage obligations		7,712		0		110		7,602		0
Obligations of states and political subdivisions		2,725		0		249		2,476		0
Total held to maturity	$	106,961	$	269	$	804	$	106,426	$	0

December 31, 2013
Available for Sale:
U.S. government agencies	$	97,242	$	14	$	5,221	$	92,035	$	0
Residential mortgage-backed agencies		116,933		334		4,823		112,444		0
Commercial mortgage-backed agencies		31,025		14		1,134		29,905		0
Collateralized mortgage obligations		30,468		84		1,162		29,390		0
Obligations of states and political subdivisions		55,505		895		1,123		55,277		0
Collateralized debt obligations		37,146		778		20,386		17,538		12,703
Total available for sale	$	368,319	$	2,119	$	33,849	$	336,589	$	12,703
Held to Maturity:
Obligations of states and political subdivisions	$	3,900	$	249	$	559	$	3,590	$	0

Proceeds from Sales and Realized Gain and Losses

Proceeds from sales of securities and the realized gains and losses are as follows:


	Nine Months Ended				Three Months Ended
	September 30,				September 30,
(in thousands)	2014		2013		2014		2013
Proceeds	$	56,838	$	50,169	$	616	$	15,033
Realized gains		1,527		447		222		35
Realized losses		434		323		75		138

Gross Unrealized Losses and Fair Values of Securities

The following table shows the Corporation’s securities with gross unrealized losses and fair values at September 30, 2014 and December 31, 2013, aggregated by investment category and the length of time that individual securities have been in a continuous unrealized loss position:


	Less than 12 months				12 months or more
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2014
Available for Sale:
U.S. Treasuries	$	10,078	$	17	$	0	$	0
U.S. government agencies		0		0		18,664		411
Residential mortgage-backed agencies		9,974		1		23,786		725
Commercial mortgage-backed agencies		20,480		235		969		15
Collateralized mortgage obligations		2,174		7		0		0
Obligations of states and political subdivisions		0		0		12,450		234
Collateralized debt obligations		0		0		19,394		13,883
Total available for sale	$	42,706	$	260	$	75,263	$	15,268

Held to Maturity:
U.S. government agencies	$	14,945	$	109	$	0	$	0
Residential mortgage-backed agencies		47,209		263		0		0
Commercial mortgage-backed agencies		9,660		73		0		0
Collateralized mortgage obligations		7,602		110		0		0
Obligations of states and political subdivisions		0		0		2,476		249
Total held to maturity	$	79,416	$	555	$	2,476	$	249


December 31, 2013
Available for Sale:
U.S. government agencies	$	62,962	$	3,154	$	13,996	$	2,067
Residential mortgage-backed agencies		60,781		1,801		46,570		3,022
Commercial mortgage-backed agencies		21,889		1,134		0		0
Collateralized mortgage obligations		21,201		1,149		3,051		13
Obligations of states and political subdivisions		15,422		1,123		0		0
Collateralized debt obligations		0		0		16,434		20,386
Total available for sale	$	182,255	$	8,361	$	80,051	$	25,488
Held to Maturity:
Obligations of states and political subdivisions	$	0	$	0	$	2,301	$	559

Non-Cash OTTI Credit Losses Recognized in Earnings

The following tables present a cumulative roll-forward of the amount of non-cash OTTI charges related to credit losses which have been recognized in earnings for the trust preferred securities in the CDO portfolio held and not intended to be sold for the nine- and three-month periods ended September 30, 2014 and 2013:




	Nine Months Ended September 30,
(in thousands)	2014		2013
Balance of credit-related OTTI at January 1	$	13,422	$	13,959
Reduction for increases in cash flows expected to be collected		(501)		(404)
Balance of credit-related OTTI at September 30	$	12,921	$	13,555


	Three Months Ended September 30,
(in thousands)	2014		2013
Balance of credit-related OTTI at July 1	$	13,091	$	13,695
Reduction for increases in cash flows expected to be collected		(170)		(140)
Balance of credit-related OTTI at September 30	$	12,921	$	13,555

Amortized Cost and Fair Values Classified by Contractual Maturity Date


	September 30, 2014
(in thousands)	Amortized Cost		Fair Value
Contractual Maturity
Available for sale:
Due in one year or less	$	19,536	$	19,540
Due after one year through five years		44,436	$	44,475
Due after five years through ten years		29,390		30,015
Due after ten years		59,207		46,769
		152,569		140,799

Residential mortgage-backed agencies		46,573		46,123
Commercial mortgage-backed agencies		26,737		26,545
Collateralized mortgage obligations		9,286		9,368
	$	235,165	$	222,835
Held to Maturity:
Due after five years through ten years	$	15,442	$	15,437
Due after ten years		11,759		11,437
		27,201		26,874

Residential mortgage-backed agencies		55,572		55,402
Commercial mortgage-backed agencies		16,476		16,548
Collateralized mortgage obligations		7,712		7,602
	$	106,961	$	106,426

- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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