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Securities | 12 Months Ended
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Dec. 31, 2011
Investments debt and equity securities abstract |
Investments In Debt And Marketable Equity Securities And Certain Trading Assets Disclosure Text Block | NOTE 5: SECURITIES At December 31, 2011 and 2010, respectively, all securities within the scope of FASB ASC 320, Investments – Debt and Equity Securities were classified as available-for-sale. The fair value and amortized cost for securities available-for-sale by contractual maturity at December 31, 2011 and 2010, respectively, are presented below.
|  | December 31, 2011
|  |  | 1 year | 1 to 5 | 5 to 10 | After 10 | Fair |  | Gross Unrealized |  | Amortized
(Dollars in thousands) |  | or less | years | years | years | Value |  | Gains | Losses |  | Cost
Available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |
Agency obligations (a) | $ | — | — | 5,013 | 46,072 | 51,085 |  | 182 | 1 |  | $ | 50,904
Agency RMBS (a) |  | — | — | 14,935 | 149,863 | 164,798 |  | 2,534 | 129 |  |  | 162,393
State and political subdivisions |  | — | 414 | 17,761 | 63,538 | 81,713 |  | 4,339 | 48 |  |  | 77,422
Trust preferred securities: |  |  |  |  |  |  |  |  |  |  |  |
| Pooled |  | — | — | — | 100 | 100 |  | — | 130 |  |  | 230
| Individual issuer |  | — | — | — | 1,886 | 1,886 |  | 186 | 243 |  |  | 1,943
| Total available-for-sale | $ | — | 414 | 37,709 | 261,459 | 299,582 |  | 7,241 | 551 |  | $ | 292,892
(a) Includes securities issued by U.S. government agencies or government sponsored entities.
|  | December 31, 2010
|  |  | 1 year | 1 to 5 | 5 to 10 | After 10 | Fair |  | Gross Unrealized |  | Amortized
(Dollars in thousands) |  | or less | years | years | years | Value |  | Gains | Losses |  | Cost
Available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |
Agency obligations (a) | $ | — | — | 37,821 | 52,650 | 90,471 |  | 95 | 1,017 |  | $ | 91,393
Agency RMBS (a) |  | — | — | 9,976 | 133,168 | 143,144 |  | 1,566 | 1,441 |  |  | 143,019
State and political subdivisions |  | 21 | 856 | 13,547 | 62,342 | 76,766 |  | 472 | 2,801 |  |  | 79,095
Trust preferred securities: |  |  |  |  |  |  |  |  |  |  |  |
| Pooled |  | — | — | — | 20 | 20 |  | — | 210 |  |  | 230
| Individual issuer |  | — | — | — | 2,129 | 2,129 |  | — | 153 |  |  | 2,282
Corporate debt |  | — | 2,690 | — | — | 2,690 |  | — | — |  |  | 2,690
| Total available-for-sale | $ | 21 | 3,546 | 61,344 | 250,309 | 315,220 |  | 2,133 | 5,622 |  | $ | 318,709
(a) Includes securities issued by U.S. government agencies or government sponsored entities.
Securities with aggregate fair values of $161.5 million and $171.1 million at December 31, 2011 and 2010, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase, Federal Home Loan Bank (“FHLB”) advances, and for other purposes required or permitted by law. Included in other assets o n the Consolidated Balance Sheet s are cost-method investments. The carrying amounts of cost-method inve stments were $5.0 and $5.8 million at December 31, 2011 and 2010, respectively. Cost-method investments primarily include non-marketable equity investments, such as FHLB of Atlanta stock and Federal Reserve Bank (“FRB”) stock. Gross Unrealized Losses and Fair Value The fair values and gross unrealized losses on securities at December 31, 2011 and 2010, respectively, segregated by those securities that have been in an unrealiz ed loss position for less than 12 months and 12 months or more are presented below.
|  |  |  | Less than 12 Months |  |  | 12 Months or Longer |  |  | Total
|  |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized |  |  | Fair |  |  | Unrealized
(Dollars in thousands) |  | Value |  |  | Losses |  |  | Value |  |  | Losses |  |  | Value |  |  | Losses
December 31, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency obligations | $ | 5,000 |  |  | 1 |  |  | — |  |  | — |  |  | 5,000 |  | $ | 1
Agency RMBS |  | 17,020 |  |  | 129 |  |  | — |  |  | — |  |  | 17,020 |  |  | 129
State and political subdivisions |  | 1,686 |  |  | 11 |  |  | 718 |  |  | 37 |  |  | 2,404 |  |  | 48
Trust preferred securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Pooled |  | — |  |  | — |  |  | 100 |  |  | 130 |  |  | 100 |  |  | 130
| Individual issuer |  | — |  |  | — |  |  | 757 |  |  | 243 |  |  | 757 |  |  | 243
|  | Total | $ | 23,706 |  |  | 141 |  |  | 1,575 |  |  | 410 |  |  | 25,281 |  | $ | 551
December 31, 2010: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency obligations | $ | 45,351 |  |  | 1,017 |  |  | — |  |  | — |  |  | 45,351 |  | $ | 1,017
Agency RMBS |  | 89,840 |  |  | 1,441 |  |  | — |  |  | — |  |  | 89,840 |  |  | 1,441
State and political subdivisions |  | 49,176 |  |  | 2,323 |  |  | 3,207 |  |  | 478 |  |  | 52,383 |  |  | 2,801
Trust preferred securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Pooled |  | — |  |  | — |  |  | 20 |  |  | 210 |  |  | 20 |  |  | 210
| Individual issuer |  | — |  |  | — |  |  | 847 |  |  | 153 |  |  | 847 |  |  | 153
|  | Total | $ | 184,367 |  |  | 4,781 |  |  | 4,074 |  |  | 841 |  |  | 188,441 |  | $ | 5,622
The applicable date for determining when securities are in an unrealized loss position is December 31, 2011. As such, it is possible that a security in an unrealized loss position at December 31, 2011 had a market value that exceeded its amortized cost on other days during the past 12-month period. For the securities in the previous table, the Company does not have the intent to sell and has determined it is not more likely than not that the Company will be required to sell the security before recovery of the amortized cost basis, which may be maturity. The Company has assessed each security for credit impairment. For debt securities, the Company evaluates, where necessary, whether credit impairment exists by comparing the present value of the expected cash flows to the securities' amortized cost basis. For cost-method investments, the Company evaluates whether an event or change in circumstances has occurred during the reporting period that may have a significant adverse effect on the fair value of the investment. In determining whether a loss is temporary, the Company considers all relevant information including: the length of time and the extent to which the fair value has been less than the amortized cost basis; adverse conditions specifically related to the security, an industry, or a geographic area (for example, changes in the financial condition of the issuer of the security, or in the case of an asset-backed debt security, in the financial condition of the underlying loan obligors, including changes in technology or the discontinuance of a segment of the business that may affect the future earnings potential of the issuer or underlying loan obligors of the security or changes in the quality of the credit enhancement); the historical and implied volatility of the fair value of the security; the payment structure of the debt security and the likelihood of the issuer being able to make payments that increase in the future; failure of the issuer of the security to make scheduled interest or principal payments; any changes to the rating of the security by a rating agency; and recoveries or additional declines in fair value subsequent to the balance sheet date. To the extent the Company estimates future expected cash flows, the Company considered all available information in developing those expected cash flows. For asset-backed securities such as pooled trust preferred securities, suc h information generally includes: r emaining payment terms of the security (including as applicable, terms that require underlying obligor payments to increase in the future); current delinquencies and nonperforming assets of underlying collateral; expected future default rates; and subordination levels or other credit enhancements. Agency obligations The unrealized losses associated with a gency obligations are primarily driven by changes in interest rates and not due to the credit quality of the securities. These securities are issued by U.S. government agencies or government-sponsored entities and do not have any credit losses given the explicit or implicit government guarantee. Agency residential mortgage-backed securities (“RMBS”) The unrealized losses associated with Agency RMBS are primarily driven by changes in interest rates and not due to the credit quality of the securities. These securities are issued by U.S. government agencies or government-sponsored entities and do not have any credit losses given the explicit or implicit government guarantee. Securities of U.S. states and political subdivisions The unrealized losses associated with securities of U.S. states and political subdivisions are primarily driven by changes in interest rates and are not due to the credit quality of the securities. These securities will continue to be monitored as part of the Company's quarterly impairment analysis, but are expected to perform even if the rating agencies reduce the credit rating of the bond insurers. As a result, the Company expects to recover the entire amortized cost basis of these securities. Pooled trust preferred securities The unrealized loss es associated with pooled trust preferred securities are primarily driven by higher projected collateral losses and wider credit spreads. Pooled trust preferred securities primarily consist of securities issued by community banks and thrifts. The Company assesses impairment for these securities using a cash flow model. The key assumptions include default probabilities of the underlying collateral and recoveries on collateral defaults. Based upon the Company's assessment of the expected credit losses for these securities, and given the performance of the underlying collateral compared to the Company's credit enhancement, the Company expects to recover the remaining amortized cost basis of these securities. Individual issuer trust preferred securities The unrealized losses associated with individual issuer trust preferred securities are primarily related to securities backed by individual issuer community banks. For individual issuers, management evaluates the financial performance of the issuer on a quarterly basis to determine if it is probable that the issuer can make all contractual principal and interest payments. Based upon its evaluation, the Company expects to recover the remaining amortized cost basis of these securities. Cost-method investments At December 31, 2011, cost-method investments with an aggregate cost of $5.0 million were not evaluated for impairment because the Company did not identify any events or changes in circumstances that may have a significant adverse effect on the fair value of these cost-method investments. The carrying values of the Company's investment securities could decline in the future if the underlying performance of the collateral for pooled trust preferred securities, the financial condition of individual issuers of trust preferred securities, or the credit quality of other securities deteriorate and the Company determines it is probable that it will not recover the entire amortized cost basis for the security. As a result, there is a risk that significant other-than-temporary impairment charges may occur in the future. The following tables show the applicable credit ratings, fair values, gross unrealized losses, and life-to-date impairment charges for pooled and individual issuer trust preferred securities at December 31, 2011 , and 2010, respectively, segregated by those securities that have been in an unrealized loss position for less than 12 months and 12 months or more.
Trust Preferred Securities as of | December 31, 2011
|  |  |  |  |  |  |  |  |  |  | Unrealized Losses |  |  | Life-to-date
|  |  |  | Credit Rating |  |  | Fair |  | Less than |  | 12 months |  |  |  |  | Impairment
(Dollars in thousands) | Moody's | Fitch |  |  | Value |  | 12 months |  | or Longer |  | Total |  |  | Charges
Pooled: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ALESCO Preferred Funding XVII Ltd (a) | C | CC |  | $ | 100 |  |  | — |  | 130 |  | 130 |  | $ | 1,770
Individual issuer (b): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carolina Financial Capital Trust I | n/a | n/a |  |  | 193 |  |  | — |  | — |  | — |  |  | 257
Main Street Bank Statutory Trust I (c) | n/a | n/a |  |  | 389 |  |  | — |  | 111 |  | 111 |  |  | —
MNB Capital Trust I | n/a | n/a |  |  | 55 |  |  | — |  | — |  | — |  |  | 445
PrimeSouth Capital Trust I | n/a | n/a |  |  | 75 |  |  | — |  | — |  | — |  |  | 425
TCB Trust | n/a | n/a |  |  | 368 |  |  | — |  | 132 |  | 132 |  |  | —
United Community Capital Trust | n/a | n/a |  |  | 806 |  |  | — |  | — |  | — |  |  | 379
| Total individual issuer |  |  |  |  | 1,886 |  |  | — |  | 243 |  | 243 |  |  | 1,506
Total trust preferred securities |  |  |  | $ | 1,986 |  |  | — |  | 373 |  | 373 |  | $ | 3,276
n/a - not applicable securities not rated.
(a) Class B Deferrable Third Priority Secured Floating Rate Notes. The underlying collateral is primarily composed of
| trust preferred securities issued by community banks and thrifts.
(b) 144A Floating Rate Capital Securities. Underlying issuer is a community bank holding company. Securities have no
| excess subordination or overcollateralization.
(c) Now an obligation of BB&T Corporation.
Trust Preferred Securities as of | December 31, 2010
|  |  |  |  |  |  |  |  |  |  | Unrealized Losses |  |  | Life-to-date
|  |  |  | Credit Rating |  |  | Fair |  | Less than |  | 12 months |  |  |  |  | Impairment
(Dollars in thousands) |  |  | Moody's | Fitch |  |  | Value |  | 12 months |  | or Longer |  | Total |  |  | Charges
Pooled: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
ALESCO Preferred Funding XVII Ltd (a) | C | CC |  | $ | 20 |  |  | — |  | 210 |  | 210 |  | $ | 1,770
Individual issuer (b): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carolina Financial Capital Trust I | n/a | n/a |  |  | 312 |  |  | — |  | — |  | — |  |  | 138
Main Street Bank Statutory Trust I (c) | n/a | n/a |  |  | 438 |  |  | — |  | 62 |  | 62 |  |  | —
MNB Capital Trust I | n/a | n/a |  |  | 152 |  |  | — |  | — |  | — |  |  | 348
PrimeSouth Capital Trust I | n/a | n/a |  |  | 197 |  |  | — |  | — |  | — |  |  | 303
TCB Trust | n/a | n/a |  |  | 409 |  |  | — |  | 91 |  | 91 |  |  | —
United Community Capital Trust | n/a | n/a |  |  | 621 |  |  | — |  | — |  | — |  |  | 379
| Total individual issuer |  |  |  |  | 2,129 |  |  | — |  | 153 |  | 153 |  |  | 1,168
Total trust preferred securities |  |  |  | $ | 2,149 |  |  | — |  | 363 |  | 363 |  | $ | 2,938
n/a - not applicable securities not rated.
(a) Class B Deferrable Third Priority Secured Floating Rate Notes. The underlying collateral is primarily composed of
| trust preferred securities issued by community banks and thrifts.
(b) 144A Floating Rate Capital Securities. Underlying issuer is a community bank holding company. Securities have no
| excess subordination or overcollateralization.
(c) Now an obligation of BB&T Corporation.
For pooled trust preferred securities, the Company estimated expected future cash flows of the security by estimating the expected future cash flows of the underlying collateral and applying those collateral cash flows, together with any credit enhancements such as subordination interests owned by third parties, to the security. The expected future cash flows of the underlying collateral are determined using the remaining contractual cash flows adjusted for future expected credit losses (which consider default probabilities derived from issuer credit ratings for the underlying collateral). The probability-weighted expected future cash flows of the security are then discounted at the interest rate used to recognize income on the security to arrive at a present value amount. Excess subordination is defined as the amount of performing collateral that is in excess of what is needed to pay-off a specified class of securities and all classes senior to the specified class. Performing collateral is defined as total collateral minus all collateral that is currently deferring or currently in default. This definition assumes that all collateral that is currently deferring will default with a zero recovery rate. The underlying issuers can cure the deferral, or some portion greater than zero could be recovered on default of an underlying issuer. Excess subordination, as defined previously, does not consider any excess interest spread that is built into the structure of the security, which provides another source of repayment for the bonds. At December 31, 2011 and 2010, respectively, there was no excess subordination for the Class B notes of ALESCO Preferred Funding XVII, Ltd. Other-Than-Temporarily Impaired Securities The following table presents a roll-forward of the credit loss component of the amortized cost of debt securities that the Company has written down for other-than-temporary impairment and the credit component of the loss is recognized in earnings (referred to as “credit-impaired” debt securities). O ther-than-temporary impairments recognized in earnings for the years ended December 31, 2011, 2010 and 2009, respectively, for credit-impaired debt securities are presented as additions in two components based upon w hether the current period is the first time the debt security was credit-impaired (initial credit impairment) or is not the first ti me the debt security was credit-impaired (subsequent credit impairments). The credit loss component is reduced if the Company sell s, intend s to sell or believe s it will be required to sell previously credit-impaired debt securities. Additionally, the credit loss component is reduced if the Company receive s cash flows in excess of what it expected to receive over the remaining life of the credit-impaired debt security, the security matures or is fully written-down and deemed worthless. Changes in the credit loss component of credit-impaired debt securities were:
|  |  |  |  | Year ended December 31
(Dollars in thousands) |  |  | 2011 |  |  | 2010 |  |  | 2009
Balance, beginning of period |  | $ | 2,938 |  |  | 4,570 |  |  | —
| Additions: |  |  |  |  |  |  |  |  |
|  | Initial credit impairments |  |  | — |  |  | 1,160 |  |  | 2,663
|  | Subsequent credit impairments |  |  | 338 |  |  | 58 |  |  | 1,907
| Reductions: |  |  |  |  |  |  |  |  |
|  | Securities sold |  |  | — |  |  | (975) |  |  | —
|  | Due to change in intent or requirement to sell |  |  |  |  |  |  |  |  |
|  | Securities fully written down and deemed worthless |  |  | — |  |  | (1,875) |  |  | —
|  | Increases in expected cash flows |  |  | — |  |  | — |  |  | —
Balance, end of period |  | $ | 3,276 |  |  | 2,938 |  |  | 4,570
Other-Than-Temporary Impairment The following table presents deta ils of the other-than-temporary impairment related to securities, including equity securities carried at cost.
|  |  |  |  |  | Year ended December 31
(Dollars in thousands) |  |  | 2011 |  |  | 2010 |  |  | 2009
Other-than-temporary impairment charges (included in earnings): |  |  |  |  |  |  |  |  |
| Debt securities: |  |  |  |  |  |  |  |  |
|  | Corporate debt securities |  | $ | — |  |  | 810 |  |  | —
|  | Pooled trust preferred securities |  |  | — |  |  | 50 |  |  | 2,695
|  | Individual issuer trust preferred securities |  |  | 338 |  |  | 1,168 |  |  | 1,875
|  |  | Total debt securities |  | $ | 338 |  |  | 2,028 |  |  | 4,570
| Cost-method investments |  |  | — |  |  | — |  |  | 1,980
Total other-than-temporary impairment charges |  |  | 338 |  |  | 2,028 |  |  | 6,550
Other-than-temporary impairment on debt securities: |  |  |  |  |  |  |  |  |
| Recorded as part of gross realized losses: |  |  |  |  |  |  |  |  |
|  | Credit-related |  |  | 338 |  |  | 1,218 |  |  | 4,570
|  | Securities with intent to sell |  |  | — |  |  | 810 |  |  | —
| Recorded directly to other comprehensive income for non-credit |  |  |  |  |  |  |  |  |
|  | related impairment |  |  | 130 |  |  | 210 |  |  | 257
Total other-than-temporary impairment on debt securities |  | $ | 468 |  |  | 2,238 |  |  | 4,827
Realized Gains and Losses
The following table presents the gross realized gains and losses on sales and other-than-temporary impairment charges
related to securities, including cost-method investments.
|  |  |  | Year ended December 31
(Dollars in thousands) |  |  | 2011 |  |  | 2010 |  |  | 2009
Gross realized gains |  | $ | 1,698 |  |  | 3,496 |  |  | 2,881
Gross realized losses |  |  | (482) |  |  | (45) |  |  | (34)
Other-than-temporary impairment charges |  |  | (338) |  |  | (2,028) |  |  | (6,550)
| Realized gains (losses), net |  | $ | 878 |  |  | 1,423 |  |  | (3,703)

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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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