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Securities | 9 Months Ended
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Sep. 30, 2012
Investments debt and equity securities [Abstract] |
Investments In Debt And Marketable Equity Securities And Certain Trading Assets Disclosure Text Block | NOTE 4: SECURITIES At September 30, 2012 and December 31, 2011, respectively, all securities within the scope of 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 September 30, 2012 and December 31, 2011, respectively, are presented below.
|  | September 30, 2012
|  |  | 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) | $ | — | — | 10,113 | 24,503 | 34,616 |  | 247 | — |  | $ | 34,369
Agency RMBS (a) |  | — | — | 4,986 | 132,627 | 137,613 |  | 4,077 | — |  |  | 133,536
State and political subdivisions |  | 112 | 1,706 | 19,464 | 60,687 | 81,969 |  | 5,486 | — |  |  | 76,483
Trust preferred securities: |  |  |  |  |  |  |  |  |  |  |  |
| Individual issuer |  | — | — | — | 621 | 621 |  | 101 | 173 |  |  | 693
| Total available-for-sale | $ | 112 | 1,706 | 34,563 | 218,438 | 254,819 |  | 9,911 | 173 |  | $ | 245,081
(a) Includes securities issued by U.S. government agencies or government sponsored entities.
|  | 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.
Securities with aggregate fair values of $133.4 million and $161.5 million at September 30, 2012 and December 31, 2011, 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 are cost-method in vestments. The carrying amount s of cost-method inve stments w ere $3.0 million and $5.0 million at September 30, 2012 and December 31, 2011, 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 September 30, 2012 and December 31, 2011, respectively, segregated by those securities that have been in an unrealized loss position for less than 12 months and 12 months or longer, 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
September 30, 2012: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Trust preferred securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Individual issuer | $ | — |  |  | — |  |  | 327 |  |  | 173 |  | $ | 327 |  |  | 173
|  | Total | $ | — |  |  | — |  |  | 327 |  |  | 173 |  | $ | 327 |  |  | 173
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
The applicable date for determining when securities are in an unrealized loss position is September 30, 2012. As such, it is possible that a security in an unrealized loss position at September 30, 2012 had a market value that exceeded its amortized cost on other days during the past twelve-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 assesse s 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. Agency obligations The unrealized losses associated with a gency obligations were primarily driven by changes in interest rates and not due to the credit quality of the securities. These securities were issued by U.S. government agencies or government-sponsored entities and d id not have any credit losses given the explicit government guarantee or other government support. Agency residential mortgage-backed securities (“RMBS”) The unr ealized losses associated with a gency RMBS were primarily driven by changes in interest rates and not due to the credit quality of the securities. These securities were issued by U.S. government agencies or government-sponsored entities and d id not have any credit losses given the explicit government guarantee or other government support. Securities of U.S. states and political subdivisions The unrealized losses associated with securities of U.S. states and political subdivisions were primarily driven by changes in interest rates and were 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. Individual issuer t rust preferred securities The unrealized losses associated with individual issuer trust preferred securities were related to securities issued on behalf of individual community bank holding companies. M anagement evaluates the financial p erformance of individual community bank holding companies on a quarterly basis to dete rmine if it is probable that such 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 September 30, 2012, cost-method investments with an aggregate cost of $3.0 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 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 trust preferred securities at September 30, 2012 and December 31, 2011, respectively, segregated by those securities that have been in an unrealized loss position for less than 12 months and 12 months or longer.
Trust Preferred Securities as of | September 30, 2012
|  |  |  |  |  |  |  |  |  |  | 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
Individual issuer (a): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carolina Financial Capital Trust I | n/a | n/a |  | $ | 294 |  |  | — |  | — |  | — |  |  | 257
TCB Trust | n/a | n/a |  |  | 327 |  |  | — |  | 173 |  | 173 |  |  | —
Total trust preferred securities |  |  |  | $ | 621 |  |  | — |  | 173 |  | 173 |  |  | 257
n/a - not applicable, securities not rated.
(a) 144A Floating Rate Capital Securities. Issuers are individual community bank holding companies.
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. Issuers are individual community bank holding companies.
(c) Now an obligation of BB&T Corporation.
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 quarters and nine months ended September 30, 2012 and 2011, 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 the security is fully written-down and deemed worthless. Changes in the credit loss component of credit-impaired debt securities were:
|  |  |  | Quarter ended September 30, |  |  | Nine months ended September 30,
(Dollars in thousands) |  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011
Balance, beginning of period | $ | 1,257 |  | $ | 3,040 |  | $ | 3,276 |  | $ | 2,938
| Additions: |  |  |  |  |  |  |  |  |  |  |
|  | Subsequent credit impairments |  | — |  |  | 236 |  |  | 130 |  |  | 338
| Reductions: |  |  |  |  |  |  |  |  |  |  |
|  | Securities sold |  | — |  |  | — |  |  | 2,149 |  |  | —
Balance, end of period | $ | 1,257 |  | $ | 3,276 |  | $ | 1,257 |  | $ | 3,276
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, for the quarters and nine months ended September 30, 2012 and 2011.
|  |  |  |  | Quarter ended September 30, |  |  | Nine months ended September 30,
(Dollars in thousands) |  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011
Other-than-temporary impairment charges |  |  |  |  |  |  |  |  |  |  |
| (included in earnings): |  |  |  |  |  |  |  |  |  |  |
| Debt securities: |  |  |  |  |  |  |  |  |  |  |
|  | Individual issuer trust preferred securities | $ | — |  | $ | 236 |  | $ | 130 |  | $ | 338
|  |  | Total debt securities |  | — |  |  | 236 |  |  | 130 |  |  | 338
Total other-than-temporary impairment charges | $ | — |  | $ | 236 |  | $ | 130 |  | $ | 338
Other-than-temporary impairment on debt securities: |  |  |  |  |  |  |  |  |  |
| Recorded as part of gross realized losses: |  |  |  |  |  |  |  |  |  |  |
|  | Credit-related | $ | — |  |  | 236 |  | $ | 130 |  | $ | 338
|  | Securities with intent to sell |  | — |  |  | — |  |  | — |  |  | —
|  | (Transferred from) recorded directly to other |  |  |  |  |  |  |  |  |  |  |
|  |  | comprehensive income for non-credit related |  |  |  |  |  |  |  |  |  |  |
|  |  | impairment |  | — |  |  | (80) |  |  | — |  |  | 130
Total other-than-temporary impairment on debt securities | $ | — |  | $ | 156 |  | $ | 130 |  | $ | 468
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.
|  |  |  |  | Quarter ended September 30, |  |  | Nine months ended September 30,
(Dollars in thousands) |  |  | 2012 |  |  | 2011 |  |  | 2012 |  |  | 2011
Gross realized gains |  | $ | 203 |  | $ | 474 |  | $ | 927 |  | $ | 1,379
Gross realized losses |  |  | (25) |  |  | (23) |  |  | (189) |  |  | (478)
Other-than-temporary impairment charges |  |  | — |  |  | (236) |  |  | (130) |  |  | (338)
|  | Realized gains, net |  | $ | 178 |  | $ | 215 |  | $ | 608 |  | $ | 563

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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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