Investment Securities

6 Months Ended

Jun. 30, 2011

Investment Securities [Abstract]

Investment Securities

Note 2. Investment Securities

The following table shows the amortized cost and the approximate fair value of the held-to-maturity securities and available-for-sale securities at June 30, 2011 and December 31, 2010 by maturity within each type.

	June 30, 2011									December 31, 2010
			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
(Dollars in thousands)	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Securities Held-to-Maturity
Residential mortgage-backed securities:
Within 1 year	$	—	$	—	$	—		$	—	$	15	$	—	$	—		$	15
		—		—		—			—		15		—		—			15
Other securities:
Within 1 year		18		—		—			18		17		—		—			17
		18		—		—			18		17		—		—			17
Total	$	18	$	—	$	—		$	18	$	32	$	—	$	—		$	32
Securities Available-for-Sale
U.S. government corporations and agencies:
Within 1 year	$	5,000	$	35	$	—		$	5,035	$	7,000	$	—	$	—		$	7,000
After 1 year to 5 years		132,511		615		(458	)		132,668		182,585		515		(2,000	)		181,100
		137,511		650		(458	)		137,703		189,585		515		(2,000	)		188,100
State and political subdivisions:
Within 1 year		755		11		—			766		451		—		—			451
After 1 year to 5 years		9,406		352		—			9,758		8,801		281		—			9,082
After 5 years to 10 years		11,692		370		(57	)		12,005		14,042		281		(69	)		14,254
Over 10 years		88,065		2,057		(380	)		89,742		86,315		639		(2,693	)		84,261
		109,918		2,790		(437	)		112,271		109,609		1,201		(2,762	)		108,048
Residential mortgage-backed securities:
After 5 years to 10 years		12,488		793		—			13,281		14,709		743		—			15,452
Over 10 years		71,931		3,069		(481	)		74,519		66,919		3,222		(492	)		69,649
		84,419		3,862		(481	)		87,800		81,628		3,965		(492	)		85,101
Commercial mortgage obligations:
After 5 years to 10 years		7,013		219		—			7,232		8,855		252		—			9,107
Over 10 years		61,113		905		(380	)		61,638		63,827		1,321		(1,164	)		63,984
		68,126		1,124		(380	)		68,870		72,682		1,573		(1,164	)		73,091
Other securities:
Within 1 year		3,548		—		—			3,548		4,692		30		—			4,722
After 1 year to 5 years		4,990		5		—			4,995		4,988		—		(43	)		4,945
		8,538		5		—			8,543		9,680		30		(43	)		9,667
Equity securities:
No stated maturity		2,369		662		(216	)		2,815		2,447		680		(142	)		2,985
		2,369		662		(216	)		2,815		2,447		680		(142	)		2,985
Total	$	410,881	$	9,093	$	(1,972	)	$	418,002	$	465,631	$	7,964	$	(6,603	)	$	466,992

Expected maturities may differ from contractual maturities because debt issuers may have the right to call or prepay obligations without call or prepayment penalties.

Securities with a fair value of $299.4 million and $347.3 million at June 30, 2011 and December 31, 2010, respectively, were pledged to secure public deposits and for other purposes as required by law.

During the six months ended June 30, 2011 and 2010, available-for-sale securities with a fair value at the date of sale of $5.9 million and $3.6 million, respectively, were sold. Gross realized gains on such sales totaled $569 thousand in 2011 and $108 thousand in 2010. Gross realized losses on sales were $0 thousand in 2011 and $21 thousand in 2010. Tax expense related to net realized gains from the sales of investment securities for the six months ended June 30, 2011 and 2010 was $199 thousand and $30 thousand, respectively. Accumulated other comprehensive income related to securities of $4.6 million and $884 thousand, net of taxes, has been included in shareholders’ equity at June 30, 2011 and December 31, 2010, respectively. Unrealized losses in investment securities at June 30, 2011 and December 31, 2010 do not represent other-than-temporary impairments.

The Corporation realized other-than-temporary impairment charges to noninterest income of $10 thousand and $47 thousand, respectively, on its equity portfolio during the six months ended June 30, 2011 and 2010. The Corporation determined that it was probable that certain equity securities would not regain market value equivalent to the Corporation’s cost basis within a reasonable period of time due to a decline in the financial stability of the underlying companies. The Corporation carefully monitors all of its equity securities and has not taken impairment losses on certain other equity securities in an unrealized loss position, at this time, as the financial performance of the underlying companies is not indicative of the market deterioration of their stock and it is probable that the market value of the equity securities will recover to the Corporation’s cost basis in the individual securities in a reasonable amount of time. The equity securities within the following table consist of common stocks of other financial institutions, which have experienced recent declines in value consistent with the industry as a whole. Management evaluated the near-term prospects of the issuers in relation to the severity and duration of the impairment. The Corporation has the positive intent to hold these securities and believes it is more likely than not, that it will not have to sell these securities until recovery to the Corporation’s cost basis occurs. The Corporation does not consider these investments to be other-than-temporarily impaired at June 30, 2011 and December 31, 2010.

Management evaluates debt securities, which are comprised of U. S. Government, Government Sponsored Agencies, municipalities and other issuers, for other-than-temporary impairment and considers the current economic conditions, the length of time and the extent to which the fair value has been less than cost, interest rates and the bond rating of each security. All of the debt securities are rated as investment grade and management believes that it will not incur any losses. The unrealized losses on the Corporation’s investments in debt securities are temporary in nature since they are primarily related to market interest rates and are not related to the underlying credit quality of the issuers within our investment portfolio. The Corporation does not have the intent to sell the debt securities and believes it is more likely than not, that it will not have to sell the securities before recovery of their cost basis. The Corporation has not recognized any other-than-temporary impairment charges on debt securities for the six months ended June 30, 2011 and 2010.

At June 30, 2011 and December 31, 2010, there were no investments in any single non-federal issuer representing more than 10% of shareholders’ equity.

The following table shows the amount of securities that were in an unrealized loss position at June 30, 2011 and December 31, 2010:

	At June 30, 2011
	Less than Twelve Months					Twelve Months or Longer					Total
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. government corporations and agencies	$	59,466	$	(458	)	$	—	$	—		$	59,466	$	(458	)
State and political subdivisions		14,920		(290	)		2,654		(147	)		17,574		(437	)
Residential mortgage-backed securities		—		—			3,906		(481	)		3,906		(481	)
Commercial mortgage obligations		19,537		(380	)		—		—			19,537		(380	)
Equity securities		873		(216	)		—		—			873		(216	)
Total	$	94,796	$	(1,344	)	$	6,560	$	(628	)	$	101,356	$	(1,972	)

	At December 31, 2010
	Less than Twelve Months					Twelve Months or Longer					Total
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. government corporations and agencies	$	107,978	$	(2,000	)	$	—	$	—		$	107,978	$	(2,000	)
State and political subdivisions		52,531		(2,589	)		1,589		(173	)		54,120		(2,762	)
Residential mortgage-backed securities		10,096		(38	)		4,419		(454	)		14,515		(492	)
Commercial mortgage obligations		19,322		(1,164	)		—		—			19,322		(1,164	)
Other securities		4,945		(43	)		—		—			4,945		(43	)
Equity securities		951		(140	)		17		(2	)		968		(142	)
Total	$	195,823	$	(5,974	)	$	6,025	$	(629	)	$	201,848	$	(6,603	)