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Investment Securities
 3 Months Ended
Mar. 31, 2012
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
Investment Securities

The amortized cost of investment securities and their fair values are as follows for the periods indicated:
 
Par
Value
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair
Value
 
(Dollars in thousands)
At March 31, 2012:
 
 
 
 
 
 
 
 
 
Available-for-sale investment securities:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
17,500

 
$
17,467

 
$
399

 
$
(1
)
 
$
17,865

Government sponsored entity (GSE) securities
44,800

 
44,947

 
1,280

 
—

 
46,227

Corporate bonds
5,420

 
5,046

 
89

 
—

 
5,135

Collateralized mortgage obligations
94,712

 
84,521

 
2,267

 
(707
)
 
86,081

Commercial mortgage-backed securities
61,654

 
62,464

 
1,600

 
—

 
64,064

Asset backed securities
4,811

 
4,407

 
8

 
(9
)
 
4,406

Pooled trust preferred securities
26,730

 
24,247

 
—

 
(8,780
)
 
15,467

GSE preferred stock
200

 
—

 
2

 
—

 
2

Total available-for-sale investment securities
$
255,827

 
$
243,099

 
$
5,645

 
$
(9,497
)
 
$
239,247

 
 
 
 
 
 
 
 
 
 
Held-to-maturity investment securities:
 

 
 

 
 

 
 

 
 

Asset backed securities
$
7,775

 
$
8,001

 
$
259

 
$
—

 
$
8,260

Municipal securities
7,910

 
7,910

 
50

 
—

 
7,960

Total held-to-maturity investment securities
$
15,685

 
$
15,911

 
$
309

 
$
—

 
$
16,220

 
Par
Value
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair
Value
 
(Dollars in thousands)
At December 31, 2011:
 
 
 
 
 
 
 
 
 
Available-for-sale investment securities:
 
 
 
 
 
 
 
 
 
U.S. Treasury securities
$
15,000

 
$
14,967

 
$
447

 
$
—

 
$
15,414

Government sponsored entity (GSE) securities
46,800

 
46,967

 
1,415

 
—

 
48,382

Corporate bonds
5,420

 
5,022

 
9

 
(4
)
 
5,027

Collateralized mortgage obligations
79,006

 
71,073

 
1,178

 
(1,367
)
 
70,884

Commercial mortgage-backed securities
72,885

 
74,664

 
1,520

 
(66
)
 
76,118

Pooled trust preferred securities
27,398

 
24,804

 
—

 
(6,249
)
 
18,555

GSE preferred stock
200

 
—

 
1

 
—

 
1

Total available-for-sale investment securities
$
246,709

 
$
237,497

 
$
4,570

 
$
(7,686
)
 
$
234,381

 
 
 
 
 
 
 
 
 
 
Held-to-maturity investment securities:
 

 
 

 
 

 
 

 
 

Asset backed securities
$
8,201

 
$
8,461

 
$
285

 
$
—

 
$
8,746

Municipal securities
7,910

 
7,910

 
47

 
—

 
7,957

Total held-to-maturity investment securities
$
16,111

 
$
16,371

 
$
332

 
$
—

 
$
16,703

 
The Company’s investments in residential collateralized mortgage obligations consisted of $4.9 million and $5.2 million, respectively, of GSE issued investment securities and $81.2 million and $65.7 million, respectively, of non-agency (private issued) residential investment securities at March 31, 2012 and December 31, 2011, respectively.
 
Investment securities with unrealized losses aggregated by investment category and length of time that individual investment securities have been in a continuous unrealized loss position are presented in the following tables for the dates indicated.
 
March 31, 2012
 
Less than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
 
Fair
Value
 
Unrealized Losses
 
(Dollars in thousands)
U.S. Treasury securities
$
5,498

 
$
(1
)
 
$
—

 
$
—

 
$
5,498

 
$
(1
)
Collateralized mortgage obligations
25,910

 
(619
)
 
5,235

 
(88
)
 
31,145

 
(707
)
Commercial mortgage-backed securities
75

 
—

 
—

 
—

 
75

 
—

Asset backed securities
—

 
—

 
33

 
(9
)
 
33

 
(9
)
Pooled trust preferred securities
—

 
—

 
15,467

 
(8,780
)
 
15,467

 
(8,780
)
 
$
31,483

 
$
(620
)
 
$
20,735

 
$
(8,877
)
 
$
52,218

 
$
(9,497
)

 
December 31, 2011
 
Less than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
(Dollars in thousands)
Corporate bonds
$
3,969

 
$
(4
)
 
$
—

 
$
—

 
$
3,969

 
$
(4
)
Collateralized mortgage obligations
34,504

 
(983
)
 
3,428

 
(384
)
 
37,932

 
(1,367
)
Commercial mortgage-backed securities
89

 
(1
)
 
4,154

 
(65
)
 
4,243

 
(66
)
Pooled trust preferred securities
—

 
—

 
18,555

 
(6,249
)
 
18,555

 
(6,249
)
 
$
38,562

 
$
(988
)
 
$
26,137

 
$
(6,698
)
 
$
64,699

 
$
(7,686
)

We evaluate all investment securities on a quarterly basis, and more frequently when economic conditions warrant additional evaluations, for determining if an other-than-temporary impairment (OTTI) exists pursuant to guidelines established in the Financial Accounting Standards Board Accounting Standards Codification (ASC) 320-10, Investments - Debt and Equity Securities.  Current accounting guidance generally provides that if a marketable security is in an unrealized loss position, whether due to general market conditions or industry or issuer-specific factors, the holder of the investment securities must assess whether the impairment is other-than-temporary.

In management’s belief, the decline in value of the Company’s investment in collateralized mortgage obligations is minimal and primarily attributable to changes in market interest rates and macroeconomic conditions affecting liquidity and not necessarily the expected cash flows of the individual investment securities.  The fair value of these investment securities is expected to recover as macroeconomic conditions improve, interest rates rise, and the investment securities approach their maturity date.

At March 31, 2012, the Company’s pooled trust preferred investment securities consisted of “Super Senior” securities backed by senior securities issued mainly by bank and thrift holding companies.  Due to the structure of the securities, as deferrals and defaults on the underlying collateral increase, cash flows are increasingly diverted from mezzanine and subordinate tranches to pay down principal on the “Super Senior” tranches.  In management’s belief, the decline in value is primarily attributable to macroeconomic conditions affecting liquidity of these securities and not necessarily the expected cash flows of the individual securities. The fair value of these securities is expected to recover as the securities approach their maturity date.

Unrealized losses on collateralized mortgage obligations and pooled trust preferred investment securities have not been recognized in income because management does not have the intent to sell these securities and has the ability to hold these securities for a period of time sufficient to allow for any anticipated recovery in fair value, which may be at maturity.  We may, from time to time, dispose of an impaired security in response to asset/liability management decisions, future market movements, business plan changes, or if the net proceeds could be reinvested at a rate of return that is expected to recover the loss within a reasonable period of time.  The Company concluded that the unrealized losses that existed at March 31, 2012 did not constitute other-than-temporary impairments.

The amortized cost and fair value of investment securities at March 31, 2012, by contractual maturity, are shown in the following tables.  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.  Investment securities not due at a single maturity date are shown separately.


 
Available-for-Sale
 
Amortized Cost
 
Fair
Value
 
(Dollars in thousands)
U.S. Treasury securities:
 
 
 
Due in one year or less
$
5,499

 
$
5,498

Due after one year through five years
11,968

 
12,367

GSE securities:
 
 
 

Due in one year or less
799

 
814

Due after one year through five years
44,148

 
45,413

Corporate bonds — Due after one year through five years
5,046

 
5,135

Collateralized mortgage obligations — Due after five years
84,521

 
86,081

Commercial mortgage-backed securities — Due after five years
62,464

 
64,064

Asset backed securities — Due after five years
4,407

 
4,406

Pooled trust preferred securities — Due after ten years
24,247

 
15,467

GSE preferred stock
—

 
2

 
$
243,099

 
$
239,247


 
Held-to-Maturity
 
Amortized Cost
 
Fair
Value
 
(Dollars in thousands)
Asset backed securities — Due after five years
$
8,001

 
$
8,260

Municipal securities:
 

 
 

Due in one year or less
2,970

 
2,987

Due after one year through five years
4,940

 
4,973

 
$
15,911

 
$
16,220


The Company realized gross gains on the sale of available-for-sale investment securities totaling $418,000 and $519,000, respectively, for the three months ended March 31, 2012 and 2011.
 
The carrying value of investment securities pledged as collateral to secure public deposits and for other purposes at March 31, 2012 and December 31, 2011 was $53.8 million and $54.4 million, respectively.  Other than the U.S. Government, its agencies, and GSEs, there were no other holdings of investment securities of any one issuer in an amount greater than 10% of shareholders’ equity.