Note 3. Securities

A summary comparison of securities by type at March 31, 2012 and December 31, 2011 is shown below.

	March 31, 2012									December 31, 2011
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale:
U.S. Government Agencies	$	398,930	$	168	$	(5,096	)	$	394,002	$	319,113	$	1,422	$	(328	)	$	320,207
Corporate debt securities		176,160		6,764		(752	)		182,172		171,927		6,250		(1,222	)		176,955
Mutual funds or other equity securities		2,564		25		-			2,589		2,773		38		-			2,811
Municipal bonds		19,628		606		-			20,234		19,916		609		(1	)		20,524
Total available for sale securities	$	597,282	$	7,563	$	(5,848	)	$	598,997	$	513,729	$	8,319	$	(1,551	)	$	520,497

Held to maturity:
U.S. Government Agencies	$	92,448	$	372	$	(283	)	$	92,537	$	112,666	$	535	$	(4	)	$	113.197
Total held to maturity securities	$	92,448	$	372	$	(283	)	$	92,537	$	112,666	$	535	$	(4	)	$	113.197

The scheduled maturities of securities at March 31, 2012, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	March 31, 2012
(in thousands)	Amortized Cost		Fair Value
Available For Sale:
Due in one year or less	$	18,788	$	19,228
Due after one year through five years		63,191		65,150
Due after five years through 10 years		195,332		198,838
Over 10 years		319,971		315,781
Total available for sale securities	$	597,282	$	598,997

Held to Maturity:
Due in one year or less	$	-	$	-
Due after one year through five years		8,028		8,071
Due after five years through 10 years		51,440		51,639
Over 10 years		32,980		32,827
Total held to maturity securities	$	92,448	$	92,537

At March 31, 2012 approximately $458.9 million in securities were pledged to secure public fund deposits, and for other purposes required or permitted by law.

The following is a summary of the fair value of securities with gross unrealized losses and an aging of those gross unrealized losses at March 31, 2012.

	Less Than 12 Months					12 Months or More					Total
(in thousands)	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available for sale:
U.S. Government agencies	$	336,744	$	(5,096	)	$	-	$	-		$	336,744	$	(5,096	)
Corporate debt securities		25,272		(440	)		2,107		(312	)		27,379		(752	)
Mutual funds or other equity securities		-		-			-		-			-		-
Municipals		-		-			-		-			-		-
Total available for sale securities	$	362,016	$	(5,536	)	$	2,107	$	(312	)	$	364,123	$	(5,848	)

Held to maturity:
U.S. Government agencies	$	40,155	$	(283	)	$	-	$	-		$	40,155	$	(283	)
Total held to maturity securities	$	40,155	$	(283	)	$	-	$	-		$	40,155	$	(283	)

At March 31, 2012, 185 debt securities have gross unrealized losses of $6.1 million or 1.5% of amortized cost. The Company believes that it will collect all amounts contractually due and has the intent and the ability to hold these securities until the fair value is at least equal to the carrying value. The Company had 66 U.S. Government agency securities and 113 corporate debt securities that had gross unrealized losses for less than 12 months. The Company had 6 corporate debt securities which have been in a continuous unrealized loss position for 12 months or longer. All securities with unrealized losses greater than 12 months were classified as available for sale with amortized cost of $2.4 million. Securities with unrealized losses less than 12 months included $367.6 million amortized cost classified as available for sale and $40.4 million amortized cost classified as held to maturity.

If impairment is other than temporary for equity securities, then an impairment loss shall be recognized in earnings equal to the entire difference between the investment's cost and its fair value at the balance sheet date of the reporting period for which the assessment is made. The fair value of the investment would then become the new amortized cost basis of the investment and is not adjusted for subsequent recoveries in fair value. For debt securities, other than temporary impairment loss is recognized in earnings if the Company is required to sell or is more likely than not to sell the security before recovery of its amortized cost. If the Company is not required to sell the security or does intend to sell the security then the other-than-temporary impairment is separated into the amount representing credit loss and the amount related to all other factors. The amount related to credit loss is recognized in earnings and the amount related to all other factors is recognized in other comprehensive income. The previous amortized cost basis less the other-than-temporary impairment recognized in earnings shall become the new amortized cost basis of the investment. Management evaluates securities for other-than-temporary impairment at least quarterly and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, (iii) the recovery of contractual principal and interest and (iv) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer's financial condition, Management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and industry reports.

The amount of investment securities issued by government agencies with unrealized losses and the amount of unrealized losses on those investment securities are primarily the result of market interest rates. At March 31, 2012 the Company had the ability and intent to hold these securities in its current portfolio until recovery, which may be until maturity.

The corporate debt securities consist primarily of corporate bonds issued by the following types of organizations: financial, insurance, utilities, manufacturing, industrial, consumer products and oil and gas. Also included in corporate debt securities are trust preferred capital securities, many issued by national and global financial services firms. The Company believes that the each of the issuers will be able to fulfill the obligations of these securities. At March 31, 2012 the Company had the ability and intent to hold these securities until they recover, which could be at their maturity dates.

The held to maturity portfolio is comprised of government sponsored enterprise securities such as FHLB, FNMA, FHLMC, and FFCB. The securities have maturities of 15 years or less and the securities are used to collateralize public funds. As of March 31, 2012 public funds deposits totaled $452.7 million. The Company has maintained public funds in excess of $175.0 million since December 2007. Management believes that public funds will continue to be a significant part of the Company's deposit base and will need to be collateralized by securities in the investment portfolio.

The Company attributes the unrealized losses mainly to increases in market interest rates over the yield available at the time the underlying securities were purchased. The Company does not expect to incur a loss unless the securities are sold prior to maturity.

Securities with unrealized losses, in which the Company has not already taken an OTTI charge, are currently performing according to their contractual terms. Management has the intent and ability to hold these securities for the foreseeable future. The fair value is expected to recover as the securities approach their maturity or repricing date or if market yields for such investments decline. As a result of uncertainties in the market affecting companies in the financial services industry, it is at least reasonably possible that a change in the estimate will occur in the near term.

Securities are evaluated for other-than-temporary impairment at least quarterly. The evaluation includes performance indications of the underlying assets in the security, loan to collateral value, third-party guarantees, current levels of subordination, geographic concentrations, industry analysts' reports, sector credit ratings, volatility of the securities fair value, liquidity, leverage and capital ratios, the Company's ability to continue as a going concern. If the company is in bankruptcy, the status and potential outcome is also considered.

The Company believes that the securities with unrealized losses reflect impairment that is temporary and that there are currently no securities with other-than-temporary impairment.

The Company did not record an impairment write-down on its securities for the three month period ending March 31, 2012. During the first quarter of 2011, the Company recorded an impairment write-down on securities from one issuer of $0.1 million. This write-down was partially offset by a subsequent gain on sale of the securities of $45,000 in the third quarter of 2011.

At March 31, 2012, the Company's exposure to investment securities issuers that exceeded 10% of stockholders' equity as follows:

	At March 31, 2012
(in thousands)	Amortized Cost		Fair Value
Federal Home Loan Bank (FHLB)	$	99,716	$	99,676
Federal Home Loan Mortgage Corporation (Freddie Mac-FHLMC)		149,483		147,321
Federal National Mortgage Association (Fannie Mae-FNMA)		187,769		185,247
Federal Farm Credit Bank (FFCB)		54,410		54,294
Total	$	491,378	$	486,538