Investment Securities

The amortized cost and fair value of investment securities with gross unrealized gains and losses were as follows as of June 30, 2012 and December 31, 2011:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		Carrying Amount
June 30, 2012
Available for sale:
Residential collateralized mortgage obligations (CMO) securities - agency	$	70	$	7	$	—	$	77	$	77
Residential CMO securities - nonagency	1,851,998		18,957		28,624		1,842,331		1,842,331
Residential mortgage-backed securities (MBS) - agency	266		15		—		281		281
Asset-backed securities (ABS)	10,554		—		2,938		7,616		7,616
Equity securities	77		144		—		221		221
Total available for sale securities	$	1,862,965	$	19,123	$	31,562	$	1,850,526	$	1,850,526
Held to maturity:
Residential CMO securities - agency	$	146,163	$	5,840	$	—	$	152,003	$	146,163
Residential MBS - agency	34,176		1,998		—		36,174		34,176
Corporate securities	10,276		—		2,071		8,205		10,276
Total held to maturity securities	$	190,615	$	7,838	$	2,071	$	196,382	$	190,615
December 31, 2011
Available for sale:
Residential CMO securities - agency	$	96	$	8	$	—	$	104	$	104
Residential CMO securities - nonagency	1,919,046		17,609		40,837		1,895,818		1,895,818
Residential MBS - agency	317		21		—		338		338
Asset-backed securities	10,573		—		3,096		7,477		7,477
Equity securities	77		108		—		185		185
Total available for sale securities	$	1,930,109	$	17,746	$	43,933	$	1,903,922	$	1,903,922
Held to maturity:
Residential CMO securities - agency	$	159,882	$	6,029	$	78	$	165,833	$	159,882
Residential MBS - agency	19,132		1,464		—		20,596		19,132
Corporate securities	10,504		—		2,583		7,921		10,504
Total held to maturity securities	$	189,518	$	7,493	$	2,661	$	194,350	$	189,518

At June 30, 2012 and December 31, 2011, investment securities with a carrying value of $473,820 and $543,705, respectively, were pledged to secure other borrowings, public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law.

For the six months ended June 30, 2012, there were neither gross gains nor gross losses realized on available for sale investments. For the six months ended June 30, 2011, gross gains of $2,739 and gross losses of $0 were realized on available for sale investments in other noninterest income. The cost of investments sold is calculated using the specific identification method.

The gross unrealized losses and fair value of the Company’s investments with unrealized losses, aggregated by investment category and the length of time individual securities have been in a continuous unrealized loss position, at June 30, 2012 and December 31, 2011 are as follows:



	Less Than 12 Months				12 Months or Greater				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2012
Debt securities:
Residential CMO securities - nonagency	$	501,091	$	7,243	$	393,745	$	21,381	$	894,836	$	28,624
Asset-backed securities	—		—		7,616		2,938		7,616		2,938
Corporate securities	—		—		2,916		2,071		2,916		2,071
Total debt securities	$	501,091	$	7,243	$	404,277	$	26,390	$	905,368	$	33,633
December 31, 2011
Debt securities:
Residential CMO securities - nonagency	$	573,928	$	16,646	$	226,507	$	24,191	$	800,435	$	40,837
Residential CMO securities - agency	6,224		78		—		—		6,224		78
Asset-backed securities	—		—		7,477		3,096		7,477		3,096
Corporate securities	—		—		2,404		2,583		2,404		2,583
Total debt securities	$	580,152	$	16,724	$	236,388	$	29,870	$	816,540	$	46,594

The Company had unrealized losses at June 30, 2012 and December 31, 2011 on residential CMO securities, ABS and corporate securities. These unrealized losses are primarily attributable to weak market conditions. Based on the nature of impairment, these unrealized losses are considered temporary. The Company does not intend to sell nor is it more likely than not that it will be required to sell these investments before their anticipated recovery.

At June 30, 2012, the Company had 72 debt securities in an unrealized loss position. A total of 27 were in an unrealized loss position for less than 12 months, all of which were residential CMO securities. Of these, 95% in amortized cost attained credit ratings of A or better. The remaining 45 debt securities were in an unrealized loss position for 12 months or longer. These 45 securities consisted of three ABS, one corporate security and 41 nonagency residential CMO securities. Of these debt securities in an unrealized loss position, 65% in amortized cost had credit ratings of A or better.

At December 31, 2011, the Company had 71 debt securities in an unrealized loss position. A total of 42 were in an unrealized loss position for less than 12 months, all of which were residential CMO securities. Of these, 84% in amortized cost had credit ratings of A or better. The remaining 29 debt securities were in an unrealized loss position for 12 months or longer. These 29 securities consisted of three ABS, one corporate security and 25 nonagency residential CMO securities. Of these 25 nonagency securities, 68% in amortized cost had credit ratings of A or better.

In assessing whether these securities were impaired, the Company performed cash flow analyses that projected prepayments, default rates and loss severities on the collateral supporting each security. If the net present value of the investment is less than the amortized cost, the difference would be recognized in earnings as a credit-related impairment, while the remaining difference between the fair value and the amortized cost is recognized in AOCI. The Company recognized credit-related OTTI losses $685 in other noninterest income for the six months ended June 30, 2011 primarily due to a continued decline in the collateral value of a corporate security.

There were no OTTI losses recognized on available for sale or held to maturity securities during the six months ended June 30, 2012 or for the three months ended June 30, 2011.

Information regarding impairment related to credit loss recognized on securities in other noninterest income and impairment related to all other factors recognized in AOCI for the six months ended June 30, 2011 are as follows:



Debt securities:	Impairment Related to Credit Loss		Impairment Related to All Other Factors		Total Impairment
Balance, January 1, 2011	3,354		502		3,856
Additional charges on securities for which OTTI was previously recognized	685		(499	)	186
Reduction for securities on which a reduction in value was taken against earnings ⁽¹⁾	(4,039	)	—		(4,039	)
Accretion of impairment related to all other factors	—		(3	)	(3	)
Balance, June 30, 2011	—		—		—


(1)	The value for these securities for which impairment is related to credit loss were written down to a zero value during 2011 reflecting that the Company does not anticipate the ability to collect cash flows on these investments at any point in the future. This reduction in value was taken through earnings and thus, is reflected in the rollforward as a reduction of the credit loss balance to zero.

During the three and six months ended June 30, 2012 and 2011, interest and dividend income on investment securities was comprised of the following:



	Three Months Ended June 30,				Six Months Ended June 30,
	2012		2011		2012		2011
Interest income on available for sale securities	$	18,728	$	27,457	$	37,599	$	53,085
Interest income on held to maturity securities	1,409		1,637		2,809		2,009
Other interest and dividend income	562		239		840		483
	$	20,699	$	29,333	$	41,248	$	55,577

All investment interest income recognized by the Company during the three and six months ended June 30, 2012 and 2011 was fully taxable.