Note 3: Securities

Securities are classified as held to maturity when First Busey has the ability and management has the positive intent to hold those securities to maturity. Accordingly, they are stated at cost, adjusted for amortization of premiums and accretion of discounts. Securities are classified as available for sale when First Busey may decide to sell those securities due to changes in market interest rates, liquidity needs, changes in yields on alternative investments, and for other reasons. They are carried at fair value with unrealized gains and losses, net of taxes, reported in other comprehensive income.

The amortized cost, unrealized gains and losses and fair values of securities classified available for sale and held to maturity are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
September 30, 2013:	Cost		Gains		Losses			Value
	(dollars in thousands)
Available for sale
U.S. Treasury securities	$	103,024	$	385	$	(71	)	$	103,338
Obligations of U.S. government corporations and agencies	285,452		3,258		(341		)	288,369
Obligations of states and political subdivisions	292,492		3,258		(2,463		)	293,287
Residential mortgage-backed securities	185,584		4,802		(253		)	190,133
Corporate debt securities	25,407		115		(32		)	25,490
Total debt securities	891,959		11,818		(3,160		)	900,617
Mutual funds and other equity securities	4,650		2,155		—			6,805

Total	$	896,609	$	13,973	$	(3,160	)	$	907,422

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
September 30, 2013:	Cost		Gains		Losses		Value
	(dollars in thousands)
Held to maturity
Obligations of states and political subdivisions	$	838	$	6	$	—	$	844

Total	$	838	$	6	$	—	$	844

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2012:	Cost		Gains		Losses			Value
	(dollars in thousands)
Available for sale
U.S. Treasury securities	$	103,353	$	1,303	$	—		$	104,656
Obligations of U.S. government corporations and agencies	363,583		6,616		(5		)	370,194
Obligations of states and political subdivisions	274,350		6,176		(238		)	280,288
Residential mortgage-backed securities	210,139		7,576		—			217,715
Corporate debt securities	24,601		139		(26		)	24,714
Total debt securities	976,026		21,810		(269		)	997,567
Mutual funds and other equity securities	2,451		1,479		—			3,930

Total	$	978,477	$	23,289	$	(269	)	$	1,001,497

There were no held to maturity securities at December 31, 2012.

The amortized cost and fair value of debt securities available for sale and held to maturity as of September 30, 2013, by contractual maturity, are shown below. Mutual funds and other equity securities do not have stated maturity dates and therefore are not included in the following maturity summary. Mortgages underlying the residential mortgage-backed securities may be called or prepaid without penalties; therefore, actual maturities could differ from the contractual maturities. All residential mortgage-backed securities were issued by U.S. government agencies and corporations.

	Available for sale				Held to maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
	(dollars in thousands)				(dollars in thousands)
Due in one year or less	$	151,701	$	152,776	$	—	$	—
Due after one year through five years	478,362		481,436		234		235
Due after five years through ten years	182,805		185,574		496		499
Due after ten years	79,091		80,831		108		110
Total	$	891,959	$	900,617	$	838	$	844

Realized gains and losses related to sales of securities available for sale are summarized as follows:

	Three Months Ended September 30,
	2013		2012
	(dollars in thousands)
Gross security gains	$	82	$	511
Gross security (losses)	—		—
Net security gains	$	82	$	511

	Nine Months Ended September 30,
	2013		2012
	(dollars in thousands)
Gross security gains	$	82	$	576
Gross security (losses)	—		(1		)
Net security gains	$	82	$	575

The tax provision for the net realized gains was insignificant for the three and nine months ended September 30, 2013 and $0.2 million for the three and nine months ended September 30, 2012.

Investment securities with carrying amounts of $428.7 million and $489.1 million on September 30, 2013 and December 31, 2012, respectively, were pledged as collateral for public deposits, securities sold under agreements to repurchase and for other purposes as required or permitted by law.

Information pertaining to securities with gross unrealized losses at September 30, 2013 and December 31, 2012 aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

	Less than 12 months				Greater than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
September 30, 2013:	Value		Losses		Value		Losses		Value		Losses
	(dollars in thousands)
Available for sale
U.S. Treasury securities	$	36,520	$	71	$	—	$	—	$	36,520	$	71
Obligations of U.S. government corporations and agencies	25,264		341		—		—		25,264		341
Obligations of states and political subdivisions	116,930		2,399		4,582		64		121,512		2,463
Residential mortgage-backed securities	15,183		253		—		—		15,183		253
Corporate debt securities	9,354		32		—		—		9,354		32
Total temporarily impaired securities	$	203,251	$	3,096	$	4,582	$	64	$	207,833	$	3,160

	Less than 12 months				Greater than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
September 30, 2013:	Value		Losses		Value		Losses		Value		Losses
	(dollars in thousands)
Held to maturity
Obligations of states and political subdivisions (1)	$	183	$	—	$	—	$	—	$	183	$	—
Total temporarily impaired securities	$	183	$	—	$	—	$	—	$	183	$	—

(1) Unrealized loss was less than one thousand dollars.

	Less than 12 months				Greater than 12 months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2012:	Value		Losses		Value		Losses		Value		Losses
	(dollars in thousands)
Available for sale
Obligations of U.S. government corporations and agencies	$	10,155	$	5	$	—	$	—	$	10,155	$	5
Obligations of states and political subdivisions	37,958		189		3,311		49		41,269		238
Corporate debt securities	15,207		26		—		—		15,207		26
Total temporarily impaired securities	$	63,320	$	220	$	3,311	$	49	$	66,631	$	269

Management evaluates securities available for sale for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the length of time and extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and whether the Company has the intent to sell the security and it is more-likely-than-not we will have to sell the security before recovery of its cost basis.

The total number of securities in the investment portfolio in an unrealized loss position as of September 30, 2013 was 312, and represented a loss of 1.5% of the aggregate carrying value. Based upon a review of unrealized loss circumstances, the unrealized losses resulted from changes in market interest rates and liquidity, not from changes in the probability of receiving the contractual cash flows. The Company does not intend to sell the securities and it is more-likely-than-not that the Company will recover the amortized cost prior to being required to sell the securities. Full collection of the amounts due according to the contractual terms of the securities is expected; therefore, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2013.