Investment Securities (Tables)

9 Months Ended

Sep. 30, 2013

Unrealized gains on investment securities

The following tables present information related to the Corporation’s investment securities at September 30, 2013 and December 31, 2012.

	September 30, 2013
				Gross		Gross
		Amortized		Unrealized		Unrealized
		Cost		Gains		Losses		Fair Value
	(in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities		$	43,490	$	—	$	(1,795)	$	41,695
Federal agency obligations			20,939		110		(303)		20,746
Residential mortgage pass-through securities			50,070		1,022		(150)		50,942
Commercial mortgage pass-through securities			9,700		—		(182)		9,518
Obligations of U.S. states and political subdivisions			39,260		1,054		(37)		40,277
Trust preferred securities			20,635		125		(1,223)		19,537
Corporate bonds and notes			201,731		5,603		(2,099)		205,235
Asset-backed securities			16,019		209		—		16,228
Certificates of deposit			2,251		45		(1)		2,295
Equity securities			376		—		(89)		287
Mutual funds and money market funds			6,334		68		(15)		6,387
Total		$	410,805	$	8,236	$	(5,894)	$	413,147

Investment Securities Held-to-Maturity:
Federal agency obligations	$		10,892	$	284	$	—	$	11,176
Commercial mortgage pass-through securities			4,790		11		(46)		4,755
Obligations of U.S. states and political subdivisions			127,725		1,727		(3,561)		125,891
Corporate bonds and notes			10,079		128		(21)		10,186
Total	$		153,486	$	2,150	$	(3,628)	$	152,008

Total investment securities	$		564,291	$	10,386	$	(9,522)	$	565,155

	December 31, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Gains		Losses		Fair Value
	(in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	11,870	$	62	$	(23)	$	11,909
Federal agency obligations		20,207		333		(5)		20,535
Residential mortgage pass-through securities		52,400		1,385		(1)		53,784
Commercial mortgage pass-through securities		9,725		244		—		9,969
Obligations of U.S. states and political subdivisions		103,193		4,653		(132)		107,714
Trust preferred securities		22,279		144		(1,174)		21,249
Corporate bonds and notes		228,681		9,095		(371)		237,405
Collateralized mortgage obligations		2,120		—		—		2,120
Asset-backed securities		19,431		311		—		19,742
Certificates of deposit		2,854		21		(10)		2,865
Equity securities		535		—		(210)		325
Mutual funds and money market funds		9,145		68		(15)		9,198
Total	$	482,440	$	16,316	$	(1,941)	$	496,815
Investment Securities Held-to-Maturity:
Federal agency obligations	$	4,178	$	79	$	—	$	4,257
Commercial mortgage-backed securities		5,501		154		(5)		5,650
Obligations of U.S. states and political subdivisions		48,385		4,139		—		52,524
Total	$	58,064	$	4,372	$	(5)	$	62,431
Total investment securities	$	540,504	$	20,688	$	(1,946)	$	559,246

Investments classified by maturity date

The following table presents information for investment securities available-for-sale at September 30, 2013, based on scheduled maturities. Actual maturities can be expected to differ from scheduled maturities due to prepayment or early call options of the issuer.

	September 30, 2013
	Amortized
	Cost		Fair Value
	(in thousands)
Investment Securities Available-for-Sale :
Due in one year or less	$	9,690	$	9,719
Due after one year through five years		79,871		82,131
Due after five years through ten years		180,124		179,657
Due after ten years		74,640		74,506
Residential mortgage pass-through securities		50,070		50,942
Commercial mortgage pass-through securities		9,700		9,518
Equity securities		376		287
Mutual funds and money market funds		6,334		6,387
Total	$	410,805	$	413,147
Investment Securities Held-to-Maturity :
Due after one year through five years	$	13,962	$	14,041
Due after five years through ten years		10,274		10,353
Due after ten years		124,460		122,859
Commercial mortgage pass-through securities		4,790		4,755
Total	$	153,486	$	152,008

Total investment securities	$	564,291	$	565,155

Schedule of Realized Gains and Losses

Gross gains and losses from the sales of investment securities for the three and nine month periods ended September 30, 2013 and 2012 were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2013		2012		2013		2012
Gross gains on sales of investment securities	$	343	$	897	$	1,375	$	2,545
Gross losses on sales of investment securities		—		—		89		—
Net gains on sales of investment securities	$	343	$	897	$	1,286	$	2,545

Schedule of OTTI Charges for period

The following summarizes OTTI charges for the periods indicated.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2013		2012		2013		2012
Other than temporary impairment charges	$	—	$	32	$	—	$	60
Principal losses on a variable rate CMO		—		102		24		272
Total other-than-temporary impairment charges	$	—	$	134	$	24	$	332

Schedule of preferred security and associated ratings

The following table presents detailed information for each trust preferred security held by the Corporation at September 30, 2013 which has at least one rating below investment grade.

Deal Name	Single Issuer or Pooled	Class/ Tranche	Amortized Cost		Fair Value		Gross Unrealized Gain (Loss)		Lowest Credit Rating Assigned	Number of Banks Currently Performing	Deferrals and Defaults as % of Original Collateral	Expected Deferral/Defaults as % of Remaining Performing Collateral
	(dollars in thousands)
Countrywide Capital IV	Single	—	$	1,771	$	1,769	$	(2 )	BB+	1	None	None
Countrywide Capital V	Single	—		2,747		2,775		28	BB+	1	None	None
Countrywide Capital V	Single	—		250		253		3	BB+	1	None	None
Citigroup Cap IX	Single	—		992		1,002		10	BB	1	None	None
Citigroup Cap IX	Single	—		1,906		1,934		28	BB	1	None	None
Citigroup Cap XI	Single	—		246		248		2	BB	1	None	None
Nationsbank Cap Trust III	Single	—		1,573		1,276		(297)	BB+	1	None	None
Morgan Stanley Cap Trust IV	Single	—		2,500		2,446		(54)	BB+	1	None	None
Morgan Stanley Cap Trust IV	Single	—		1,742		1,710		(32)	BB+	1	None	None
Saturns — GS 2004-04	Single	—		535		509		(26)	BB+	1	None	None
Goldman Sachs	Single	—		1,000		967		(33)	BB+	1	None	None
Stifel Financial	Single	—		4,500		4,554		54	BBB-	1	None	None
ALESCO Preferred Funding VII	Pooled	C1		873		94		(779)	Ca	47 of 61 ⁽¹⁾	34.9 %	33.5 %
Total			$	20,635	$	19,537	$	(1,098)

(1)

Includes banks and insurance companies.

Credit loss portion of OTTI recognized in earnings on debt securities

Credit Loss Portion of OTTI Recognized in Earnings on Debt Securities

	Nine Months		Year
	Ended		Ended
	September 30,		December
	2013		31, 2012
	(in thousands)
Balance of credit-related OTTI at January 1,	$	4,450	$	6,539
Addition:
Credit losses on investment securities for which other-than-temporary impairment was not previously recognized		24		870
Reduction:
Credit losses on investment securities sold during the period		(2,114)		(2,959)
Balance of credit-related OTTI at period end	$	2,360	$	4,450

Schedule of unrealized losses not recognized in income

The following tables indicate gross unrealized losses not recognized in income and fair value, aggregated by investment category and the length of time individual securities have been in a continuous unrealized loss position at September 30, 2013 and December 31, 2012:

	September 30, 2013
	Total				Less than 12 Months				12 Months or Longer
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	41,695	$	(1,795)	$	41,695	$	(1,795)	$	—	$	—
Federal agency obligations		13,391		(303)		13,391		(303)		—		—
Residential mortgage pass-through securities		7,695		(150)		7,695		(150)		—		—
Commercial mortgage pass-through securities		9,519		(182)		9,519		(182)		—		—
Obligations of U.S. states and political subdivisions		2,209		(37)		2,209		(37)		—		—
Trust preferred securities		8,772		(1,223)		7,401		(147)		1,371		(1,076)
Corporate bonds and notes		44,427		(2,099)		42,463		(2,064)		1,964		(35)
Certificates of deposit		194		(1)		194		(1)		—		—
Equity securities		287		(89)		—		—		287		(89)
Mutual funds and money market funds		985		(15)		—		—		985		(15)
Total		129,174		(5,894)		124,567		(4,679)		4,607		(1,215)
Investment Securities Held-to-Maturity:
Commercial mortgage pass-through securities		1,762		(46)		1,428		(44)		334		(2)
Obligations of U.S. states and political subdivisions		63,559		(3,561)		63,559		(3,561)		—		—
Corporate bonds and notes		5,007		(21)		5,007		(21)		—		—
Total		70,328		(3,628)		69,994		(3,626)		334		(2)
Total Temporarily Impaired Securities	$	199,502	$	(9,522)	$	194,561	$	(8,305)	$	4,941	$	(1,217)

	December 31, 2012
	Total				Less than 12 Months				12 Months or Longer
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
Investment Securities Available-for-Sale:
U.S. Treasury and agency securities	$	4,460	$	(23)	$	4,460	$	(23)	$	—	$	—
Federal agency obligation		877		(5)		877		(5)		—		—
Residential mortgage pass-through securities		1,669		(1)		1,669		(1)		—		—
Obligations of U.S. states and political subdivisions		18,360		(132)		18,360		(132)		—		—
Trust preferred securities		11,740		(1,174)		10,494		(18)		1,246		(1,156)
Corporate bonds and notes		26,440		(371)		18,244		(134)		8,196		(237)
Certificates of deposit		388		(10)		388		(10)		—		—
Equity securities		325		(210)		—		—		325		(210)
Mutual funds and money market funds		985		(15)		—		—		985		(15)
Total		65,244		(1,941)		54,492		(323)		10,752		(1,618)
Investment Securities Held-to-Maturity:
Commercial mortgage-backed securities		932		(5)		932		(5)		—		—
Total		932		(5)		932		(5)		—		—
Total Temporarily Impaired Securities	$	66,176	$	(1,946)	$	55,424	$	(328)	$	10,752	$	(1,618)

- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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