Securities

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

SECURITIES

NOTE H: SECURITIES

The amortized cost and fair value of securities available for sale and held for investment at September 30, 2012 and December 31, 2011 are summarized as follows:

	September 30, 2012
(Dollars in thousands)	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	1,700	$	11	$	0		$	1,711
Mortgage-backed securities of U.S. Government Sponsored Entities		169,569		4,057		(86	)		173,540
Collateralized mortgage obligations of U.S. Government Sponsored Entities		315,420		2,496		(1,029	)		316,887
Private collateralized mortgage obligations		93,277		2,012		(84	)		95,205
Obligations of state and political subdivisions		847		58		0			905
	$	580,813	$	8,634	$	(1,199	)	$	588,248
SECURITIES HELD FOR INVESTMENT
Collateralized mortgage obligations of U.S. Government Sponsored Entities	$	5,991	$	0	$	(105	)	$	5,886
Private collateralized mortgage obligations		1,406		37		0			1,443
Obligations of state and political subdivisions		6,659		787		(8	)		7,438
Other		1,500		67		0			1,567
	$	15,556	$	891	$	(113	)	$	16,334

	December 31, 2011
(Dollars in thousands)	Gross Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	1,699	$	25	$	0		$	1,724
Mortgage-backed securities of U.S. Government Sponsored Entities		135,665		2,819		(37	)		138,447
Collateralized mortgage obligations of U.S. Government Sponsored Entities		428,139		9,111		(316	)		436,934
Private collateralized mortgage obligations		73,247		330		(3,487	)		70,090
Obligations of state and political subdivisions		1,097		70		0			1,167
	$	639,847	$	12,355	$	(3,840	)	$	648,362
SECURITIES HELD FOR INVESTMENT
Collateralized mortgage obligations of U.S. Government Sponsored Entities	$	10,475	$	0	$	(136	)	$	10,339
Private collateralized mortgage obligations		1,840		40		0			1,880
Obligations of state and political subdivisions		6,662		570		0			7,232
Other		1,000		36		0			1,036
	$	19,977	$	646	$	(136	)	$	20,487

Proceeds from sales of securities during the nine month period ended September 30, 2012 were $248,509,000 with gross gains of $7,251,000 and gross losses of $214,000. Proceeds from sales of securities during the nine month period ended September 30, 2011 were $33,555,000 with gross gains of $153,000 and gross losses of $16,000.

Securities with a carrying value of $72,018,000 and fair value of $73,173,000 at September 30, 2012 were pledged as collateral for United States Treasury deposits, and other public and trust deposits. Securities with a carrying value and fair value of $143,741,000 were pledged as collateral for repurchase agreements.

The amortized cost and fair value of securities at September 30, 2012, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.

	Held for Investment				Available for Sale
(Dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in less than one year	$	0	$	0	$	1,700	$	1,711
Due after one year through five years		376		379		441		472
Due after five years through ten years		1,254		1,371		406		433
Due after ten years		5,029		5,688		0		0
		6,659		7,438		2,547		2,616
Mortgage-backed securities of Government Sponsored Entities		0		0		169,569		173,540
Collateralized mortgage obligations of Government Sponsored Entities		5,991		5,886		315,420		316,887
Private collateralized mortgage obligations		1,406		1,443		93,277		95,205
No contractual maturity		1,500		1,567		0		0
	$	15,556	$	16,334	$	580,813	$	588,248

The estimated fair value of a security is determined based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flows analyses, using observable market data where available. The tables below indicate the amount of securities with unrealized losses and period of time for which these losses were outstanding at September 30, 2012 and December 31, 2011, respectively.

	September 30, 2012
	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Mortgage-backed securities of U.S. Government Sponsored Entities	$	23,096	$	(86	)	$	0	$	0		$	23,096	$	(86	)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		149,926		(1,029	)		5,886		(105	)		155,812		(1,134	)
Private collateralized mortgage obligations		0		0			10,106		(84	)		10,106		(84	)
Obligations of state and political subdivisions		300		(6	)		125		(2	)		425		(8	)
Total temporarily impaired securities	$	173,322	$	(1,121	)	$	16,117	$	(191	)	$	189,439	$	(1,312	)

	December 31, 2011
	Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Mortgage-backed securities of U.S. Government Sponsored Entities	$	18,800	$	(37	)	$	0	$	0		$	18,800	$	(37	)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		59,913		(452	)		0		0			59,913		(452	)
Private collateralized mortgage obligations		32,615		(2,001	)		27,282		(1,486	)		59,897		(3,487	)
Total temporarily impaired securities	$	111,328	$	(2,490	)	$	27,282	$	(1,486	)	$	138,610	$	(3,976	)

Approximately $0.1 million of $1.3 million of the unrealized losses at September 30, 2012 pertain to private label securities secured by collateral originated in 2005 and prior. Their fair value is $10.1 million as of September 30, 2012 and is attributable to a combination of factors, including relative changes in interest rates since the time of purchase and decreased liquidity for investment securities in general. The collateral underlying these mortgage investments are 30- and 15-year fixed and 10/1 adjustable rate mortgages loans with low loan to values, subordination and historically have had minimal foreclosures and losses. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At September 30, 2012, the Company also had $1.2 million of unrealized losses on mortgage-backed securities of government sponsored entities having a fair value of $178.9 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase and decreased liquidity for investment securities in general. The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

As of September 30, 2012, the Company does not intend to sell nor is it anticipated that it would be required to sell any of its investment securities that have losses. Therefore, management does not consider any investment to be other-than-temporarily impaired at September 30, 2012.

Included in other assets was $11.7 million at September 30, 2012 of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. At September 30, 2012, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $11.7 million of cost method investment securities.