Securities

3 Months Ended

Mar. 31, 2013

Securities [Abstract]

SECURITIES

NOTE D — SECURITIES

The amortized cost and fair value of securities available for sale and held for investment at March 31, 2013 and December 31, 2012 are summarized as follows:

	March 31, 2013
(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	$	1,200	$	2	$	0		$	1,202
Mortgage-backed securities of U.S. Government Sponsored Entities		175,283		3,022		(904	)		177,401
Collateralized mortgage obligations of U.S. Government Sponsored Entities		366,890		2,201		(1,219	)		367,872
Private collateralized mortgage obligations		92,643		1,194		(539	)		93,298
Obligations of state and political subdivisions		7,199		688		(2	)		7,885
Other		1,500		38		0			1,538
	$	644,715	$	7,145	$	(2,664	)	$	649,196

	December 31, 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	$	7	$	0		$	1,707
Mortgage-backed securities of U.S. Government Sponsored Entities		186,404		3,320		(469	)		189,255
Collateralized mortgage obligations of U.S. Government Sponsored Entities		352,731		2,430		(902	)		354,259
Private collateralized mortgage obligations		96,258		1,203		(530	)		96,931
Obligations of state and political subdivisions		847		51		0			898
	$	637,940	$	7,011	$	(1,901	)	$	643,050
SECURITIES HELD FOR INVESTMENT
Collateralized mortgage obligations of U.S. Government Sponsored Entities	$	4,687	$	0	$	(92	)	$	4,595
Private collateralized mortgage obligations		1,278		33		0			1,311
Obligations of state and political subdivisions		6,353		737		(3	)		7,087
Other		1,500		49		0			1,549
	$	13,818	$	819	$	(95	)	$	14,542

Management changed its intent to hold the securities held for investment during the first quarter 2013 and all securities were transferred to securities available for sale to allow more flexibility in managing interest rate risk. The net carrying amount of securities transferred was $13,818, and had net unrealized gains of $724, resulting in an increase to securities available for sale of $14,542. The net unrealized gains were recorded as a component of other comprehensive income during the quarter.

Proceeds from sales of securities during the three month period ended March 31, 2013 were $11,836,000 with gross gains of $101,000 and gross losses of $76,000. Proceeds from sales of securities during the three month period ended March 31, 2012 were $111,717,000 with gross gains of $3,374,000 and gross losses of $0.

Securities with a carrying and fair value of $92,959,000 at March 31, 2013 were pledged as collateral for United States Treasury deposits, and other public and trust deposits. Securities with a carrying value and fair value of $165,665,000 were pledged as collateral for repurchase agreements.

The amortized cost and fair value of securities at March 31, 2013, 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.

	Available for Sale
(Dollars in thousands)	Amortized Cost		Fair Value
Due in less than one year	$	1,200	$	1,202
Due after one year through five years		818		842
Due after five years through ten years		1,353		1,413
Due after ten years		5,028		5,630
		8,399		9,087
Mortgage-backed securities of Government Sponsored Entities		175,283		177,401
Collateralized mortgage obligations of Government Sponsored Entities		366,890		367,872
Private collateralized mortgage obligations		92,643		93,298
No contractual maturity		1,500		1,538
	$	644,715	$	649,196

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 March 31, 2013 and December 31, 2012, respectively.

	March 31, 2013
	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	$	46,580	$	(658	)	$	17,898	$	(246	)	$	64,478	$	(904	)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		188,789		(1,219	)		0		0			188,789		(1,219	)
Private collateralized mortgage obligations		28,118		(441	)		8,298		(98	)		36,416		(539	)
Obligations of state and political subdivisions		0		0			125		(2	)		125		(2	)
Total temporarily impaired securities	$	263,487	$	(2,318	)	$	26,321	$	(346	)	$	289,808	$	(2,664	)

	December 31, 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	$	54,289	$	(469	)	$	0	$	0		$	54,289	$	(469	)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		150,057		(901	)		4,593		(93	)		154,650		(994	)
Private collateralized mortgage obligations		29,969		(441	)		9,221		(89	)		39,190		(530	)
Obligations of state and political subdivisions		0		0			125		(3	)		125		(3	)
Total temporarily impaired securities	$	234,315	$	(1,811	)	$	13,939	$	(185	)	$	248,254	$	(1,996	)

Approximately $0.5 million of the unrealized losses pertain to private label securities secured by collateral originated in 2005 and prior. Their fair value is $36.4 million 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 adjustable rate mortgage 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 March 31, 2013, the Company also had $2.1 million of unrealized losses on mortgage backed securities of government sponsored entities having a fair value of $253.3 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase and higher prepayments compressing prices as a result of the Federal Reserve’s actions to maintain low interest rates. 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 movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

As of March 31, 2013, 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 March 31, 2013.

Included in other assets is $11.2 million of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. At March 31, 2013, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $11.2 million of cost method investment securities.