Securities

12 Months Ended

Dec. 31, 2011

Securities [Abstract]

SECURITIES

(3)    SECURITIES

Trading securities, at fair value, consist of the following:

	At December 31,
	2011		2010
	Fair Value
	(Dollars In Thousands)
Cash Equivalents	$	93	$	111
Fixed Income Securities		2,242		1,584
Marketable Equity Securities		5,905		5,902
Total	$	8,240	$	7,597

The majority of trading securities are held solely for the purpose of funding certain executive nonqualified retirement obligations (see Note 14 “Employee Benefit Plans”). The remainder of the portfolio is comprised of equity securities, which consists of a fund whose investment objective is to invest in geographically specific private placement debt securities designed to support underlining economic activities such as community development and affordable housing. The Company realized a gain on trading activities of $122,000 in 2011, a gain of $150,000 in 2010, and a loss of $215,000 in 2009, which have been included in other income.

The following table presents a summary of the amortized cost, gross unrealized holding gains and losses, other-than-temporary impairment recorded in other comprehensive income and fair value of securities available for sale and securities held to maturity for the periods indicated:

	December 31, 2011												December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Unrealized Losses Other			Other-Than- Temporary Impairment			Fair Value		Amortized Cost		Gross Unrealized Gains		Unrealized Losses Other			Other-Than- Temporary Impairment			Fair Value
	(Dollars In Thousands)												(Dollars In Thousands)
Available for Sale Securities
U.S. Treasury Securities	$	—	$	—	$	—		$	—		$	—	$	715	$	2	$	—		$	—		$	717
Agency Mortgage-Backed Securities		222,349		16,042		—			—			238,391		296,821		16,481		—			—			313,302
Agency Collateralized Mortgage Obligations		52,927		874		—			—			53,801		45,426		779		(70	)		—			46,135
Private Mortgage-Backed Securities		6,215		—		—			(105	)		6,110		10,408		—		—			(154	)		10,254
Single Issuer Trust Preferred Securities Issued by Banks		5,000		—		(790	)		—			4,210		5,000		—		(779	)		—			4,221
Pooled Trust Preferred Securities Issued by Banks and Insurers		8,505		—		(2,518	)		(3,167	)		2,820		8,550		—		(2,309	)		(3,413	)		2,828
Total Available for Sale Securities	$	294,996	$	16,916	$	(3,308	)	$	(3,272	)	$	305,332	$	366,920	$	17,262	$	(3,158	)	$	(3,567	)	$	377,457
Held to Maturity Securities
U.S. Treasury Securities	$	1,014	$	103	$	—		$	—		$	1,117	$	—	$	—	$	—		$	—		$	—
Agency Mortgage-Backed Securities		109,553		4,406		—			—			113,959		95,697		1,348		(1,778	)		—			95,267
Agency Collateralized Mortgage Obligations		77,804		2,494		—			—			80,298		89,823		600		(1,691	)		—			88,732
State, County, and Municipal Securities		3,576		34		—			—			3,610		10,562		167		—			—			10,729
Single Issuer Trust Preferred Securities Issued by Banks		8,000		15		(669	)		—			7,346		6,650		19		(163	)		—			6,506
Corporate Debt Securities		5,009		155		—			—			5,164		—		—		—			—			—
Total Held to Maturity Securities	$	204,956	$	7,207	$	(669	)	$	—		$	211,494	$	202,732	$	2,134	$	(3,632	)	$	—		$	201,234
TOTAL	$	499,952	$	24,123	$	(3,977	)	$	(3,272	)	$	516,826	$	569,652	$	19,396	$	(6,790	)	$	(3,567	)	$	578,691

When securities are sold, the adjusted cost of the specific security sold is used to compute the gain or loss on the sale. The following table shows the gross realized gains and losses on available for sale securities for the periods indicated:

	As of December 31,
	2011		2010		2009
	(Dollars in Thousands)
Gross Gains on Available for Sale Securities	$	723	$	458	$	1,379
Gross Losses on Available for Sale Securities		—		—		(25	)
NET GAINS (LOSSES) ON AVAILABLE FOR SALE SECURITIES	$	723	$	458	$	1,354

The actual maturities of certain securities may differ from the contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. A schedule of the contractual maturities of securities available for sale and securities held to maturity as of December 31, 2011 is presented below:

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Dollars In Thousands)				(Dollars In Thousands)
Due in one year or less	$	—	$	—	$	330	$	334
Due from one year to five years		2,553		2,717		7,891		8,099
Due from five to ten years		57,454		61,064		2,618		2,806
Due after ten years		234,989		241,551		194,117		200,255
Total	$	294,996	$	305,332	$	204,956	$	211,494

Inclusive in the table above is $13.0 million and $24.3 million, of callable securities in the Company’s investment portfolio at December 31, 2011 and 2010, respectively.

At December 31, 2011 and 2010, investment securities carried at $389.7 million and $350.3 million, respectively, were pledged to secure public deposits, assets sold under repurchase agreements, treasury tax and loan notes, letters of credit, and for other purposes.

At December 31, 2011 and 2010, the Company had no investments in obligations of individual states, counties, or municipalities, which exceeded 10% of stockholders’ equity.

Other-Than-Temporary Impairment

The Company continually reviews investment securities for the existence of OTTI, taking into consideration current market conditions, the extent and nature of changes in fair value, issuer rating changes and trends, the credit worthiness of the obligor of the security, volatility of earnings, current analysts’ evaluations, the Company’s intent to sell the security, or whether it is more likely than not that the Company will be required to sell the debt security before its anticipated recovery, as well as other qualitative factors. The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value is not necessarily favorable, or that there is a lack of evidence to support a realizable value equal to or greater than the carrying value of the investment.

The following tables show the gross unrealized losses and fair value of the Company’s investments in an unrealized loss position, which the Company has not deemed to be OTTI, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

			At December 31, 2011
			Less than 12 months					12 months or longer					Total
Description of Securities	# of holdings		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
			(Dollars In Thousands)
Agency Mortgage-Backed Securities		0	$	—	$	—		$	—	$	—		$	—	$	—
Agency Collateralized Mortgage Obligations		0		—		—			—		—			—		—
Single Issuer Trust Preferred Securities Issued by Banks and Insurers		2		—		—			8,617		(1,459	)		8,617		(1,459	)
Pooled Trust Preferred Securities Issued by Banks and Insurers		2		—		—			2,117		(2,518	)		2,117		(2,518	)
Total Temporarily Impaired Securities		4	$	—	$	—		$	10,734	$	(3,977	)	$	10,734	$	(3,977	)
			At December 31, 2010
			Less than 12 months					12 months or longer					Total
Description of Securities	# of holdings		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
			(Dollars In Thousands)
Agency Mortgage-Backed Securities		4	$	48,956	$	(1,778	)	$	—	$	—		$	48,956	$	(1,778	)
Agency Collateralized Mortgage Obligations		6		72,631		(1,761	)		—		—			72,631		(1,761	)
Single Issuer Trust Preferred Securities Issued by Banks and Insurers		2		4,950		(163	)		4,221		(779	)		9,171		(942	)
Pooled Trust Preferred Securities Issued by Banks and Insurers		2		—		—			2,364		(2,309	)		2,364		(2,309	)
Total Temporarily Impaired Securities		14	$	126,537	$	(3,702	)	$	6,585	$	(3,088	)	$	133,122	$	(6,790	)

The Company does not intend to sell these investments and has determined based upon available evidence that it is more likely than not that the Company will not be required to sell the security before the recovery of its amortized cost basis. As a result, the Company does not consider these investments to be OTTI. The Company made this determination by reviewing various qualitative and quantitative factors regarding each investment category, such as current market conditions, extent and nature of changes in fair value, issuer rating changes and trends, volatility of earnings, and current analysts’ evaluations.

As a result of the Company’s review of these qualitative and quantitative factors, the causes of the impairments listed in the table above by category are as follows at December 31, 2011:

• Single Issuer Trust Preferred Securities:    This portfolio consists of two securities, both of which are below investment grade. The unrealized loss on these securities is attributable to the illiquid nature of the trust preferred market in the current economic environment. Management evaluates various financial metrics for each of the issuers, including regulatory capital ratios of issuers.

• Pooled Trust Preferred Securities:    This portfolio consists of two below investment grade securities of which one is performing while the other is deferring payments as contractually allowed. The unrealized loss on these securities is attributable to the illiquid nature of the trust preferred market and the significant risk premiums required in the current economic environment. Management evaluates collateral credit and instrument structure, including current and expected deferral and default rates and timing. In addition, discount rates are determined by evaluating comparable spreads observed currently in the market for similar instruments.

Management monitors the following issuances closely for impairment due to the history of OTTI losses recorded within these classes of securities. Management has determined that the securities possess characteristics which in the current economic environment could lead to further credit related OTTI charges. The following tables summarize pertinent information as of December 31, 2011, that was considered by management in determining if OTTI existed:

	Class		Amortized Cost(1)		Gross Unrealized Gain/(Loss)			Non-Credit Related Other- Than-Temporary Impairment			Fair Value		Total Cumulative Credit Related Other- Than- Temporary Impairment			Total Cumulative Other- Than- Temporary impairment to date
	(Dollars in Thousands)
Pooled Trust Preferred Securities
Pooled Trust Preferred Security A		C1	$	1,283	$	—		$	(1,139	)	$	144	$	(3,676	)	$	(4,815	)
Pooled Trust Preferred Security B		D		—		—			—			—		(3,481	)		(3,481	)
Pooled Trust Preferred Security C		C1		506		—			(390	)		116		(482	)		(872	)
Pooled Trust Preferred Security D		D		—		—			—			—		(990	)		(990	)
Pooled Trust Preferred Security E		C1		2,081		—			(1,638	)		443		(1,368	)		(3,006	)
Pooled Trust Preferred Security F		B		1,891		(1,322	)		—			569		—			—
Pooled Trust Preferred Security G		A1		2,744		(1,196	)		—			1,548		—			—
TOTAL POOLED TRUST PREFERRED SECURITIES			$	8,505	$	(2,518	)	$	(3,167	)	$	2,820	$	(9,997	)	$	(13,164	)
Private Mortgage-Backed Securities
Private Mortgage-Backed Securities — One		2A1	$	3,189	$	—		$	(140	)	$	3,049	$	(689	)	$	(829	)
Private Mortgage-Backed Securities — Two		A19		3,026		—			35			3,061		(85	)		(50	)
TOTAL PRIVATE MORTGAGE-BACKED SECURITIES			$	6,215	$	—		$	(105	)	$	6,110	$	(774	)	$	(879	)
TOTAL			$	14,720	$	(2,518	)	$	(3,272	)	$	8,930	$	(10,771	)	$	(14,043	)

(1) The amortized cost reflects previously recorded credit related OTTI charges recognized in earnings for the applicable securities.

	Class		Number of Performing Banks and Insurance Cos. in Issuances (Unique)		Current Deferrals/ Defaults/ Losses (As a % of Original Collateral)			Total Projected Defaults/ Losses (as a % of Performing Collateral)			Excess Subordination (After Taking into Account Best Estimate of Future Deferrals/ Defaults/ Losses)(1)			Lowest credit Ratings to date(2)
Pooled Trust Preferred Securities
Pooled Trust Preferred Security A		C1		56		34.39	%		22.20	%		0.00	%	C (Fitch & Moody’s)
Pooled Trust Preferred Security B		D		56		34.39	%		22.20	%		0.00	%	C (Fitch)
Pooled Trust Preferred Security C		C1		50		32.95	%		20.43	%		0.70	%	C (Fitch & Moody’s)
Pooled Trust Preferred Security D		D		50		32.95	%		20.43	%		0.00	%	C (Fitch)
Pooled Trust Preferred Security E		C1		50		28.26	%		17.21	%		1.61	%	C (Fitch & Moody’s)
Pooled Trust Preferred Security F		B		33		28.14	%		24.36	%		26.79	%	CC (Fitch)
Pooled Trust Preferred Security G		A1		33		28.14	%		24.36	%		52.19	%	CCC+ (S&P)
Private Mortgage-Backed Securities
Private Mortgage-Backed Securities — One		2A1		N/A		4.14	%		13.47	%		0.00	%	C (Fitch)
Private Mortgage-Backed Securities — Two		A19		N/A		2.63	%		5.78	%		0.00	%	B3 (Moody’s)

(1) Excess subordination represents the additional default/losses in excess of both current and projected defaults/losses that the security can absorb before the security experiences any credit impairment.

(2) The Company reviewed credit ratings provided by S&P, Moody’s and Fitch in its evaluation of issuers.

Per review of the factors outlined above, seven of the securities shown in the table above were deemed to be OTTI. The remaining securities were not deemed to be OTTI as the Company does not intend to sell these investments and has determined, based upon available evidence, that it is more likely than not that the Company will not be required to sell the security before the recovery of its amortized cost basis.

The following table shows the total OTTI that the Company recorded for the periods indicated:

	For the Years Ended December 31,
	2011			2010			2009
	(Dollars in Thousands)
Gross Change in OTTI Recorded on Certain Investments (Gain/(Losses))	$	53		$	497		$	(7,382	)
Portion of OTTI Gains (Losses) Recognized in OCI		(296	)		(831	)		(1,576	)
Total Credit Related OTTI Losses Recognized in Earnings	$	(243	)	$	(334	)	$	(8,958	)

The following table shows the cumulative credit related component of OTTI for the periods indicated:

	2011			2010			2009
	(Dollars in Thousands)
Balance at January 1,	$	(10,528	)	$	(10,194	)	$	(1,236	)
Add:
Incurred on Securities not Previously Impaired		—			(85	)		(3,993	)
Incurred on Securities Previously Impaired		(243	)		(249	)		(4,965	)
Less:
Realized Gain/Loss on Sale of Securities		—			—			—
Reclassification Due to Changes in Company’s Intent		—			—			—
Increases in Cash Flow Expected to be Collected		—			—			—
Balance at December 31,	$	(10,771	)	$	(10,528	)	$	(10,194	)