Securities

6 Months Ended

Jun. 30, 2011

Securities [Abstract]

Securities

Note 4 — Securities

During the second quarter of 2010, securities available for sale with a fair value of $315 million were transferred to held to maturity. The securities were transferred at their fair value on the date of transfer. The unrealized gain of $7.1 million on the transferred securities on the date of transfer is being amortized into interest revenue as an adjustment to the yield on those securities over the remaining life of the transferred securities. Securities are classified as held to maturity when management has the positive intent and ability to hold them until maturity. Securities held to maturity are carried at amortized cost.

The amortized cost, gross unrealized gains and losses and fair value of securities held to maturity at June 30, 2011, December 31, 2010 and June 30, 2010 are as follows (in thousands).

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
As of June 30, 2011
U.S. Government agencies	$	5,000	$	—	$	—	$	5,000
State and political subdivisions		49,122		1,823		292		50,653
Mortgage-backed securities (1)		317,456		6,184		62		323,578
Total	$	371,578	$	8,007	$	354	$	379,231
As of December 31, 2010
U.S. Government agencies	$	11,939	$	79	$	—	$	12,018
State and political subdivisions		47,007		416		1,005		46,418
Mortgage-backed securities (1)		206,861		2,700		9		209,552
Total	$	265,807	$	3,195	$	1,014	$	267,988
As of June 30, 2010
U.S. Government agencies	$	70,284	$	1,076	$	—	$	71,360
State and political subdivisions		26,246		252		7		26,491
Mortgage-backed securities (1)		225,618		4,046		18		229,646
Total	$	322,148	$	5,374	$	25	$	327,497

⁽¹⁾ All are residential type mortgage-backed securities

The cost basis, unrealized gains and losses, and fair value of securities available for sale at June 30, 2011, December 31, 2010 and June 30, 2010 are presented below (in thousands).

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
As of June 30, 2011
U.S. Government agencies	$	77,930	$	61	$	514	$	77,477
State and political subdivisions		25,569		1,207		4		26,772
Mortgage-backed securities (1)		1,556,910		35,991		283		1,592,618
Other		121,473		100		1,827		119,746
Total	$	1,781,882	$	37,359	$	2,628	$	1,816,613
As of December 31, 2010
U.S. Government agencies	$	99,969	$	67	$	1,556	$	98,480
State and political subdivisions		27,600		878		36		28,442
Mortgage-backed securities (1)		963,475		29,204		1,671		991,008
Other		107,811		192		1,516		106,487
Total	$	1,198,855	$	30,341	$	4,779	$	1,224,417
As of June 30, 2010
U.S. Government agencies	$	216,759	$	936	$	—	$	217,695
State and political subdivisions		32,998		1,001		14		33,985
Mortgage-backed securities (1)		864,141		37,730		1,103		900,768
Other		13,160		168		—		13,328
Total	$	1,127,058	$	39,835	$	1,117	$	1,165,776

⁽¹⁾ All are residential type mortgage-backed securities

The following table summarizes held to maturity securities in an unrealized loss position as of June 30, 2011, December 31, 2010 and June 30, 2010 (in thousands).

	Less than 12 Months				12 Months or More				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Loss		Fair Value		Loss		Fair Value		Loss
As of June 30, 2011
State and political subdivisions	$	10,160	$	292	$	—	$	—	$	10,160	$	292
Mortgage-backed securities		25,160		60		1,937		2		27,097		62
Total unrealized loss position	$	35,320	$	352	$	1,937	$	2	$	37,257	$	354
As of December 31, 2010
State and political subdivisions	$	28,949	$	1,005	$	—	$	—	$	28,949	$	1,005
Mortgage-backed securities		1,951		9		—		—		1,951		9
Total unrealized loss position	$	30,900	$	1,014	$	—	$	—	$	30,900	$	1,014
As of June 30, 2010
State and political subdivisions	$	1,145	$	7	$	—	$	—	$	1,145	$	7
Mortgage-backed securities		1,963		18		—		—		1,963		18
Total unrealized loss position	$	3,108	$	25	$	—	$	—	$	3,108	$	25

The following table summarizes available for sale securities in an unrealized loss position as of June 30, 2011, December 31, 2010 and June 30, 2010 (in thousands).

	Less than 12 Months				12 Months or More				Total
			Unrealized				Unrealized				Unrealized
	Fair Value		Loss		Fair Value		Loss		Fair Value		Loss
As of June 30, 2011
U.S. Government agencies	$	54,482	$	514	$	—	$	—	$	54,482	$	514
State and political subdivisions		301		—		10		4		311		4
Mortgage-backed securities		169,907		283		—		—		169,907		283
Other		97,145		1,827		—		—		97,145		1,827
Total unrealized loss position	$	321,835	$	2,624	$	10	$	4	$	321,845	$	2,628
As of December 31, 2010
U.S. Government agencies	$	68,412	$	1,556	$	—	$	—	$	68,412	$	1,556
State and political subdivisions		1,082		30		12		6		1,094		36
Mortgage-backed securities		59,505		1,630		2,799		41		62,304		1,671
Other		69,985		1,516		—		—		69,985		1,516
Total unrealized loss position	$	198,984	$	4,732	$	2,811	$	47	$	201,795	$	4,779
As of June 30, 2010
State and political subdivisions	$	300	$	2	$	401	$	12	$	701	$	14
Mortgage-backed securities		19,499		456		25,639		647		45,138		1,103
Total unrealized loss position	$	19,799	$	458	$	26,040	$	659	$	45,839	$	1,117

At June 30, 2011, there were 28 available for sale securities and 13 held to maturity securities that were in an unrealized loss position. United does not intend to sell nor believes it will be required to sell securities in an unrealized loss position prior to the recovery of their amortized cost basis. Unrealized losses at June 30, 2011 were primarily attributable to changes in interest rates.

Management evaluates securities 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 the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, among other factors. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analyst’s reports. During the six months ended June 30, 2010, United recorded impairment losses of $950,000 on investments in financial institutions that showed evidence of other-than-temporary impairment. No impairment losses were identified in the first six months of 2011.

Realized gains and losses are derived using the specific identification method for determining the cost of securities sold. The following table summarizes securities sales activity for the three and six month periods ended June 30, 2011 and 2010 (in thousands).

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2011		2010		2011		2010
Proceeds from sales	$	55,363	$	—	$	106,603	$	40,817
Gross gains on sales	$	838	$	—	$	1,169	$	1,260
Gross losses on sales		55		—		331		249
Impairment losses		—		—		—		950
Net gains on sales of securities	$	783	$	—	$	838	$	61
Income tax expense attributable to sales	$	305	$	—	$	326	$	24

Securities with a carrying value of $2.11 billion, $1.43 billion, and $1.12 billion were pledged to secure public deposits, FHLB advances and other secured borrowings at June 30, 2011, December 31, 2010 and June 30, 2010.

The amortized cost and fair value of held to maturity and available for sale securities at June 30, 2011, by contractual maturity, are presented in the following table (in thousands).

	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. Government agencies:
5 to 10 years	$	64,350	$	64,034	$	—	$	—
More than 10 years		13,580		13,443		5,000		5,000
		77,930		77,477		5,000		5,000
State and political subdivisions:
Within 1 year		4,715		4,781		—		—
1 to 5 years		14,682		15,485		2,025		2,078
5 to 10 years		5,324		5,627		21,273		22,336
More than 10 years		848		879		25,824		26,239
		25,569		26,772		49,122		50,653
Other:
1 to 5 years		18,475		17,962		—		—
5 to 10 years		99,546		99,033		—		—
More than 10 years		3,452		2,751		—		—
		121,473		119,746		—		—
Total securities other than mortgage-backed securities:
Within 1 year		4,715		4,781		—		—
1 to 5 years		33,157		33,447		2,025		2,078
5 to 10 years		169,220		168,694		21,273		22,336
More than 10 years		17,880		17,073		30,824		31,239
Mortgage-backed securities		1,556,910		1,592,618		317,456		323,578
	$	1,781,882	$	1,816,613	$	371,578	$	379,231

Expected maturities may differ from contractual maturities because issuers and borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.