XML 70 R10.htm IDEA: XBRL DOCUMENT v2.4.0.6
Securities
 9 Months Ended
Sep. 30, 2012
Securities [Abstract]  
Securities
2. Securities

The Company’s securities available for sale portfolio is summarized as follows:

 

                                 

(Dollars amounts in thousands)

   Amortized
cost		     Unrealized
gains		     Unrealized
losses		     Fair
value		  

September 30, 2012:

                                

Trust preferred securities

   $ 45,893     $ 353     $ (8,587 )    $ 37,659  

Municipal securities

     178,281       14,594       (239 )      192,636  

Equity securities

     1,235       700       —         1,935  

Corporate bonds

     207,033       6,762       (1,712 )      212,083  

Mortgage-backed securities

                                

U.S. sponsored entities

     645,785       39,549       —         685,334  

Private label

     6,807       193       (32 )      6,968  
   

 

 

    

 

 

    

 

 

    

 

 

  

Subtotal mortgage-backed securities

     652,592       39,742       (32 )      692,302  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total securities

   $ 1,085,034     $ 62,151     $ (10,570 )    $ 1,136,615  
   

 

 

    

 

 

    

 

 

    

 

 

  

December 31, 2011:

                                

Trust preferred securities

   $ 45,894     $ 265     $ (8,615 )    $ 37,544  

Municipal securities

     174,288       10,427       (230 )      184,485  

Equity securities

     1,754       351       (2 )      2,103  

Corporate bonds

     165,923       1,784       (2,928 )      164,779  

Mortgage-backed securities

                                

U.S. sponsored entities

     694,674       37,636       (8 )      732,302  

Private label

     8,964       241       (302 )      8,903  
   

 

 

    

 

 

    

 

 

    

 

 

  

Subtotal mortgage-backed securities

     703,638       37,877       (310 )      741,205  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total securities

   $ 1,091,497     $ 50,704     $ (12,085 )    $ 1,130,116  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

The following table shows the Company’s investments gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2012:

 

                                                                         
As of September 30, 2012  
       
    Less than 12 Months     12 Months or more     Total  
(Dollars amounts in thousands)   # of
Securities		     Fair Value     Unrealized
losses		     # of
Securities		     Fair Value     Unrealized
losses		     # of
Securities		     Fair Value     Unrealized
losses		  

Trust preferred securities

     —       $ —       $ —         9     $ 35,822     $ 8,587       9     $ 35,822     $ 8,587  

Municipal securities

     2       3,005       239       —         —         —         2       3,005       239  

Corporate bonds

     1       3,800       2       6       23,289       1,710       7       27,089       1,712  

Mortgage-backed securities

                                                                        

Private label

     —         —         —         1       1,279       32       1       1,279       32  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

     3     $ 6,805     $ 241       16     $ 60,390     $ 10,329       19     $ 67,195     $ 10,570  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The following table shows the Company’s investments gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2011:

 

                                                                         
As of December 31, 2011  
       
    Less than 12 Months     12 Months or more     Total  
(Dollars amounts in thousands)   # of
Securities		     Fair Value     Unrealized
losses		     # of
Securities		     Fair Value     Unrealized
losses		     # of
Securities		     Fair Value     Unrealized
losses		  

Trust preferred securities

     —       $ —       $ —         9     $ 35,789     $ 8,615       9     $ 35,789     $ 8,615  

Municipal securities

     2       3,094       149       3       2,627       81       5       5,721       230  

Equity securities

     —         —         —         1       130       2       1       130       2  

Corporate bonds

     27       91,046       2,928       —         —         —         27       91,046       2,928  

Mortgage-backed securities

                                                                        

U.S. sponsored entities

     1       4,596       8       —         —         —         1       4,596       8  

Private label

     3       3,084       302       —         —         —         3       3,084       302  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Subtotal mortgage-backed securities

     4       7,680       310       —         —         —         4       7,680       310  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

     33     $ 101,820     $ 3,387       13     $ 38,546     $ 8,698       46     $ 140,366     $ 12,085  
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The Company primarily invests in mortgage-backed securities, variable and fixed rate corporate bonds, municipal bonds, trust preferred securities and to a lesser extent equity securities. The policy of the Company is to recognize other than temporary impairment (OTTI) on equity securities where the fair value has been significantly below cost for three consecutive quarters. Declines in the fair value of the debt securities that can be attributed to specific adverse conditions affecting the credit quality of the investment would be recorded as OTTI and charged to earnings. In order to determine if a decline in fair value is other than temporary, the Company reviews corporate ratings of the investment, analyst reports and SEC filings of the issuers. For fixed maturity investments with unrealized losses due to interest rates where the Company expects to recover the entire amortized cost basis of the security, declines in value below cost are not assumed to be other than temporary. The Company reviews its position quarterly and has asserted that at September 30, 2012, the declines outlined in the above table represent temporary declines due to changes in interest rates and are not reflections of impairment in the credit quality of the securities. Additionally, the Company does not intend to sell the investment and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis.

The Company reviews investment in debt securities on an ongoing basis for the presence of OTTI with formal reviews performed quarterly. Credit-related OTTI losses on individual securities are recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in accumulated other comprehensive income. There were no OTTI losses on individual securities during the third quarter of 2012. The $31,000 credit-related OTTI recognized during the second quarter 2012 consisted of $5,000 on a pooled trust preferred security having a book value of $503,000 and $26,000 on one of the Company’s equity investments in community banks that had experienced a decline in its fair value for the last several quarters. There was noncredit-related OTTI on these securities recognized in OCI during the second quarter of approximately $375,000.

One pooled trust preferred security has previously been determined to be other than temporarily impaired due solely to credit related factors. This security is a collateralized debt obligation currently comprised of trust preferred securities of 10 financial institutions and has a Moody’s rating of Ca, which is below investment grade. The Company utilized a discounted cash flow method to determine the amount of impairment. During this analysis, the Company determined that three of these financial institutions are currently deferring interest payments. In addition, four financial institutions have previously defaulted. Currently seven of the ten remaining financial institutions are performing. Two of the three financial institutions that are deferring interest payments as of September 2012 either lost money or broke even for the most recently reported quarter and had a Tier 1 Risk Ratio at or less than the required well capitalized institution level under prompt corrective action provisions of 6%. Also, there were three financial institutions (including two of the three deferrals) within this pool that the non-performing assets to loans plus real estate owned ratio was greater than 10%. One of the three financial institutions currently deferring interest payments was able to raise capital in 2010 and is anticipated to ultimately recover.

Because of the subprime crisis current markets for variable rate corporate trust preferred securities are illiquid. This includes the Company’s eight stand alone trust preferred securities and the Company’s one pooled trust preferred security. The Company used a discounted cash flow method to price these securities due to the lack of liquidity for resale of this investment type and the absence of reliable pricing information. This method is described more fully in footnote 9, “Fair Value”.

 

                         
As of September 30, 2012  
   
    Available for sale  
(Dollar amounts in thousands)   Weighted
Average Yield		     Amortized
cost		     Fair
value		  

Due in one year or less

     3.93 %    $ 21,514     $ 21,820  

Due from one year to five years

     3.18 %      174,718       181,660  

Due from five to ten years

     3.79 %      101,673       105,645  

Due after ten years

     3.44 %      785,894       825,555  
   

 

 

    

 

 

    

 

 

  
      3.44 %    $ 1,083,799     $ 1,134,680  
   

 

 

    

 

 

    

 

 

  

 

                         
As of December 31, 2011  
   
    Available for sale  
(Dollar amounts in thousands)   Weighted
Average Yield		     Amortized
cost		     Fair
value		  

Due in one year or less

     4.65 %    $ 43,232     $ 43,644  

Due from one year to five years

     3.62 %      106,858       107,452  

Due from five to ten years

     5.03 %      102,525       106,384  

Due after ten years

     3.74 %      837,128       870,533  
   

 

 

    

 

 

    

 

 

  
      3.89 %    $ 1,089,743     $ 1,128,013  
   

 

 

    

 

 

    

 

 

  

For purposes of the maturity table, mortgage backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on weighted-average contractual maturities of underlying collateral. The mortgage-backed securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

The proceeds from the sale of securities for the three month period ended September 30, 2012 were $316,000 resulting in gross realized gains of $197,000 and the proceeds from the sale of securities for the nine month period ended September 30, 2012 were $1.1 million resulting in gross realized gains of $464,000. The proceeds from the sale of securities for the three month period ended September 30, 2011 were $20.3 million resulting in gross realized gains of $406,000 and the proceeds from the sale of securities for the nine month period ended September 30, 2011 were $25.4 million resulting in gross realized gains of $937,000. There were no losses from the sale of securities during the three and nine month periods ended September 30, 2012 and 2011.