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Investment Securities
12 Months Ended
Dec. 31, 2012
Investment Securities [Abstract]  
Investment Securities

 

Note 3:  Investment Securities

 

A summary of the amortized cost and fair values of investment securities follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortized

 

Gross Unrealized

 

Fair

(Dollars in thousands)

Cost

 

Gains

 

Losses

 

Value

At December 31, 2012

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

Obligations of state and political subdivisions

$

12,797 

 

$

862 

 

$

 -

 

$

13,659 

Total

$

12,797 

 

$

862 

 

$

 -

 

$

13,659 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

Federal agency securities

$

114,159 

 

$

1,474 

 

$

(19)

 

$

115,614 

Obligations of state and political subdivisions

 

34,754 

 

 

887 

 

 

(83)

 

 

35,558 

Residential mortgage-backed securities

 

200,310 

 

 

3,668 

 

 

(303)

 

 

203,675 

Asset-backed securities

 

7,794 

 

 

 -

 

 

(123)

 

 

7,671 

Equity securities

 

1,300 

 

 

497 

 

 

 -

 

 

1,797 

Total

$

358,317 

 

$

6,526 

 

$

(528)

 

$

364,315 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity:

 

 

 

 

 

 

 

 

 

 

 

Obligations of state and political subdivisions

$

15,252 

 

$

633 

 

$

 -

 

$

15,885 

Total

$

15,252 

 

$

633 

 

$

 -

 

$

15,885 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

Federal agency securities

$

64,524 

 

$

1,051 

 

$

(22)

 

$

65,553 

Obligations of state and political subdivisions

 

10,926 

 

 

196 

 

 

(19)

 

 

11,103 

Residential mortgage-backed securities

 

177,365 

 

 

4,889 

 

 

(107)

 

 

182,147 

Equity securities

 

1,054 

 

 

243 

 

 

 -

 

 

1,297 

Total

$

253,869 

 

$

6,379 

 

$

(148)

 

$

260,100 

 

Residential mortgage-backed securities consist of agency securities underwritten and guaranteed by Government National Mortgage Association (“Ginnie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”), and Federal National Mortgage Association (“Fannie Mae”). 

 

Securities with limited marketability, such as Federal Reserve Bank stock, Federal Home Loan Bank stock, and certain other investments, are carried at cost and included in other assets on our Consolidated Statement of Financial Condition.  Total investments carried at cost were $8.5 million and $10.5 million at December 31, 2012 and 2011, respectively.  There are no identified events or changes in circumstances that may have a significant adverse effect on the investments carried at cost.  

 

A comparison of the amortized cost and approximate fair value of our investment securities by maturity date at December 31, 2012 follows: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale

 

Held to Maturity

 

Amortized

 

Fair

 

Amortized

 

Fair

(Dollars in thousands)

Cost

 

Value

 

Cost

 

Value

One year or less

$

34,192 

 

$

34,302 

 

$

1,001 

 

$

1,002 

More than one year through five years

 

177,437 

 

 

181,420 

 

 

1,944 

 

 

1,981 

More than five years through ten years

 

133,135 

 

 

134,577 

 

 

6,416 

 

 

6,776 

More than ten years

 

13,553 

 

 

14,016 

 

 

3,436 

 

 

3,900 

Total

$

358,317 

 

$

364,315 

 

$

12,797 

 

$

13,659 

 

The foregoing analysis assumes that our residential mortgage-backed securities mature during the period in which they are estimated to prepay.  No other prepayment or repricing assumptions have been applied to our investment securities for this analysis. 

 

Gain or loss on sale or call of investments is based upon the specific identification method.  The 2012 gain on sales of investment securities was primarily the result of a single investment security held at cost. Sales of securities are as follows: 

 

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

2012

 

 

2011

 

 

2010

Proceeds from sales

$

6,588 

 

$

 -

 

$

57,782 

Gross realized gains

 

45 

 

 

 -

 

 

2,497 

Gross realized losses

 

(10)

 

 

 -

 

 

(3)

  

 

The following table shows securities with gross unrealized losses and their fair values by the length of time that the individual securities had been in a continuous unrealized loss position at December 31, 2012 and 2011.  Securities whose market values exceed cost are excluded from this table.     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuous Unrealized

 

 

 

 

 

 

Amortized cost of

 

Loss Existing for:

 

Fair value of

 

Number of

 

securities with

 

Less Than

 

More Than

 

securities with

(Dollars in thousands)

Securities

 

unrealized losses

 

12 Months

 

12 Months

 

unrealized losses

At December 31, 2012

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal agency securities

 

$

9,887 

 

$

(19)

 

$

 -

 

$

9,868 

Obligations of state and political subdivisions

 

 

10,457 

 

 

(83)

 

 

 -

 

 

10,374 

Residential mortgage-backed securities

23 

 

 

46,787 

 

 

(288)

 

 

(15)

 

 

46,484 

Asset-backed securities

 

 

7,794 

 

 

(123)

 

 

 -

 

 

7,671 

Total

41 

 

$

74,925 

 

$

(513)

 

$

(15)

 

$

74,397 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At December 31, 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

Available for Sale:

 

 

 

 

 

 

 

 

 

 

 

 

 

Federal agency securities

 

$

5,461 

 

$

(22)

 

$

 -

 

$

5,439 

Obligations of state and political subdivisions

 

 

3,853 

 

 

(19)

 

 

 -

 

 

3,834 

Residential mortgage-backed securities

22 

 

 

19,666 

 

 

(107)

 

 

 -

 

 

19,558 

Total

28 

 

$

28,980 

 

$

(148)

 

$

 -

 

$

28,831 

 

We evaluate all securities on an individual basis for other-than-temporary impairment on at least a quarterly basis.  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, and the intent and ability of us to retain our investment in the issuer for a period of time sufficient to allow for an anticipated recovery in fair value. 

 

Management has the ability and intent to hold the securities classified as held to maturity in the table above until they mature, at which time we expect to receive full value for the securities.  Furthermore, as of December 31, 2012, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that it is not more likely than not that we will have to sell any such securities before a recovery of cost.  The declines in fair value were attributable to increases in market interest rates over the yields available at the time the underlying securities were purchased or increases in spreads over market interest rates.  Management does not believe any of the securities are impaired due to credit quality.  Accordingly, as of December 31, 2012, management believes the impairment of these investments is not deemed to be other-than-temporary. 

 

As required by law, available for sale investment securities are pledged to secure public and trust deposits, sweep agreements, and borrowings from the FHLB.  Securities with an amortized cost of $284.2 million and $212.3 million were pledged to meet such requirements at December 31, 2012 and 2011, respectively.  Any amount over-pledged can be released at any time.