| Securities |
The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities as of September 30, 2011 and December 31, 2010 are summarized as follows (dollars in thousands):
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
Gross Unrealized |
|
|
|
|
| |
|
Amortized
Cost |
|
|
Gains |
|
|
(Losses) |
|
|
Estimated
Fair Value |
|
|
September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency securities
|
|
$ |
7,973 |
|
|
$ |
584 |
|
|
$ |
— |
|
|
$ |
8,557 |
|
|
Obligations of states and political subdivisions
|
|
|
181,710 |
|
|
|
10,863 |
|
|
|
(248 |
) |
|
|
192,325 |
|
|
Corporate and other bonds
|
|
|
14,466 |
|
|
|
279 |
|
|
|
(450 |
) |
|
|
14,295 |
|
|
Mortgage-backed securities
|
|
|
354,707 |
|
|
|
12,067 |
|
|
|
(222 |
) |
|
|
366,552 |
|
|
Federal Reserve Bank stock - restricted
|
|
|
6,714 |
|
|
|
— |
|
|
|
— |
|
|
|
6,714 |
|
|
Federal Home Loan Bank stock - restricted
|
|
|
15,103 |
|
|
|
— |
|
|
|
— |
|
|
|
15,103 |
|
|
Other securities
|
|
|
2,950 |
|
|
|
— |
|
|
|
(11 |
) |
|
|
2,939 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities
|
|
$ |
583,623 |
|
|
$ |
23,793 |
|
|
$ |
(931 |
) |
|
$ |
606,485 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency securities
|
|
$ |
9,610 |
|
|
$ |
454 |
|
|
$ |
(103 |
) |
|
$ |
9,961 |
|
|
Obligations of states and political subdivisions
|
|
|
176,431 |
|
|
|
2,189 |
|
|
|
(3,588 |
) |
|
|
175,032 |
|
|
Corporate and other bonds
|
|
|
15,543 |
|
|
|
380 |
|
|
|
(858 |
) |
|
|
15,065 |
|
|
Mortgage-backed securities
|
|
|
334,696 |
|
|
|
9,767 |
|
|
|
(425 |
) |
|
|
344,038 |
|
|
Federal Reserve Bank stock - restricted
|
|
|
6,716 |
|
|
|
— |
|
|
|
— |
|
|
|
6,716 |
|
|
Federal Home Loan Bank stock - restricted
|
|
|
18,345 |
|
|
|
— |
|
|
|
— |
|
|
|
18,345 |
|
|
Other securities
|
|
|
3,259 |
|
|
|
32 |
|
|
|
(7 |
) |
|
|
3,284 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total securities
|
|
$ |
564,600 |
|
|
$ |
12,822 |
|
|
$ |
(4,981 |
) |
|
$ |
572,441 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table shows the gross unrealized losses and fair value (in thousands) of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired. These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position and are as follows:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Less than 12 months |
|
|
More than 12 months |
|
|
Total |
|
| |
|
Fair value |
|
|
Unrealized
Losses |
|
|
Fair value |
|
|
Unrealized
Losses |
|
|
Fair value |
|
|
Unrealized
Losses |
|
|
As of September 30, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Obligations of states and political subdivisions
|
|
$ |
3,966 |
|
|
$ |
(244 |
) |
|
$ |
679 |
|
|
$ |
(4 |
) |
|
$ |
4,645 |
|
|
$ |
(248 |
) |
|
Mortgage-backed securities
|
|
|
31,458 |
|
|
|
(222 |
) |
|
|
— |
|
|
|
— |
|
|
|
31,458 |
|
|
|
(222 |
) |
|
Corporate bonds and other securities
|
|
|
2,397 |
|
|
|
(116 |
) |
|
|
4,073 |
|
|
|
(345 |
) |
|
|
6,470 |
|
|
|
(461 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$ |
37,821 |
|
|
$ |
(582 |
) |
|
$ |
4,752 |
|
|
$ |
(349 |
) |
|
$ |
42,573 |
|
|
$ |
(931 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
As of December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. government and agency securities
|
|
$ |
43 |
|
|
$ |
(103 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
43 |
|
|
$ |
(103 |
) |
|
Obligations of states and political subdivisions
|
|
|
82,952 |
|
|
|
(2,451 |
) |
|
|
14,762 |
|
|
|
(1,137 |
) |
|
|
97,714 |
|
|
|
(3,588 |
) |
|
Mortgage-backed securities
|
|
|
49,515 |
|
|
|
(425 |
) |
|
|
— |
|
|
|
— |
|
|
|
49,515 |
|
|
|
(425 |
) |
|
Corporate bonds and other securities
|
|
|
— |
|
|
|
(7 |
) |
|
|
4,104 |
|
|
|
(858 |
) |
|
|
4,104 |
|
|
|
(865 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Totals
|
|
$ |
132,510 |
|
|
$ |
(2,986 |
) |
|
$ |
18,866 |
|
|
$ |
(1,995 |
) |
|
$ |
151,376 |
|
|
$ |
(4,981 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2011, there were $4.8 million, or 4 issues, of individual securities that had been in a continuous loss position for more than 12 months. Additionally, these securities had an unrealized loss of $348 thousand and consisted of corporate and municipal obligations.
The following table summarizes the contractual maturity of securities available for sale, at fair value and their weighted average yields as of September 30, 2011:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
1 Year or
Less |
|
|
1 - 5 Years |
|
|
5 - 10 Years |
|
|
Over 10
Years and
Equity
Securities |
|
|
Total |
|
|
U.S. government and agency securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
$ |
— |
|
|
$ |
7,913 |
|
|
$ |
— |
|
|
$ |
60 |
|
|
$ |
7,973 |
|
|
Fair value
|
|
|
— |
|
|
|
8,418 |
|
|
|
— |
|
|
|
139 |
|
|
|
8,557 |
|
|
Weighted average yield (1)
|
|
|
— |
|
|
|
3.69 |
% |
|
|
— |
|
|
|
— |
|
|
|
3.66 |
% |
| |
|
|
|
|
|
|
Mortgage backed securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
$ |
1,522 |
|
|
$ |
11,288 |
|
|
$ |
47,182 |
|
|
$ |
294,715 |
|
|
$ |
354,707 |
|
|
Fair value
|
|
|
1,548 |
|
|
|
11,730 |
|
|
|
49,708 |
|
|
|
303,566 |
|
|
|
366,552 |
|
|
Weighted average yield (1)
|
|
|
4.17 |
% |
|
|
4.19 |
% |
|
|
3.92 |
% |
|
|
3.20 |
% |
|
|
3.33 |
% |
| |
|
|
|
|
|
|
Obligations of states and political subdivisions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
$ |
559 |
|
|
$ |
8,112 |
|
|
$ |
36,424 |
|
|
$ |
136,615 |
|
|
$ |
181,710 |
|
|
Fair value
|
|
|
561 |
|
|
|
8,387 |
|
|
|
38,510 |
|
|
|
144,867 |
|
|
|
192,325 |
|
|
Weighted average yield (1)
|
|
|
5.16 |
% |
|
|
4.60 |
% |
|
|
4.53 |
% |
|
|
4.17 |
% |
|
|
4.27 |
% |
| |
|
|
|
|
|
|
Other securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
$ |
2,001 |
|
|
$ |
1,518 |
|
|
$ |
924 |
|
|
$ |
34,790 |
|
|
$ |
39,233 |
|
|
Fair value
|
|
|
2,019 |
|
|
|
1,480 |
|
|
|
947 |
|
|
|
34,605 |
|
|
|
39,051 |
|
|
Weighted average yield (1)
|
|
|
5.69 |
% |
|
|
5.35 |
% |
|
|
4.67 |
% |
|
|
5.16 |
% |
|
|
5.18 |
% |
| |
|
|
|
|
|
|
Total securities available for sale:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortized cost
|
|
$ |
4,082 |
|
|
$ |
28,831 |
|
|
$ |
84,530 |
|
|
$ |
466,180 |
|
|
$ |
583,623 |
|
|
Fair value
|
|
|
4,128 |
|
|
|
30,016 |
|
|
|
89,165 |
|
|
|
483,176 |
|
|
|
606,485 |
|
|
Weighted average yield (1)
|
|
|
5.05 |
% |
|
|
4.23 |
% |
|
|
4.19 |
% |
|
|
3.63 |
% |
|
|
3.75 |
% |
| (1) |
Yields on tax-exempt securities have been computed on a tax-equivalent basis. |
During each quarter the Company conducts an assessment of the securities portfolio for other-than-temporary impairment ("OTTI") consideration. The assessment considers factors such as external credit ratings, delinquency coverage ratios, market price, management's judgment, expectations of future performance, and relevant industry research and analysis. An impairment is OTTI if any of the following conditions exists: the entity intends to sell the security; it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis; or the entity does not expect to recover the security's entire amortized cost basis (even if the entity does not intend to sell). If a credit loss exists, but an entity does not intend to sell the impaired debt security and is not more likely than not to be required to sell before recovery, the impairment is other-than-temporary and should be separated into a credit portion to be recognized in earnings and the remaining amount relating to all other factors recognized as other comprehensive loss.
Based on the assessment for the quarter ended September 30, 2011 and in accordance with the guidance, the Company determined that a single issuer Trust Preferred security incurred credit-related OTTI of $400,000, and was recognized in earnings for the quarter ended September 30, 2011. No OTTI had been recognized prior to the current quarter. There is a possibility that the Company will sell the security before recovering all unamortized costs. The significant inputs the Company considered in determining the amount of the credit loss are as follows:
| |
|
|
The assessment of security credit rating agencies and research performed by third parties;
|
| |
|
|
The continued interest payment deferral by the issuer;
|
| |
|
|
The lack of improving asset quality of the issuer and worsening economic conditions; and
|
| |
|
|
The security is thinly traded and trading at its historical low, below par.
|
OTTI recognized for the periods presented is summarized as follow (dollars in thousands):
| |
|
|
|
|
| |
|
OTTI Losses |
|
|
Cumulative credit losses on investment securities, through December 31, 2010
|
|
$ |
— |
|
|
Cumulative credit losses on investment securities
|
|
|
— |
|
|
Additions for credit losses not previously regognized
|
|
|
400 |
|
| |
|
|
|
|
|
Cumulative credit losses on investment securities, through September 30, 2011
|
|
$ |
400 |
|
| |
|
|
|
|
|