Investment Securities

9 Months Ended

Sep. 30, 2011

Investment Securities [Abstract]

Investment Securities

Note 2. Investment Securities

The following table shows the amortized cost and the approximate fair value of the held-to-maturity securities and available-for-sale securities at September 30, 2011 and December 31, 2010 by maturity within each type.

	At September 30, 2011									At December 31, 2010
			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
(Dollars in thousands)	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Securities Held-to-Maturity
Residential mortgage-backed securities:
Within 1 year	$	—	$	—	$	—		$	—	$	15	$	—	$	—		$	15
		—		—		—			—		15		—		—			15
Corporate bonds:
After 1 year to 5 years		30,526		6		(320	)		30,212		17		—		—			17
		30,526		6		(320	)		30,212		17		—		—			17
Total	$	30,526	$	6	$	(320	)	$	30,212	$	32	$	—	$	—		$	32
Securities Available-for-Sale
U.S. government corporations and agencies:
Within 1 year	$	5,000	$	26	$	—		$	5,026	$	7,000	$	—	$	—		$	7,000
After 1 year to 5 years		117,991		964		(17	)		118,938		182,585		515		(2,000	)		181,100
		122,991		990		(17	)		123,964		189,585		515		(2,000	)		188,100
State and political subdivisions:
Within 1 year		754		8		—			762		451		—		—			451
After 1 year to 5 years		9,561		358		—			9,919		8,801		281		—			9,082
After 5 years to 10 years		11,426		401		(23	)		11,804		14,042		281		(69	)		14,254
Over 10 years		87,424		3,976		(16	)		91,384		86,315		639		(2,693	)		84,261
		109,165		4,743		(39	)		113,869		109,609		1,201		(2,762	)		108,048
Residential mortgage-backed securities:
After 5 years to 10 years		11,591		741		—			12,332		14,709		743		—			15,452
Over 10 years		54,036		2,701		(620	)		56,117		66,919		3,222		(492	)		69,649
		65,627		3,442		(620	)		68,449		81,628		3,965		(492	)		85,101
Commercial mortgage obligations:
After 5 years to 10 years		6,305		181		—			6,486		8,855		252		—			9,107
Over 10 years		55,400		1,155		—			56,555		63,827		1,321		(1,164	)		63,984
		61,705		1,336		—			63,041		72,682		1,573		(1,164	)		73,091
Corporate bonds:
Within 1 year		—		—		—			—		2,999		30		—			3,029
After 1 year to 5 years		4,990		—		(177	)		4,813		4,988		—		(43	)		4,945
		4,990		—		(177	)		4,813		7,987		30		(43	)		7,974
Other debt securities:
Within 1 year		5,193		—		—			5,193		1,693		—		—			1,693
		5,193		—		—			5,193		1,693		—		—			1,693
Equity securities:
No stated maturity		2,367		356		(238	)		2,485		2,447		680		(142	)		2,985
		2,367		356		(238	)		2,485		2,447		680		(142	)		2,985
Total	$	372,038	$	10,867	$	(1,091	)	$	381,814	$	465,631	$	7,964	$	(6,603	)	$	466,992

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

Securities with a fair value of $289.0 million and $347.3 million at September 30, 2011 and December 31, 2010, respectively, were pledged to secure public deposits and for other purposes as required by law.

During the nine months ended September 30, 2011 and 2010, available-for-sale securities with a fair value at the date of sale of $40.5 million and $13.5 million, respectively, were sold. Gross realized gains on such sales totaled $1.4 million in 2011 and $447 thousand in 2010. Gross realized losses on sales were $11 thousand in 2011 and $21 thousand in 2010. Tax expense related to net realized gains from the sales of investment securities for the nine months ended September 30, 2011 and 2010 was $500 thousand and $149 thousand, respectively. Accumulated other comprehensive income related to securities of $6.4 million and $7.1 million, net of taxes, has been included in shareholders’ equity at September 30, 2011 and December 31, 2010, respectively. Unrealized losses in investment securities at September 30, 2011 and December 31, 2010 do not represent other-than-temporary impairments.

The Corporation realized other-than-temporary impairment charges to noninterest income of $11 thousand and $59 thousand, respectively, on its equity portfolio during the nine months ended September 30, 2011 and 2010. The Corporation determined that it was probable that certain equity securities would not regain market value equivalent to the Corporation’s cost basis within a reasonable period of time due to a decline in the financial stability of the underlying companies. The Corporation carefully monitors all of its equity securities and has not taken impairment losses on certain other equity securities in an unrealized loss position, at this time, as the financial performance of the underlying companies is not indicative of the market deterioration of their stock and it is probable that the market value of the equity securities will recover to the Corporation’s cost basis in the individual securities in a reasonable amount of time. The equity securities within the following table consist of common stocks of other financial institutions, which have experienced recent declines in value consistent with the industry as a whole. Management evaluated the near-term prospects of the issuers in relation to the severity and duration of the impairment. The Corporation has the positive intent to hold these securities and believes it is more likely than not, that it will not have to sell these securities until recovery to the Corporation’s cost basis occurs. The Corporation does not consider these investments to be other-than-temporarily impaired at September 30, 2011 and December 31, 2010.

Management evaluates debt securities, which are comprised of U. S. Government, Government Sponsored Agencies, municipalities, corporate bonds and other issuers, for other-than-temporary impairment and considers the current economic conditions, the length of time and the extent to which the fair value has been less than cost, interest rates and the bond rating of each security. All of the debt securities are rated as investment grade and management believes that it will not incur any losses. The unrealized losses on the Corporation’s investments in debt securities are temporary in nature since they are primarily related to market interest rates and are not related to the underlying credit quality of the issuers within our investment portfolio. The Corporation does not have the intent to sell the debt securities and believes it is more likely than not, that it will not have to sell the securities before recovery of their cost basis. The Corporation has not recognized any other-than-temporary impairment charges on debt securities for the nine months ended September 30, 2011 and 2010.

At September 30, 2011 and December 31, 2010, there were no investments in any single non-federal issuer representing more than 10% of shareholders’ equity.

The following table shows the amount of securities that were in an unrealized loss position at September 30, 2011 and December 31, 2010:

	At September 30, 2011
	Less than Twelve Months					Twelve Months or Longer					Total
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. government corporations and agencies	$	9,996	$	(17	)	$	—	$	—		$	9,996	$	(17	)
State and political subdivisions		371		(3	)		1,712		(36	)		2,083		(39	)
Residential mortgage-backed securities		—		—			3,528		(620	)		3,528		(620	)
Corporate bonds		30,025		(497	)		—		—			30,025		(497	)
Equity securities		1,049		(238	)		—		—			1,049		(238	)
Total	$	41,441	$	(755	)	$	5,240	$	(656	)	$	46,681	$	(1,411	)

	At December 31, 2010
	Less than Twelve Months					Twelve Months or Longer					Total
			Unrealized					Unrealized					Unrealized
(Dollars in thousands)	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
U.S. government corporations and agencies	$	107,978	$	(2,000	)	$	—	$	—		$	107,978	$	(2,000	)
State and political subdivisions		52,531		(2,589	)		1,589		(173	)		54,120		(2,762	)
Residential mortgage-backed securities		10,096		(38	)		4,419		(454	)		14,515		(492	)
Commercial mortgage obligations		19,322		(1,164	)		—		—			19,322		(1,164	)
Corporate bonds		4,945		(43	)		—		—			4,945		(43	)
Equity securities		951		(140	)		17		(2	)		968		(142	)
Total	$	195,823	$	(5,974	)	$	6,025	$	(629	)	$	201,848	$	(6,603	)