Investments (Tables)

9 Months Ended

Sep. 30, 2012

Amortized Cost and Fair Values of Securities

The amortized cost and approximate fair values of securities as of September 30, 2012 and December 31, 2011 are as follows.

	September 30, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for Sale Securities
Mortgage-backed securities
Government sponsored agencies	$	179,467	$	7,972	$	-		$	187,439
Collateralized mortgage obligations
Government sponsored agencies		125,153		3,845		(34	)		128,964
Federal agencies		3,000		18		0			3,018
Municipals		3,129		158		(15	)		3,272
Small Business Administration		9		-		-			9
Corporate obligations		24,099		397		(4,335	)		20,161
Total	$	334,857	$	12,390	$	(4,384	)	$	342,863

	December 31, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Available for Sale Securities
Mortgage-backed securities
Government sponsored agencies	$	198,039	$	4,813	$	(6	)	$	202,846
Collateralized mortgage obligations
Government sponsored agencies		97,098		2,963		-			100,061
Federal agencies		2,000		2		-			2,002
Municipals		3,364		208		(14	)		3,558
Small Business Administration		12		-		-			12
Corporate obligations		27,488		-		(5,089	)		22,399
Total	$	328,001	$	7,986	$	(5,109	)	$	330,878

Amortized Cost and Fair Value of Available for Sale Securities by Contractual Maturity

The amortized cost and fair value of available-for-sale securities at September 30, 2012, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale
	Amortized		Fair
Description Securities	Cost		Value
Security obligations due
One to five years	$	17,356	$	17,752
Five to ten years		4,946		4,972
After ten years		7,926		3,727
		30,228		26,451
Mortgage-backed securities		179,467		187,439
Collateralized mortgage obligations		125,153		128,964
Small Business Administration		9		9
Totals	$	334,857	$	342,863

Investments Gross Unrealized Losses and Fair Value in Continuous Unrealized Loss Position

The following tables show our 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 and December 31, 2011:

	September 30, 2012
	Less than 12 months					12 months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Available for Sale
Collateralized mortgage obligations
Government sponsored agencies	$	8,010	$	(34	)	$	-	$	-		$	8,010	$	(34	)
Municipals		876		(15	)		-		-			876		(15	)
Corporate obligations		-		-			2,408		(4,335	)		2,408		(4,335	)
Total temporarily impaired securities	$	8,886	$	(49	)	$	2,408	$	(4,335	)	$	11,294	$	(4,384	)

	December 31, 2011
	Less than 12 months					12 months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
Available for Sale
Mortgage-backed securities
Government sponsored agencies	$	5,076	$	(6	)	$	-	$	-		$	5,076	$	(6	)
Municipals		971		(14	)		-		-			971		(14	)
Corporate obligations		19,957		(790	)		2,454		(4,299	)		22,411		(5,089	)
Total temporarily impaired securities	$	26,004	$	(810	)	$	2,454	$	(4,299	)	$	28,458	$	(5,109	)

Bank's Investment in Trust Preferred Securities

The following table provides additional information related to the Bank’s investment in trust preferred securities as of September 30, 2012:

Deal	Class		Original Par		Book Value		Fair Value		Unrealized Loss		Recognized Losses 2012		Lowest Rating	Number of Banks/Insurance Companies Currently Performing		Actual Deferrals/Defaults (as % of original collateral)			Total Projected Defaults (as a % of performing collateral)^a			Excess Subordination (after taking into account best estimate of future deferrals/defaults)^b

Alesco Preferred Funding IX		A2A	$	1,000	$	902	$	375	$	527	$	-	B2		44		16.64	%		15.38	%		44.11	%
Preferred Term Securities XIII		B1		1,000		823		254		569		-	Ca		40		34.94	%		27.67	%		0.84	%
Preferred Term Securities XVIII		C		1,000		917		210		707		-	Ca		48		29.43	%		16.14	%		1.73	%
Preferred Term Securities XXVII		C1		1,000		710		200		510		-	C		34		26.61	%		22.84	%		6.09	%
U.S. Capital Funding I		B1		3,000		2,891		1,148		1,743		-	Caa1		30		15.90	%		14.84	%		1.55	%
U.S. Capital Funding III		B1		1,000		500		221		279		-	Ca		28		27.94	%		16.86	%		0.00	%

Total			$	8,000	$	6,743	$	2,408	$	4,335	$	-

(a)	A 10% recovery is applied to all projected defaults. A 15% recovery is applied to all projected insurance defaults. No recovery is applied to current defaults.

(b)	Excess subordination represents the additional defaults in excess of both current and projected defaults that the CDO can absorb before the bond experiences any credit impairment. Excess subordinated percentage is calculated by (a) determining what percentage of defaults a deal can experience before the bond has credit impairment, and (b) subtracting from this default breakage percentage both total current and expected future default percentages.

Debt Securities for which Credit Loss was Recognized in Income and Other Losses Recorded in Other Comprehensive Income

The following table provides information about debt securities for which only a credit loss was recognized in income and other losses are recorded in other comprehensive income.

	Accumulated Credit Losses Three Months Ended September 30,
	2012			2011
Credit losses on debt securities held
Beginning of period	$	(1,205	)	$	(1,205	)
Additions related to increases in previously recognized other-than-temporary losses for the three months ended		-			-

As of September 30,	$	(1,205	)	$	(1,205	)

	Accumulated Credit Losses Nine Months Ended September 30,
	2012			2011
Credit losses on debt securities held
Beginning of year	$	(1,205	)	$	(1,179	)
Additions related to increases in previously recognized other-than-temporary losses for the nine months ended		-			(26	)

As of September 30,	$	(1,205	)	$	(1,205	)

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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+ Details

- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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