Note 3 - Securities

12 Months Ended

Dec. 31, 2012

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

3.      SECURITIES

A summary of the Company’s securities portfolio by category is presented in the following table.

Securities Portfolio

(Dollar amounts in thousands)

	December 31,
	2012									2011
	Amortized		Gross Unrealized					Fair		Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Securities Available-for-Sale
U.S. agency securities	$	508	$	-	$	-		$	508	$	5,060	$	-	$	(25	)	$	5,035
Collateralized mortgage obligations (“CMOs”)		397,146		3,752		(515	)		400,383		383,828		2,622		(2,346	)		384,104
Othermortgage-backed securities (“MBSs”)		117,785		5,183		(68	)		122,900		81,982		5,732		(23	)		87,691
Municipal securities		495,906		24,623		(486	)		520,043		464,282		26,155		(366	)		490,071
Trust preferred collateralized debt obligations (“CDOs”)		46,533		-		(34,404	)		12,129		48,759		-		(35,365	)		13,394
Corporate debt securities		13,006		2,333		-			15,339		27,511		2,514		(11	)		30,014
Equity securities:
Hedge fund investment		1,231		385		-			1,616		1,231		385		-			1,616
Other equity securities		8,459		1,026		-			9,485		958		123		-			1,081
Total equity securities		9,690		1,411		-			11,101		2,189		508		-			2,697
Total	$	1,080,574	$	37,302	$	(35,473	)	$	1,082,403	$	1,013,611	$	37,531	$	(38,136	)	$	1,013,006
Securities Held-to-Maturity
Municipal securities	$	34,295	$	1,728	$	-		$	36,023	$	60,458	$	1,019	$	-		$	61,477
Trading Securities								$	14,162								$	14,469

Remaining Contractual Maturity of Securities

(Dollar amounts in thousands)

	December 31, 2012
	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
One year or less	$	18,938	$	18,668	$	5,314	$	5,582
After one year to five years		376,898		371,519		9,803		10,297
After five years to ten years		86,847		85,608		6,213		6,526
After ten years		73,270		72,224		12,965		13,618
Securities that do not have a single maturity date		524,621		534,384		-		-
Total	$	1,080,574	$	1,082,403	$	34,295	$	36,023

The carrying value of securities available-for-sale that were pledged to secure deposits or for other purposes as permitted or required by law totaled $675.3 million at December 31, 2012 and $592.7 million at December 31, 2011. No securities held-to-maturity were pledged as of December 31, 2012 or 2011.

Excluding securities issued or backed by the U.S. government and its agencies and U.S. government-sponsored enterprises, there were no investments in securities from one issuer that exceeded 10% of total stockholders’ equity as of December 31, 2012 or 2011.

Securities (Losses) Gains

(Dollar amounts in thousands)

	Years ended December 31,
	2012			2011			2010
Proceeds from sales	$	153,668		$	188,556		$	390,217
Gains (losses) on sales of securities:
Gross realized gains	$	3,045		$	4,103		$	18,444
Gross realized losses		(297	)		(757	)		(1,311	)
Net realized gains on securities sales		2,748			3,346			17,133
Non-cash impairment charges:
Other-than-temporary securities impairment		(3,728	)		(1,464	)		(5,364	)
Portion of OTTI recognized in other comprehensive (loss) income		59			528			447
Net non-cash impairment charges		(3,669	)		(936	)		(4,917	)
Net realized (losses) gains	$	(921	)	$	2,410		$	12,216
Income tax (benefit) expense on net realized (losses) gains	$	(377	)	$	986		$	4,764
Net trading gains (losses) (1)	$	1,627		$	(691	)	$	1,530
Net non-cash impairment charges:
CDOs	$	2,226		$	936		$	4,664
CMOs		1,443			-			86
Equity securities		-			-			167
Total	$	3,669		$	936		$	4,917

(1) All net trading gains (losses) relate to trading securities still held as of December 31, 2012 and 2011.

Accounting guidance requires that the credit portion of an OTTI charge be recognized through income. If a decline in fair value below carrying value is not attributable to credit deterioration and the Company does not intend to sell the security or believe it would not be more likely than not required to sell the security prior to recovery, the Company records the non-credit related portion of the decline in fair value in other comprehensive (loss) income. In deriving the credit component of the impairment on the CDOs, projected cash flows were discounted at the contractual rate and compared to the fair values computed by discounting future projected cash flows at the London Interbank Offered Rate (“LIBOR”) plus an adjustment to reflect the higher risk inherent in these securities given their complex structures and the impact of market factors.

Credit-Related CDO Impairment Losses

(Dollar amounts in thousands)

		Years Ended December 31,
Number		2012		2011		2010		2009		2008		Total
	1	$	-	$	-	$	-	$	8,474	$	1,886	$	10,360
	2		1,534		525		794		6,549		-		9,402
	3		692		411		142		1,017		-		2,262
	4		-		-		684		394		-		1,078
	5		-		-		2,801		5,769		-		8,570
	6		-		-		243		-		-		243
	7		-		-		-		2,306		4,444		6,750
		$	2,226	$	936	$	4,664	$	24,509	$	6,330	$	38,665

The following table summarizes changes in the amount of credit losses recognized in earnings on the Company’s available-for-sale debt securities for which a portion of OTTI was recognized in other comprehensive (loss) income.

Changes in Credit Losses Recognized in Earnings

(Dollar amounts in thousands)

	Years Ended December 31,
	2012			2011		2010
Cumulative amount recognized at the beginning of the year	$	36,525		$	35,589	$	30,839
Credit losses included in earnings (1):
Losses recognized on securities that previously had credit losses		2,278			936		4,421
Losses recognized on securities that did not previously have credit losses		1,391			-		329
Reduction for securities sold during the year		(1,391	)		-		-
Cumulative amount recognized at the end of the year	$	38,803		$	36,525	$	35,589

(1) Included in net securities (losses) gains in the Consolidated Statements of Income.

The following table presents the aggregate amount of unrealized losses and the aggregate related fair values of securities with unrealized losses as of December 31, 2012 and 2011.

Securities in an Unrealized Loss Position

(Dollar amounts in thousands)

			Less Than 12 Months				12 Months or Longer				Total
	Number of Securities		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
As of December 31, 2012
CMOs		19	$	102,939	$	421	$	12,796	$	94	$	115,735	$	515
Other MBSs		6		7,210		55		176		13		7,386		68
Municipal securities		49		28,903		459		1,238		27		30,141		486
CDOs		6		-		-		12,129		34,404		12,129		34,404
Total		80	$	139,052	$	935	$	26,339	$	34,538	$	165,391	$	35,473
As of December 31, 2011
U.S. agency securities		2	$	-	$	-	$	5,035	$	25	$	5,035	$	25
CMOs		30		163,819		1,818		12,628		528		176,447		2,346
Other MBSs		4		182		17		1,072		6		1,254		23
Municipal securities		19		934		2		7,857		364		8,791		366
CDOs		6		-		-		13,394		35,365		13,394		35,365
Corporate debt securities		1		2,157		11		-		-		2,157		11
Total		62	$	167,092	$	1,848	$	39,986	$	36,288	$	207,078	$	38,136

Substantially all of the Company’s CMOs and other MBSs are either backed by U.S. government-owned agencies or issued by U.S. government-sponsored enterprises. Municipal securities are issued by municipal authorities, and the majority is supported by third-party insurance or some other form of credit enhancement. Management does not believe any remaining individual unrealized loss as of December 31, 2012 represents an OTTI. The unrealized losses associated with these securities are not believed to be attributed to credit quality, but rather to changes in interest rates and temporary market movements. In addition, the Company does not intend to sell the securities with unrealized losses, and it is not more likely than not that the Company will be required to sell them before recovery of their amortized cost bases, which may be at maturity.

The unrealized losses on CDOs as of December 31, 2012 reflect the market’s unfavorable view of structured investment vehicles given the current interest rate and liquidity environment. Management does not believe any remaining unrealized losses on the CDOs represent OTTI related to credit deterioration. In addition, the Company does not intend to sell the CDOs with unrealized losses, and the Company does not believe it is more likely than not that it will be required to sell them before recovery of their amortized cost bases, which may be at maturity. As of December 31, 2012, the portion of OTTI recognized in accumulated other comprehensive loss (i.e., not related to credit deterioration) totaled $34.4 million.

Significant judgment is required to calculate the fair value of the CDOs, all of which are pooled. Generally, fair value determinations are based on several factors regarding current market and economic conditions related to these securities and the underlying collateral. For these reasons and due to the illiquidity in the secondary market for the CDOs, the Company estimates the fair value of these securities using discounted cash flow analyses with the assistance of a structured credit valuation firm. For additional discussion of the CDO valuation methodology, refer to Note 22, “Fair Value.”