Investments (Tables)

9 Months Ended

Sep. 30, 2013

Aggregate Carrying And Approximate Market Values Of Available-For-Sale Securities

The amortized cost and estimated fair values of the Company's securities are shown in the following table (in thousands):



	September 30, 2013								December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	2,511	$	61	$	—	$	2,572	$	3,792	$	96	$	—	$	3,888
Obligations of states and
political subdivisions	41,109		814		74		41,849		47,293		1,651		15		48,929
Mortgage-backed securities:
U.S. government agencies	255,889		3,351		4,601		254,639		279,336		7,231		85		286,482
Private label	2,383		19		2		2,400		3,235		37		—		3,272
Trust preferred
securities	13,456		1,047		2,495		12,008		15,402		55		2,812		12,645
Corporate securities	9,783		172		639		9,316		16,152		207		412		15,947
Total Debt Securities	325,131		5,464		7,811		322,784		365,210		9,277		3,324		371,163
Marketable equity securities	3,381		1,575		—		4,956		3,381		804		—		4,185
Investment funds	1,525		—		18		1,507		1,724		50		—		1,774
Total Securities
Available-for-Sale	$	330,037	$	7,039	$	7,829	$	329,247	$	370,315	$	10,131	$	3,324	$	377,122

Aggregate Carrying And Approximate Market Values Of Held-To-Maturity Securities



	September 30, 2013								December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities held-to-maturity
Trust preferred securities	$	3,994	$	2,412	$	—	$	6,406	$	13,454	$	465	$	58	$	13,861
Total Securities
Held-to-Maturity	$	3,994	$	2,412	$	—	$	6,406	$	13,454	$	465	$	58	$	13,861

Other investment securities:
Non-marketable equity securities	$	13,344	$	—	$	—	$	13,344	$	11,463	$	—	$	—	$	11,463
Total Other Investment
Securities	$	13,344	$	—	$	—	$	13,344	$	11,463	$	—	$	—	$	11,463

Gross Unrealized Losses And Fair Value Of Investments

The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):



	September 30, 2013
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	3,471	$	73	$	448	$	1	$	3,919	$	74
Mortgage-backed securities:
U.S. Government agencies	129,114		4,485		5,217		116		134,331		4,601
Private label	1,604		2		—		—		1,604		2
Trust preferred securities	130		270		4,497		2,225		4,627		2,495
Corporate securities	6,081		639		—		—		6,081		639
Investment funds	1,482		18		—		—		1,482		18
Total	$	141,882	$	5,487	$	10,162	$	2,342	$	152,044	$	7,829



	December 31, 2012
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	1,163	$	15	$	—	$	—	$	1,163	$	15
Mortgage-backed securities:
U.S. Government agencies	16,225		85		—		—		16,225		85
Trust preferred securities	348		51		5,836		2,761		6,184		2,812
Corporate securities	1,950		49		4,344		363		6,294		412
Total	$	19,686	$	200	$	10,180	$	3,124	$	29,866	$	3,324
Securities held-to-maturity:
Trust preferred securities	$	—	$	—	$	3,380	$	58	$	3,380	$	58

Credit Loss Component Of OTTI On Debt Securities Recognized In Earnings

The following table presents a progression of the credit loss component of OTTI on debt and equity securities recognized in earnings during the nine months ended September 30, 2013 and for the year ended December 31, 2012 (in thousands). The credit loss component represents the difference between the present value of expected future cash flows and the amortized cost basis of the security. The credit component of OTTI recognized in earnings during a period is presented in two parts based upon whether the credit impairment in the current period is the first time the security was credit impaired (initial credit impairment) or if there is additional credit impairment on a security that was credit impaired in previous periods.



	Debt Securities		Equity Securities			Total
Balance at January 1, 2012	$	20,610	$	6,048		$	26,658
Additions:
Initial credit impairment	—		—			—
Additional credit impairment	576		—			576
Deductions:
Called	—		(1,235		)	(1,235		)
Balance at December 31, 2012	21,186		4,813			25,999
Additions:
Initial credit impairment	—		—			—
Additional credit impairment	—		—			—
Deductions:
Called	—		—			—
Balance at September 30, 2013	$	21,186	$	4,813		$	25,999

Additional Information Of Trust Preferred Securities With Credit Rating Below Investment Grade

The following table presents additional information about the Company’s trust preferred securities with a credit rating of below investment grade as of September 30, 2013 (dollars in thousands):



Deal Name		Type	Class	Original Cost		Amortized Cost		Fair Value		Difference (1)		Lowest Credit Rating	# of issuers currently performing	Actual deferrals/defaults (as a % of original dollar)		Expected deferrals/defaults (as a % of remaining of performing collateral)			Excess Subordination as a Percentage of Current Performing Collateral (4)
		Pooled trust preferred securities:
		Other-than-temporarily impaired
		Available for Sale:
P1		Pooled	Mezz	$	827	$	268	$	368	100		Caa3	7	19.5	%	21.0	%	⁽²⁾	52.5	%
P2		Pooled	Mezz	3,279		436		1,252		816		Ca	6	22.3	%	5.2	%	⁽²⁾	23.4	%
P3	⁽⁵⁾	Pooled	Mezz	2,962		1,419		365		(1,054	)	Caa3	22	25.5	%	8.2	%	⁽²⁾	12.9	%
P4	⁽⁶⁾	Pooled	Mezz	4,060		400		130		(270	)	Ca	9	19.2	%	7.1	%	⁽³⁾	22.8	%
P5		Pooled	Mezz	6,228		826		457		(369	)	Ca	9	26.0	%	21.0	%	⁽²⁾	24.7	%
		Held to Maturity:
P6		Pooled	Mezz	1,599		—		737		737		Caa3	7	19.5	%	21.0	%	⁽²⁾	52.5	%
P7		Pooled	Mezz	4,354		—		1,669		1,669		Ca	6	22.3	%	5.2	%	⁽²⁾	23.4	%
		Single issuer trust preferred securities
		Available for sale:
S5		Single		261		235		289		54		NR	1	—	%	—	%
		Held to Maturity:
S9		Single		4,000		3,994		4,000		6		NR	1	—	%	—	%


(1)	The differences noted consist of unrealized gains (losses) recorded at September 30, 2013 and noncredit other-than-temporary impairment losses recorded subsequent to April 1, 2009 that have not been reclassified as credit losses.


(2)	Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default. This model for this security assumes that all collateral that is currently deferring will default with a zero recovery rate. The underlying issuers can cure, thus this bond could recover at a higher percentage upon default than zero.


(3)	Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default. The model for this security assumes that one of the banks that is currently deferring will cure. If additional underlying issuers cure, this bond could recover at a higher percentage.

(4)

Excess subordination is defined as the additional defaults/deferrals necessary in the next reporting period to deplete the entire credit enhancement (excess interest and over-collateralization) beneath our tranche within each pool to the point that would cause a "break in yield." This amount assumes that all currently performing collateral continues to perform. A break in yield means that our security would not be expected to receive all the contractual cash flows (principal and interest) by maturity. The "percent of current performing collateral" is the ratio of the "excess subordination amount" to current performing collateral—a higher percent means there is more excess subordination to absorb additional defaults/deferrals, and the better our security is protected from loss.


(5)	No other-than-temporary impairment losses were recognized during the nine months ended September 30, 2013. Other-than-temporary impairment losses of $11,000 were recognized during the year ended December 31, 2012.


(6)	No other-than-temporary impairment losses were recognized during the nine months ended September 30, 2013. Other-than-temporary impairment losses of $565,000 were recognized during the year ended December 31, 2012.

Amortized Cost And Estimated Fair Value Of Debt Securities By Contractual Maturity

The amortized cost and estimated fair value of debt securities at September 30, 2013, by contractual maturity, are shown in the following table (in thousands). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties. Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.



	Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	5,566	$	5,581
Due after one year through five years	24,206		24,677
Due after five years through ten years	36,483		37,258
Due after ten years	258,876		255,268
	$	325,131	$	322,784
Securities Held-to-Maturity
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	—		—
Due after ten years	3,994		6,406
	$	3,994	$	6,406

Gross Gains And Losses Realized

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands). The specific identification method is used to determine the cost basis of securities sold.



	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2013		2012			2013		2012

Gross realized gains	$	—	$	830		$	93	$	1,776
Gross realized losses	—		(100		)	—		(246		)
Net investment security gains	$	—	$	730		$	93	$	1,530

- 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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- Definition

Tabular disclosure of all investments in certain debt and equity securities for which the entity has the positive intent and ability to hold until maturity.

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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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