Investments in Debt and Equity Securities

12 Months Ended

Dec. 31, 2011

Investments in Debt and Equity Securities [Abstract]

Investments in Debt and Equity Securities

Note 2:             Investments in Debt and Equity Securities

The amortized cost and fair values of securities classified as available-for-sale were as follows:

	December 31, 2011
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
	(In Thousands)
U.S. government agencies	$20,000	$60	$—	$20,060
Collateralized mortgage obligations	5,220	—	380	4,840
Mortgage-backed securities	628,729	13,728	802	641,655
Small Business Administration
loan pools	55,422	1,070	—	56,492
States and political subdivisions	145,663	5,478	903	150,238
Corporate bonds	50	245	—	295
Equity securities	1,230	601	—	1,831
	$856,314	$21,182	$2,085	$875,411
	December 31, 2010
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
	(In Thousands)
U.S. government agencies	$4,000	$—	$20	$3,980
Collateralized mortgage obligations	8,311	183	814	7,680
Mortgage-backed securities	590,085	10,879	1,753	599,211
Small Business Administration
loan pools	60,063	851	—	60,914
States and political subdivisions	99,314	378	4,075	95,617
Corporate bonds	49	—	28	21
Equity securities	1,230	893	—	2,123
	$763,052	$13,184	$6,690	$769,546

Additional details of the Company’s collateralized mortgage obligations and mortgage-backed securities at December 31, 2011, are described as follows:

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
	(In Thousands)
Collateralized mortgage obligations
Nonagency variable	$5,220	$—	$380	$4,840
Mortgage-backed securities
FHLMC fixed	$18,667	$1,577	$—	$20,244
FHLMC hybrid ARM	50,517	3,220	—	53,737
Total FHLMC	69,184	4,797	—	73,981
FNMA fixed	21,071	1,504	—	22,575
FNMA hybrid ARM	41,614	2,556	—	44,170
Total FNMA	62,685	4,060	—	66,745
GNMA fixed	9,826	372	1	10,197
GNMA hybrid ARM	487,034	4,499	801	490,732
Total GNMA	496,860	4,871	802	500,929
	$628,729	$13,728	$802	$641,655
Total fixed	$49,564	$3,453	$1	$53,016
Total hybrid ARM	579,165	10,275	801	588,639
	$628,729	$13,728	$802	$641,655

The amortized cost and fair value of available-for-sale securities at December 31, 2011, 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.

	Amortized	Fair
	Cost	Value
	(In Thousands)
One year or less	$1,566	$1,568
After one through five years	1,580	1,608
After five through ten years	13,135	13,497
After ten years	204,854	210,412
Securities not due on a single maturity date	633,949	646,495
Equity securities	1,230	1,831
	$856,314	$875,411

The amortized cost and fair values of securities classified as held to maturity were as follows:

	December 31, 2011
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
	(In Thousands)
States and political
subdivisions	$1,865	$236	$—	$2,101

	December 31, 2010
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
	(In Thousands)
States and political
subdivisions	$1,125	$175	$—	$1,300

The held-to-maturity securities at December 31, 2011, by contractual maturity, are shown below.  Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Fair
	Cost	Value
	(In Thousands)
One year or less	$840	$904
After five through ten years	1,025	1,197
	$1,865	$2,101

The amortized cost and fair values of securities pledged as collateral was as follows at December 31, 2011 and 2010:

	2011		2010
	Amortized	Fair	Amortized	Fair
	Cost	Value	Cost	Value
	(In Thousands)
Public deposits	$463,832	$475,622	$388,456	$393,261
Collateralized borrowing
accounts	235,323	237,576	263,778	264,450
Structured repurchase
agreements	65,658	67,498	66,755	68,202
Other	1,600	1,678	5,527	5,621
	$766,413	$782,374	$724,516	$731,534

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost.  Total fair value of these investments at December 31, 2011 and 2010, respectively, was approximately $172.6 million and $298.8 million which is approximately 19.67% and 38.77% of the Company’s available-for-sale and held-to-maturity investment portfolio, respectively.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these debt securities are temporary.

The following table shows the Company’s 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 December 31, 2011 and 2010:

	2011
	Less than 12 Months		12 Months or More		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Description of Securities	Value	Losses	Value	Losses	Value	Losses
	(In Thousands)
Collateralized mortgage
obligations	$3,760	$(110)	$1,460	$(270)	$5,220	$(380)
Mortgage-backed securities	61,720	(365)	91,824	(437)	153,544	(802)
States and political
subdivisions	6,436	(44)	7,381	(859)	13,817	(903)
	$71,916	$(519)	$100,665	$(1,566)	$172,581	$(2,085)

	2010
	Less than 12 Months		12 Months or More		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Description of Securities	Value	Losses	Value	Losses	Value	Losses
	(In Thousands)
U.S. government agencies	$3,980	$(20)	$—	$—	$3,980	$(20)
Collateralized mortgage
obligations	—	—	1,809	(814)	1,809	(814)
Mortgage-backed securities	231,524	(1,753)	—	—	231,524	(1,753)
States and political
subdivisions	56,221	(2,328)	5,257	(1,747)	61,478	(4,075)
Corporate bonds	8	(24)	14	(4)	22	(28)
	$291,733	$(4,125)	$7,080	$(2,565)	$298,813	$(6,690)

Other-than-Temporary Impairment

Upon acquisition of a security, the Company decides whether it is within the scope of the accounting guidance for beneficial interests in securitized financial assets or will be evaluated for impairment under the accounting guidance for investments in debt and equity securities.

The accounting guidance for beneficial interests in securitized financial assets provides incremental impairment guidance for a subset of the debt securities within the scope of the guidance for investments in debt and equity securities.  For securities where the security is a beneficial interest in securitized financial assets, the Company uses the beneficial interests in securitized financial asset impairment model.  For securities where the security is not a beneficial interest in securitized financial assets, the Company uses the debt and equity securities impairment model.  The Company does not currently have securities within the scope of this guidance for beneficial interests in securitized financial assets.

The Company routinely conducts periodic reviews to identify and evaluate each investment security to determine whether an other-than-temporary impairment has occurred.  The Company considers the length of time a security has been in an unrealized loss position, the relative amount of the unrealized loss compared to the carrying value of the security, the type of security and other factors.  If certain criteria are met, the Company performs additional review and evaluation using observable market values or various inputs in economic models to determine if an unrealized loss is other than temporary.  The Company uses quoted market prices for marketable equity securities and uses broker pricing quotes based on observable inputs for equity investments that are not traded on a stock exchange.  For nonagency collateralized mortgage obligations, to determine if the unrealized loss is other than temporary, the Company projects total estimated defaults of the underlying assets (mortgages) and multiplies that calculated amount by an estimate of realizable value upon sale in the marketplace (severity) in order to determine the projected collateral loss.  The Company also evaluates any current credit enhancement underlying these securities to determine the impact on cash flows.  If the Company determines that a given security position will be subject to a write-down or loss, the Company records the expected credit loss as a charge to earnings.

During 2011, the Company determined that the impairment of a nonagency collateralized mortgage obligation with a book value of $1.8 million had become other than temporary.  Consequently, the Company recorded a total of $615,000 of pre-tax charges to income.  During 2010, no securities were determined to have impairment that had become other than temporary.  During 2009, the Company determined that the impairment of certain available-for-sale securities with a book value of $8.5 million had become other than temporary.  Consequently, the Company recorded a $4.3 million pre-tax charge to income during 2009.  This total charge included $2.9 million related to the nonagency collateralized mortgage obligation that was also determined to be impaired during 2011. 

Credit Losses Recognized on Investments

Certain debt securities have experienced fair value deterioration due to credit losses, as well as due to other market factors, but are not otherwise other than temporarily impaired. 

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
	2011	2010
	(In Thousands)
Credit losses on debt securities held
Beginning of year	$2,983	$2,983
Additions related to other-than-temporary losses
not previously recognized	—	—
Additions related to increases in credit losses on debt
securities for which other-than-temporary
impairment losses were previously recognized	615	—
Reductions due to sales	—	—
End of year	$3,598	$2,983