Securities

3 Months Ended

Mar. 31, 2013

Securities [Abstract]

Securities

2. Securities

The Company’s securities available for sale portfolio is summarized as follows:

(Dollar amounts in thousands)	Amortized		Unrealized		Unrealized			Fair
	cost		gains		losses			value
March 31, 2013:
Trust preferred securities	$	45,895	$	409	$	(8,063	)	$	38,241
Municipal securities		177,528		12,154		(423	)		189,259
Equity securities		1,142		849		—			1,991
Corporate bonds		219,737		7,832		(496	)		227,073
Mortgage-backed securities
U.S. sponsored entities		598,647		29,535		(426	)		627,756
Private label		2,276		33		—			2,309
Subtotal mortgage-backed securities		600,923		29,568		(426	)		630,065
Total securities	$	1,045,225	$	50,812	$	(9,408	)	$	1,086,629
December 31, 2012:
Trust preferred securities	$	45,894	$	367	$	(8,234	)	$	38,027
Municipal securities		177,414		13,717		(244	)		190,887
Equity securities		1,142		676		—			1,818
Corporate bonds		219,700		7,186		(1,091	)		225,795
Mortgage-backed securities
U.S. sponsored entities		617,158		33,021		(246	)		649,933
Private label		4,139		177		—			4,316
Subtotal mortgage-backed securities		621,297		33,198		(246	)		654,249
Total securities	$	1,065,447	$	55,144	$	(9,815	)	$	1,110,776

The private-label mortgage backed securities totaled $2.3 million and $4.3 million as of March 31, 2013 and December 31, 2012, respectively.

The following table shows the Company’s 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 March 31, 2013:

As of March 31, 2013

(Dollar amounts in thousands)

	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses
Trust preferred securities		—	$	—	$	—		9	$	36,353	$	8,063		9	$	36,353	$	8,063
Municipal securities		10		8,130		210		2		3,032		213		12		11,162		423
Corporate bonds		2		6,078		12		5		20,516		484		7		26,594		496
Mortgage-backed securities
U.S. sponsored entities		16		65,565		426		—		—		—		16		65,565		426
Total		28	$	79,773	$	648		16	$	59,901	$	8,760		44	$	139,674	$	9,408

The following table shows the Company’s 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 December 31, 2012:

As of December 31, 2012

(Dollar amounts in thousands)

	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses
Trust preferred securities		—	$	—	$	—		9	$	36,179	$	8,234		9	$	36,179	$	8,234
Municipal securities		5		4,179		58		2		3,059		186		7		7,238		244
Corporate bonds		5		15,604		110		5		20,020		981		10		35,624		1,091
Mortgage-backed securities
U.S. sponsored entities		8		28,246		246		—		—		—		8		28,246		246
Total		18	$	48,029	$	414		16	$	59,258	$	9,401		34	$	107,287	$	9,815

The Company primarily invests in mortgage-backed securities, variable and fixed rate corporate bonds, municipal bonds, trust preferred securities, government bonds and to a lesser extent equity securities. The policy of the Company is to recognize other than temporary impairment (OTTI) on equity securities where the fair value has been significantly below cost for three consecutive quarters. Declines in the fair value of the corporate bonds that can be attributed to specific adverse conditions affecting the credit quality of the investment would be recorded as OTTI losses and charged to earnings. In order to determine if a decline in fair value is other than temporary, the Company reviews corporate ratings of the investment, analyst reports and SEC filings of the issuers. For fixed maturity investments with unrealized losses due to interest rates where the Company expects to recover the entire amortized cost basis of the security, declines in value below cost are not assumed to be other than temporary. The Company reviews its position quarterly and has asserted that at March 31, 2013, the declines outlined in the above table represent temporary declines due to changes in interest rates and are not reflections of impairment in the credit quality of the securities. Additionally, the Company does not intend to sell the investment and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis.

The Company reviews investment debt securities on an ongoing basis for the presence of OTTI with formal reviews performed quarterly. Credit-related OTTI losses on individual securities are recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in accumulated other comprehensive income. There were no OTTI losses on individual securities during the quarter.

One pooled trust preferred security has previously been determined to be other than temporarily impaired due solely to credit related factors. This security is a collateralized debt obligation currently comprised of trust preferred securities of 10 financial institutions and has a Moody’s rating of Ca, which is below investment grade. The Company utilized a discounted cash flow method to determine the amount of impairment. During this analysis, the Company determined that two of these financial institutions are currently deferring interest payments. The Company utilized an independent third party to analyze this bond at December 31, 2011 and the Company believes the factors have improved for this bond since the third party review and no additional impairment exists.

Because of the subprime crisis current markets for variable rate corporate trust preferred securities are illiquid. In order to determine prices of these securities the Company utilizes a discounted cash flow method. This method is described more fully in footnote 9, “Fair Value.”

The following table summarizes scheduled maturities of the Company’s securities as of March 31, 2013 and December 31, 2012 excluding equity securities which have no maturity dates:

As of March 31, 2013

(Dollar amounts in thousands)

	Available for sale
	Weighted			Amortized		Fair
	Average Yield			cost		value
Due in one year or less		3.71	%	$	22,982	$	23,303
Due from one year to five years		3.06	%		187,547		195,987
Due from five to ten years		3.15	%		106,489		110,108
Due after ten years		3.18	%		727,065		755,240
		3.17	%	$	1,044,083	$	1,084,638

As of December 31, 2012

(Dollar amounts in thousands)

	Available for sale
	Weighted			Amortized		Fair
	Average Yield			cost		value
Due in one year or less		3.80	%	$	19,137	$	19,411
Due from one year to five years		3.05	%		187,595		195,182
Due from five to ten years		3.27	%		108,288		111,879
Due after ten years		3.30	%		749,285		782,486
		3.26	%	$	1,064,305	$	1,108,958

For purposes of the maturity table, mortgage backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on weighted-average contractual maturities of underlying collateral. The mortgage-backed securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

The proceeds from the sale of securities for the three months ended March 31, 2013 was $1.5 million resulting in gross realized gains of $268,000. The proceeds from the sale of securities for the three months ended March 31, 2012 $25.4 million resulting in gross realized gains of $267,000. There were no gross realized losses for the three months ended March 31, 2013 and 2012, respectively.