3. SECURITIES

Securities Portfolio

(Amounts in thousands)


	June 30, 2012									December 31, 2011
	Amortized		Gross Unrealized					Fair		Amortized		Gross Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
Securities Available-for-Sale
U.S. Treasury	$	87,286	$	966	$	—		$	88,252	$	60,590	$	931	$	—		$	61,521
U.S. Agencies		—		—		—			—		10,014		20		—			10,034
Collateralized mortgage obligations		292,177		13,223		(132	)		305,268		344,078		12,062		(140	)		356,000
Residential mortgage -backed securities		983,811		50,302		—			1,034,113		1,140,555		48,660		(2	)		1,189,213
State and municipal		186,029		11,690		(203	)		197,516		154,080		12,140		(23	)		166,197
Foreign sovereign debt		500		—		—			500		500		—		—			500

Total	$	1,549,803	$	76,181	$	(335	)	$	1,625,649	$	1,709,817	$	73,813	$	(165	)	$	1,783,465

Securities Held-to-Maturity
Residential mortgage -backed securities	$	675,211	$	13,365	$	(79	)	$	688,497	$	490,072	$	3,172	$	(85	)	$	493,159
Commercial mortgage-backed securities		17,495		185		—		$	17,680		—		—		—			—
State and municipal		571		—		—			571		71		—		—			71

Total	$	693,277	$	13,550	$	(79	)	$	706,748	$	490,143	$	3,172	$	(85	)	$	493,230

Non-Marketable Equity Investments
FHLB stock	$	43,467	$	—	$	—		$	43,467	$	40,695	$	—	$	—		$	40,695
Other		4,235		—		—			4,235		2,909		—		—			2,909

Total	$	47,702	$	—	$	—		$	47,702	$	43,604	$	—	$	—		$	43,604

Non-marketable equity investments primarily consist of Federal Home Loan Bank (“FHLB”) stock and represent amounts required to be invested in the common stock of the FHLB as a result of our membership in, and borrowings from, the FHLB. This equity security is “restricted” in that it can only be sold to the FHLB or another member institution at par. Therefore, it is less liquid than other equity securities. The fair value is estimated to be cost, and no other-than-temporary impairments have been recorded on this security during 2012 and 2011 with such impairment assessment based on the expectation that the investment would ultimately be recovered at par. Other non-marketable equity investments include certain interests we have in investment funds that make qualifying investments for purposes of supporting our community reinvestment initiatives (“CRA investments”).

The carrying value of securities pledged to secure public deposits, FHLB advances, trust deposits, Federal Reserve Bank (“FRB”) discount window borrowings, derivative transactions, standby letters of credit with counterparty banks and for other purposes as permitted or required by law, totaled $498.9 million at June 30, 2012 and $514.6 million at December 31, 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 consolidated equity at June 30, 2012 or December 31, 2011.

The following table presents the fair values of securities with unrealized losses as of June 30, 2012 and December 31, 2011. The securities presented are grouped according to the time periods during which the securities have been in a continuous unrealized loss position.

Securities in Unrealized Loss Position

(Amounts in thousands)


	Less Than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
*As of June 30, 2012*
Securities Available-for-Sale
Collateralized mortgage obligations	$	32,222	$	(117	)	$	1,473	$	(15	)	$	33,695	$	(132	)
State and municipal		17,473		(203	)		—		—			17,473		(203	)

Total	$	49,695	$	(320	)	$	1,473	$	(15	)	$	51,168	$	(335	)

Securities Held-to-Maturity
Residential mortgage-backed securities	$	13,652	$	(79	)	$	—	$	—		$	13,652	$	(79	)

*As of December 31, 2011*
Securities Available-for-Sale
Collateralized mortgage obligations	$	36,126	$	(140	)	$	—	$	—		$	36,126	$	(140	)
Residential mortgage-backed securities		154		(2	)		—		—			154		(2	)
State and municipal		4,352		(23	)		—		—			4,352		(23	)

Total	$	40,632	$	(165	)	$	—	$	—		$	40,632	$	(165	)

Securities Held-to-Maturity
Residential mortgage-backed securities	$	80,500	$	(85	)	$	—	$	—		$	80,500	$	(85	)

There were $1.5 million of securities with $15,000 in an unrealized loss position for greater than 12 months at June 30, 2012 and none at December 31, 2011. This unrealized loss was caused primarily by changes in interest rates and spreads. We do not intend to sell the securities and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity. Accordingly, we do not consider these securities to be other-than-temporarily impaired at June 30, 2012.

Remaining Contractual Maturity of Securities

(Amounts in thousands)


	June 30, 2012
	Available-For Sale Securities				Held-To-Maturity Securities and Non-Marketable Equity Investments
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
U.S. Treasury, U.S. Agencies, state and municipal and foreign sovereign debt securities
One year or less	$	1,793	$	1,813	$	523	$	523
One year to five years		134,704		138,164		48		48
Five years to ten years		124,966		132,892		—		—
After ten years		12,352		13,399		—		—
All other securities
Collateralized mortgage obligations		292,177		305,268		—		—
Residential mortgage-backed securities		983,811		1,034,113		675,211		688,497
Commercial mortgage-backed securities		—		—		17,495		17,680
Non-marketable equity investments		—		—		47,702		47,702

Total	$	1,549,803	$	1,625,649	$	740,979	$	754,450

Securities Gains (Losses)

(Amounts in thousands)


	Quarters Ended June 30,						Six Months Ended June 30,
	2012			2011			2012			2011
Proceeds from sales	$	—		$	33,723		$	812		$	60,493

Gross realized gains		253			848			379			1,272
Gross realized losses		(543	)		(178	)		(564	)		(235	)

Net realized (losses) gains	$	(290	)⁽¹⁾	$	670		$	(185	)	$	1,037

Income tax (benefit) provision on net realized (losses) gains	$	(115	)	$	266		$	(73	)	$	410

⁽¹⁾	Primarily relates to activity with our CRA investments and includes the amortization of tax credit investments under the effective yield method and adjustments for our portion of the of the investees’ carrying value.

Refer to Note 11 for additional details of the securities available-for-sale portfolio and the related impact of unrealized gains (losses) on other comprehensive income.