SECURITIES

The amortized cost, gross unrealized gains and losses and estimated fair values of securities available for sale as of September 30, 2011, and December 31, 2010, are summarized in the table below, in thousands:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2011
Securities available for sale:
U.S. government corporations and agencies	$	164,039	$	5,596	$	(233	)	$	169,402
Mortgage-backed securities	756,652		17,298		(4,754		)	769,196
Obligations of states and political subdivisions	261,968		15,597		(866		)	276,699
Corporate debt securities	26,261		—		(801		)	25,460
Total debt securities	1,208,920		38,491		(6,654		)	1,240,757
Equity securities	23,367		445		—			23,812
Total	$	1,232,287	$	38,936	$	(6,654	)	$	1,264,569

December 31, 2010
Securities available for sale:
U.S. government corporations and agencies	$	316,758	$	4,392	$	(1,143	)	$	320,007
Mortgage-backed securities	586,796		17,455		(4,211		)	600,040
Obligations of states and political subdivisions	244,368		4,235		(4,140		)	244,463
Corporate debt securities	16,142		—		(1,168		)	14,974
Total debt securities	1,164,064		26,082		(10,662		)	1,179,484
Equity securities	24,743		472		—			25,215
Total	$	1,188,807	$	26,554	$	(10,662	)	$	1,204,699

The amortized cost, gross unrealized gains and losses and estimated fair values of held to maturity securities as of September 30, 2011, and December 31, 2010, are summarized in the table below, in thousands:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2011
Securities held to maturity:
Mortgage-backed securities	$	9,307	$	119	$	(1,179	)	$	8,247
Obligations of states and political subdivisions	49,130		181		(13		)	49,298
Total	$	58,437	$	300	$	(1,192	)	$	57,545

December 31, 2010
Securities held to maturity:
Mortgage-backed securities	$	9,825	$	145	$	(993	)	$	8,977
Obligations of states and political subdivisions	49,796		—		(163		)	49,633
Total	$	59,621	$	145	$	(1,156	)	$	58,610

Nearly 82% of Heartland's mortgage-backed securities are issuances of government-sponsored enterprises.

The following table summarizes, in thousands, the amount of unrealized losses, defined as the amount by which cost or amortized cost exceeds fair value, and the related fair value of investments with unrealized losses in Heartland's securities portfolio as of September 30, 2011, and December 31, 2010. The investments were segregated into two categories: those that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more months. The reference point for determining how long an investment was in an unrealized loss position was September 30, 2010, and December 31, 2009, respectively.



	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2011
U.S. government corporations and agencies	$	50,231	$	(233	)	$	—	$	—		$	50,231	$	(233	)
Mortgage-backed securities	168,537		(2,617		)	49,460		(2,137		)	217,997		(4,754		)
Obligations of states and political subdivisions	5,171		(162		)	4,094		(704		)	9,265		(866		)
Corporate debt securities	14,562		(445		)	10,897		(356		)	25,459		(801		)
Total debt securities	238,501		(3,457		)	64,451		(3,197		)	302,952		(6,654		)
Equity securities	—		—			—		—			—		—
Total temporarily impaired securities	$	238,501	$	(3,457	)	$	64,451	$	(3,197	)	$	302,952	$	(6,654	)

December 31, 2010
U.S. government corporations and agencies	$	107,583	$	(1,143	)	$	—	$	—		$	107,583	$	(1,143	)
Mortgage-backed securities	104,724		(2,765		)	11,984		(1,446		)	116,708		(4,211		)
Obligations of states and political subdivisions	109,387		(3,995		)	763		(145		)	110,150		(4,140		)
Corporate debt securities	14,974		(1,168		)	—		—			14,974		(1,168		)
Total debt securities	336,668		(9,071		)	12,747		(1,591		)	349,415		(10,662		)
Equity securities	—		—			—		—			—		—
Total temporarily impaired securities	$	336,668	$	(9,071	)	$	12,747	$	(1,591	)	$	349,415	$	(10,662	)

Unrealized losses on Heartland's mortgage-backed securities are the result of changes in market interest rates or widening of market spreads subsequent to the initial purchase of the securities and not related to concerns regarding the underlying credit of the issuers or the underlying collateral. It is expected that the securities will not be settled at a price less than the amortized cost of the investment. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because Heartland has the intent and ability to hold these investments until a market price recovery or to maturity and does not believe it will be required to sell the securities before maturity, these investments are not considered other-than-temporarily impaired.

Unrealized losses on Heartland's obligations of states and political subdivisions are the result of changes in market interest rates or widening of market spreads subsequent to the initial purchase of the securities. Management monitors the published credit ratings of these securities and has noted credit rating reductions in a number of these securities, primarily due to the downgrade in the credit ratings of the insurance companies providing credit enhancement to that of the issuing municipalities. Because the decline in fair value is attributable to changes in interest rates or widening market spreads due to insurance company downgrades and not underlying credit quality, and because Heartland has the intent and ability to hold these investments until a market price recovery or to maturity and does not believe it will be required to sell the securities before maturity, these investments are not considered other-than-temporarily impaired.