SECURITIES

The amortized cost, gross unrealized gains and losses and estimated fair values of available for sale securities as of December 31, 2011 and 2010, are summarized as follows:



(Dollars in thousands)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
2011
Securities available for sale:
U.S. government corporations and agencies	$	104,719	$	2,428	$	—		$	107,147
Mortgage-backed securities	815,408		14,643		(4,997		)	825,054
Obligations of states and political subdivisions	272,660		14,983		(973		)	286,670
Corporate debt securities	26,284		29		(1,060		)	25,253
Total debt securities	1,219,071		32,083		(7,030		)	1,244,124
Equity securities	23,389		486		—			23,875
Total	$	1,242,460	$	32,569	$	(7,030	)	$	1,267,999
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 December 31, 2011 and 2010, are summarized as follows:



(Dollars in thousands)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
2011
Securities held to maturity:
Mortgage-backed securities	$	9,131	$	40	$	(1,532	)	$	7,639
Obligations of states and political subdivisions	49,129		730		(12		)	49,847
Total	$	58,260	$	770	$	(1,544	)	$	57,486
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 80% of our mortgage-backed securities are issuances of government-sponsored enterprises.

Included in the equity securities at December 31, 2011 and 2010, were shares of stock in each Federal Home Loan Bank (the "FHLB") of Des Moines, Chicago, Dallas, San Francisco, Seattle and Topeka at an amortized cost of $14.4 million and $15.8 million, respectively. There were no unrealized gains or losses recorded on these securities as they are not readily marketable. Heartland considers its FHLB stock as a long-term investment that provides access to competitive products and liquidity. During 2009, certain FHLBs in the FHLB System suspended repurchases of excess capital stock. Heartland evaluates impairment in these investments based on the ultimate recoverability of the par value and at December 31, 2011, did not consider the investments to be other than temporarily impaired.

The amortized cost and estimated fair value of debt securities available for sale at December 31, 2011, by contractual maturity using estimated prepayment speeds on mortgage-backed securities, are as follows. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.



(Dollars in thousands)
	Amortized Cost		Estimated Fair Value
Securities available for sale:
Due in 1 year or less	$	174,266	$	175,245
Due in 1 to 5 years	534,848		542,457
Due in 5 to 10 years	117,289		121,001
Due after 10 years	392,668		405,421
Total	$	1,219,071	$	1,244,124

The amortized cost and estimated fair value of debt securities held to maturity at December 31, 2011, by contractual maturity using estimated prepayment speeds on mortgage-backed securities, are as follows. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.



(Dollars in thousands)
	Amortized Cost		Estimated Fair Value
Securities held to maturity:
Due in 1 year or less	$	1,259	$	946
Due in 1 to 5 years	7,464		6,254
Due in 5 to 10 years	1,693		1,711
Due after 10 years	47,844		48,575
Total	$	58,260	$	57,486

As of December 31, 2011, securities with a fair value of $557.0 million were pledged to secure public and trust deposits, short-term borrowings and for other purposes as required by law.

Gross gains and losses realized related to sales of securities for the years ended December 31, 2011, 2010, and 2009, are summarized as follows:



(Dollars in thousands)
	2011		2010		2009
Securities sold:
Proceeds from sales	$	493,167	$	399,901	$	199,745
Gross security gains	15,302		8,575		9,012
Gross security losses	2,198		1,741		364

During the years ended December 31, 2011, 2010, and 2009, Heartland incurred other than temporary impairment losses of $0, $0 and $40,000, respectively, on equity securities available for sale. No other than temporary impairment losses were recorded on debt securities during the years ended December 31, 2011, 2010 and 2009.

The following tables summarize 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 December 31, 2011 and 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 December 31, 2010 and 2009, respectively.



(Dollars in thousands)
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2011:
U.S. government corporations and agencies	$	—	$	—		$	—	$	—		$	—	$	—
Mortgage-backed securities	133,538		(1,794		)	71,231		(3,203		)	204,769		(4,997		)
Obligations of states and political subdivisions	13,139		(284		)	4,010		(689		)	17,149		(973		)
Corporate debt securities	5,147		(243		)	15,346		(817		)	20,493		(1,060		)
Total debt securities	151,824		(2,321		)	90,587		(4,709		)	242,411		(7,030		)
Equity securities	—		—			—		—			—		—
Total temporarily impaired securities	$	151,824	$	(2,321	)	$	90,587	$	(4,709	)	$	242,411	$	(7,030	)
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 see 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 see the securities before maturity, these investments are not considered other-than-temporarily impaired.