Interest-Bearing Deposits and Securities

3 Months Ended

Sep. 30, 2011

Interest-Bearing Deposits and Securities

Interest-Bearing Deposits and Securities

Note 5:  INTEREST-BEARING DEPOSITS AND SECURITIES

The following table sets forth additional detail regarding our interest-bearing deposits and securities at the dates indicated (includes securities—trading, available-for-sale and held-to-maturity, all at carrying value) (in thousands):

	September 30 2011		December 31 2010		September 30 2010
Interest-bearing deposits included in cash and due from banks	$	234,824	$	321,896	$	441,977
U.S. Government and agency obligations		292,012		139,807		116,188
Municipal bonds:
Taxable		15,220		7,123		2,953
Tax exempt		92,432		75,509		69,504
Total municipal bonds		107,652		82,632		72,457
Corporate bonds		52,238		58,495		46,035
Mortgage-backed or related securities:
GNMA		20,815		23,732		16,105
FHLMC		25,350		26,952		32,160
FNMA		47,177		32,341		35,509
Private issuer		2,589		3,544		3,994
Total mortgage-backed or related securities		95,931		86,569		87,768
Equity securities (excludes FHLB stock)		545		190		144
Total securities		548,378		367,693		322,592
FHLB stock		37,371		37,371		37,371
	$	820,573	$	726,960	$	801,940

Securities—Trading:  The amortized cost and estimated fair value of securities—trading at September 30, 2011 and December 31, 2010 are summarized as follows (dollars in thousands):

	September 30, 2011							December 31, 2010
	Amortized Cost		Fair Value		Percent of Total			Amortized Cost		Fair Value		Percent of Total
U.S. Government and agency   obligations	$	3,402	$	3,633		4.3	%	$	4,167	$	4,379		4.6	%
Municipal bonds:
Taxable		391		441		0.5			682		693		0.7
Tax exempt		5,428		5,545		6.5			5,422		5,705		6.0
Total municipal bonds		5,819		5,986		7.0			6,104		6,398		6.7
Corporate bonds		63,507		35,257		41.3			63,581		34,724		36.4
Mortgage-backed or related securities:
FHLMC		11,615		12,416		14.5			16,554		17,347		18.2
FNMA		25,490		27,582		32.3			30,749		32,341		33.9
Total mortgage-backed or          related securities		37,105		39,998		46.8			47,303		49,688		52.1
Equity securities		6,915		545		0.6			6,915		190		0.2
	$	116,748	$	85,419		100.0	%	$	128,070	$	95,379		100.0	%

There were no sales of securities—trading during the nine months ended September 30, 2011 or 2010.  The Company did not recognize an OTTI charge on securities—trading during the nine months ended September 30, 2011.  However, for the nine months ended September 30, 2010, we recognized a $1.2 million OTTI charge on a corporate bond that is a single-issue trust preferred security.  At September 30, 2011, there was one single-issuer trust preferred security in our trading portfolio on nonaccrual status with an amortized cost of $4.3 million and an estimated fair value of $1.4 million.  This same security was on nonaccrual status as of December 31, 2010.

The amortized cost and estimated fair value of securities—trading at September 30, 2011 and December 31, 2010, by contractual maturity, are shown below (in thousands).  Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.

	September 30, 2011				December 31, 2010
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	2,001	$	2,023	$	1,762	$	1,816
Due after one year through five years		1,545		1,632		2,549		2,668
Due after five years through ten years		18,330		19,579		20,442		21,328
Due after ten years through twenty   years		13,769		14,129		16,234		16,840
Due after twenty years		74,188		47,511		80,168		52,537
		109,833		84,874		121,155		95,189
Equity securities		6,915		545		6,915		190
	$	116,748	$	85,419	$	128,070	$	95,379

Securities—Available-for-Sale:  The amortized cost and estimated fair value of securities—available-for-sale at September 30, 2011 and December 31, 2010 are summarized as follows (dollars in thousands):

	September 30, 2011
	Amortized Cost		Gross Unrealized Gains			Gross Unrealized Losses			Fair Value	Percent of Total
U.S. Government and agency obligations	$	287,683	$	787	$	(91	)	$	288,379	75.1	%
Municipal bonds:
Taxable		7,380		197		(1	)		7,576	2.0
Tax exempt		15,920		153		(22	)		16,051	4.2
Total municipal bonds		23,300		350		(23	)		23,627	6.2
Corporate bonds		15,718		15		(3	)		15,730	4.1
Mortgage-backed or related securities:
FHLMC		19,321		1,494		--			20,815	5.4
FNMA		12,731		204		--			12,935	3.4
GNMA		19,362		266		(33	)		19,595	5.1
Private issuer		2,447		142		--			2,589	0.7
Total mortgage-backed or related              securities		53,861		2,106		(33	)		55,934	14.6
	$	380,562	$	3,258	$	(150	)	$	383,670	100.0	%
	December 31, 2010
	Amortized Cost		Gross Unrealized Gains			Gross Unrealized Losses			Fair Value	Percent of Total
U.S. Government and agency obligations	$	135,770	$	323	$	(665	)	$	135,428	67.6	%
Municipal bonds:
Taxable		800		--		(25	)		775	0.4
Tax exempt		4,723		--		(102	)		4,621	2.3
Total municipal bonds		5,523		--		(127	)		5,396	2.7
Corporate bonds		22,536		--		(14	)		22,522	11.2
Mortgage-backed or related securities:
FHLMC		9,314		291		--			9,605	4.8
GNMA		22,597		1,167		(32	)		23,732	11.9
Private issuer		3,318		226		--			3,544	1.8
Total mortgage-backed or related               securities		35,229		1,684		(32	)		36,881	18.5
	$	199,058	$	2,007	$	(838	)	$	200,227	100.0	%

At September 30, 2011 and December 31, 2010, an aging of unrealized losses and fair value of related securities—available-for-sale was as follows (in thousands):

	September 30, 2011
	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Government and agency   obligations	$	104,885	$	(91	)	$	--	$	--	$	104,885	$	(91	)
Municipal bonds:
Taxable		600		(1	)		--		--		600		(1	)
Tax exempt		5,907		(22	)		--		--		5,907		(22	)
Total municipal bonds		6,507		(23	)		--		--		6,507		(23	)
Corporate bonds		2,222		(3	)		--		--		2,222		(3	)
Mortgage-backed or related   securities		15,278		(33	)		--		--		15,278		(33	)
	$	128,892	$	(150	)	$	--	$	--	$	128,892	$	(150	)
	December 31, 2010
	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Government and agency  obligations	$	70,426	$	(665	)	$	--	$	--	$	70,426	$	(665	)
Municipal bonds:
Taxable		775		(25	)		--		--		775		(25	)
Tax exempt		4,621		(102	)		--		--		4,621		(102	)
Total municipal bonds		5,396		(127	)		--		--		5,396		(127	)
Corporate bonds		17,604		(14	)		--		--		17,604		(14	)
Mortgage-backed or related   securities		2,488		(32	)		--		--		2,488		(32	)
	$	95,914	$	(838	)	$	--	$	--	$	95,914	$	(838	)

Proceeds from the sale of three securities—available-for-sale during the nine months ended September 30, 2011 were $13.2 million compared to proceeds of $2.0 million from the sale of one security during the nine months ended September 30, 2010.  There were no gains or losses from the sale of securities—available-for-sale for the nine months ended September 30, 2011 and 2010, and in addition we had no OTTI charges over those same time periods.  At September 30, 2011, there were 25 securities—available-for-sale with unrealized losses, compared to 24 at December 31, 2010.  Management does not believe that any individual unrealized loss as of September 30, 2011 represents OTTI.  The decline in fair market value of these securities was generally due to changes in interest rates and changes in market-desired spreads subsequent to their purchase.

The amortized cost and estimated fair value of securities—available-for-sale at September 30, 2011 and December 31, 2010, by contractual maturity, are shown below (in thousands).  Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.

	September 30, 2011				December 31, 2010
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	20,104	$	20,124	$	55,135	$	55,132
Due after one year through five years		244,455		245,311		107,356		106,916
Due after five years through ten years		88,270		88,699		1,338		1,298
Due after ten years through twenty   years		2,446		2,589		3,318		3,544
Due after twenty years		25,287		26,947		31,911		33,337
	$	380,562	$	383,670	$	199,058	$	200,227

Securities—Held-to-Maturity:  The amortized cost and estimated fair value of securities—held-to-maturity at September 30, 2011 and December 31, 2010 are summarized as follows (dollars in thousands):

		September 30, 2011
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value	Percent of Total
Municipal bonds:
Taxable	$	7,203	$	366	$	--		$	7,569	9.1	%
Tax exempt		70,836		3,728		(8	)		74,556	89.4
Total municipal bonds		78,039		4,094		(8	)		82,125	98.5
Corporate bonds		1,250		--		(3	)		1,247	1.5
	$	79,289	$	4,094	$	(11	)	$	83,372	100.0	%
		December 31, 2010
				Gross		Gross
		Amortized		Unrealized		Unrealized			Fair	Percent
		Cost		Gains		Losses			Value	of Total
Municipal bonds:
Taxable	$	5,654	$	68	$	(71	)	$	5,651	7.6	%
Tax exempt		65,183		1,952		(106	)		67,029	90.7
Total municipal bonds		70,837		2,020		(177	)		72,680	98.3
Corporate bonds		1,250		8		(22	)		1,236	1.7
	$	72,087	$	2,028	$	(199	)	$	73,916	100.0	%

At September 30, 2011 and December 31, 2010, an age analysis of unrealized losses and fair value of related securities—held-to-maturity was as follows (in thousands):

	September 30, 2011
	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Municipal bonds:
Taxable	$	--	$	--		$	--	$	--		$	--	$	--
Tax exempt	2,156		(3		)	1,854		(5		)	4,010		(8		)
Total municipal bonds	2,156		(3		)	1,854		(5		)	4,010		(8		)
Corporate bonds	--		--			497		(3		)	497		(3		)
	$	2,156	$	(3	)	$	2,351	$	(8	)	$	4,507	$	(11	)
	December 31, 2010
	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Municipal bonds:
Taxable	$	3,443	$	(71	)	$	--	$	--		$	3,443	$	(71	)
Tax exempt	13,301		(106		)	--		--			13,301		(106		)
Total municipal bonds	16,744		(177		)	--		--			16,744		(177		)
Corporate bonds	--		--			478		(22		)	478		(22		)
	$	16,744	$	(177	)	$	478	$	(22	)	$	17,222	$	(199	)

There were no sales of securities—held-to-maturity during the nine months ended September 30, 2011 and 2010.  The Company did not recognize any OTTI charge on securities—held-to-maturity during the nine months ended September 30, 2011; however, we did recognize $3.0 million from the recovery of one security—held-to-maturity which had previously been charged off as OTTI in the prior year.  Aside from the previously mentioned $3.0 million OTTI charge, there were no other OTTI charges for the nine months ended September 30, 2010 for securities—held-to-maturity.  As of September 30, 2011, there were two held-to-maturity non-rated corporate bonds issued by a housing authority on nonaccrual status each with an amortized cost of $250,000 and estimated fair value of $249,000.  Management expects to collect all amounts due for these securities.  There were four securities—held-to-maturity with unrealized losses at September 30, 2011, compared to 13 at December 31, 2010.  Management does not believe that any individual unrealized loss as of September 30, 2011 represents OTTI.  The decline in fair market value of these securities was generally due to changes in interest rates and changes in market-desired spreads subsequent to their purchase.

The amortized cost and estimated fair value of securities—held-to-maturity at September 30, 2011 and December 31, 2010, by contractual maturity, are shown below (in thousands).  Expected maturities will differ from contractual maturities because some securities may be called or prepaid with or without call or prepayment penalties.

	September 30, 2011				December 31, 2010
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	3,069	$	3,108	$	2,297	$	2,342
Due after one year through five years		14,465		15,142		10,634		11,145
Due after five years through ten years		11,610		12,093		15,143		15,368
Due after ten years through twenty   years		48,299		51,040		41,832		42,765
Due after twenty years		1,846		1,989		2,181		2,296
	$	79,289	$	83,372	$	72,087	$	73,916

The following table presents, as of September 30, 2011, investment securities of all categories which were pledged to secure borrowings, public deposits or other obligations as permitted or required by law (in thousands):

		Amortized Cost		Fair Value
Purpose or beneficiary:
State and local governments public deposits	$	98,878	$	103,729
Interest rate swap counterparties		5,841		6,198
Retail repurchase transaction accounts		104,473		107,952
Other		4,229		4,437
Total pledged securities	$	213,421	$	222,316