CASH AND SECURITIES

Cash, due from bank and cash equivalents consisted of the following at the dates indicated (in thousands):



	December 31
	2012		2011
Cash on hand and due from banks	$	181,100	$	132,189
Cash equivalents:
Short-term cash investments	198		247
	$	181,298	$	132,436

Federal regulations require depository institutions to maintain certain minimum reserve balances. Included in cash and demand deposits were required reserves of $25.4 million and $20.4 million at December 31, 2012 and 2011, respectively.

The following table sets forth a summary of Banner’s 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):



	December 31
	2012		2011
Interest-bearing deposits included in cash and due from banks	$	114,928	$	69,758
U.S. Government and agency obligations	98,617		341,606
Municipal bonds:
Taxable	31,480		18,497
Tax exempt	103,545		88,963
Total municipal bonds	135,025		107,460
Corporate bonds	48,519		42,565
Mortgage-backed or related securities:
1-4 residential agency guaranteed	115,966		107,173
1-4 residential other	1,299		1,835
Multifamily agency guaranteed	177,940		20,919
Multifamily other	10,659		—
Total mortgage-backed securities	305,864		129,927
Asset-backed securities:	42,516		—
Equity securities (excludes FHLB stock)	63		402
Total securities	630,604		621,960
FHLB stock	36,705		37,371
	$	782,237	$	729,089

Securities—Trading: The amortized cost and estimated fair value of securities—trading at December 31, 2012 and 2011 are summarized as follows (dollars in thousands):



	December 31, 2012						December 31, 2011
	Amortized Cost		Fair Value		Percent of Total		Amortized Cost		Fair Value		Percent of Total
U.S. Government and agency obligations	$	1,380	$	1,637	2.3	%	$	2,401	$	2,635	3.3	%
Municipal bonds:
Taxable	—		—		—		391		420		0.5
Tax exempt	5,590		5,684		8.0		5,431		5,542		6.9
Total municipal bonds	5,590		5,684		8.0		5,822		5,962		7.4
Corporate bonds	57,807		35,741		50.2		63,502		35,055		43.4
Mortgage-backed and related securities:
1-4 residential agency guaranteed	25,548		28,107		39.4		34,024		36,673		45.4
Total mortgage-backed and related securities	25,548		28,107		39.4		34,024		36,673		45.4
Equity securities	14		63		0.1		6,914		402		0.5
	$	90,339	$	71,232	100.0	%	$	112,663	$	80,727	100.0	%

There were eight sales of securities—trading for the year ended December 31, 2012 with proceeds of $5.1 million and related gains of $13,000. There were no sales of securities—trading for the years ended December 31, 2011, and 2010. The Company recognized $409,000 in OTTI charges on securities—trading for the year ended December 31, 2012 compared to no OTTI charges in 2011 and OTTI charges of $1.2 million for the year ended December 31, 2010. Additionally, at December 31, 2012 and 2011, there were no securities—trading in a nonaccrual status. Net unrealized holding gains of $6.3 million were recognized in 2012 compared to $754,000 and $497,000 of net unrealized holding gains on securities—trading for the years ended December 31, 2011 and 2010, respectively.

The amortized cost and estimated fair value of securities—trading at December 31, 2012 and 2011, 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.



	December 31, 2012				December 31, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	—	$	—	$	1,000	$	1,009
Due after one year through five years	1,679		1,767		1,545		1,626
Due after five years through ten years	3,743		3,750		4,087		4,123
Due after ten years through twenty years	7,626		6,492		6,544		6,184
Due after twenty years	51,729		31,053		58,549		30,710
	64,777		43,062		71,725		43,652
Mortgage-backed securities	25,548		28,107		34,024		36,673
Equity securities	14		63		6,914		402
	$	90,339	$	71,232	$	112,663	$	80,727

Securities—Available-for-Sale: The amortized cost, gross unrealized losses and gains and estimated fair value of securities— available-for-sale at December 31, 2012 and 2011 are summarized as follows (dollars in thousands):



	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Percent of Total
U.S. Government and agency obligations	$	96,666	$	367	$	(53	)	$	96,980	20.5	%
Municipal bonds:
Taxable	20,987		233		(67		)	21,153		4.5
Tax exempt	23,575		221		(11		)	23,785		5.0
Total municipal bonds	44,562		454		(78		)	44,938		9.5
Corporate bonds	10,701		37		(9		)	10,729		2.3
Mortgage-backed or related securities:
1-4 residential agency guaranteed	87,392		1,051		(584		)	87,859		18.6
1-4 residential other	1,223		76		—			1,299		0.3
Multifamily agency guaranteed	176,026		2,140		(226		)	177,940		37.6
Multifamily other	10,700		4		(45		)	10,659		2.2
Total mortgage-backed or related securities	275,341		3,271		(855		)	277,757		58.7
Asset-backed securities:
SLMA	42,380		210		(74		)	42,516		9.0
	$	469,650	$	4,339	$	(1,069	)	$	472,920	100.0	%
	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Percent of Total
U.S. Government and agency obligations	$	338,165	$	862	$	(56	)	$	338,971	72.8	%
Municipal bonds:
Taxable	10,358		225		(2		)	10,581		2.3
Tax exempt	16,535		210		(16		)	16,729		3.6
Total municipal bonds	26,893		435		(18		)	27,310		5.9
Corporate bonds	6,240		20		—			6,260		1.3
Mortgage-backed or related securities:
1-4 residential agency guaranteed	68,922		1,711		(133		)	70,500		15.1
1-4 residential other	1,735		100		—			1,835		0.4
Multifamily agency guaranteed	20,624		310		(15		)	20,919		4.5
Total mortgage-backed or related securities	91,281		2,121		(148		)	93,254		20.0
Asset-backed securities:
SLMA	—		—		—			—		—
	$	462,579	$	3,438	$	(222	)	$	465,795	100.0	%

At December 31, 2012 and 2011, an aging of unrealized losses and fair value of related securities—available-for-sale was as follows (in thousands):



	December 31, 2012
	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	$	22,955	$	(53	)	$	—	$	—		$	22,955	$	(53	)
Municipal bonds:
Taxable	11,009		(67		)	—		—			11,009		(67		)
Tax exempt	4,619		(11		)	—		—			4,619		(11		)
Total municipal bonds	15,628		(78		)	—		—			15,628		(78		)
Corporate bonds	6,670		(9		)	—		—			6,670		(9		)
Mortgage-backed or related securities:
1-4 residential agency guaranteed	32,459		(503		)	5,746		(81		)	38,205		(584		)
Multifamily agency guaranteed	32,170		(226		)	—		—			32,170		(226		)
Multifamily other	7,279		(45		)	—		—			7,279		(45		)
Total mortgage-backed or related securities	71,908		(774		)	5,746		(81		)	77,654		(855		)
Asset-backed securities:
SLMA	19,716		(74		)	—		—			19,716		(74		)
	$	136,877	$	(988	)	$	5,746	$	(81	)	$	142,623	$	(1,069	)



	December 31, 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	$	74,326	$	(56	)	$	—	$	—	$	74,326	$	(56	)
Municipal bonds:
Taxable	3,599		(2		)	—		—		3,599		(2		)
Tax exempt	4,075		(16		)	—		—		4,075		(16		)
Total municipal bonds	7,674		(18		)	—		—		7,674		(18		)
Mortgage-backed or related securities:
1-4 residential agency guaranteed	26,730		(133		)	—		—		26,730		(133		)
Multifamily agency guaranteed	7,158		(15		)	—		—		7,158		(15		)
Total mortgage-backed or related securities	33,888		(148		)	—		—		33,888		(148		)
	$	115,888	$	(222	)	$	—	$	—	$	115,888	$	(222	)

Proceeds from the sale of three available-for-sale securities were $13 million for the year ended December 31, 2012 and the Company recognized a gain of $38,000 on those sales. There were four sales of securities—available-for-sale during the year ended December 31, 2011 with proceeds of $28 million and resulting losses of $5,000. There was one sale of securities—available-for-sale of $2 million with a resulting gain of $36,000 during the year ended December 31, 2010. There were no OTTI impairment charges on securities—available-for-sale for the years ended December 31, 2012, 2011 and 2010. At December 31, 2012, there were 52 securities— available-for-sale with unrealized losses, compared to 26 at December 31, 2011 and 24 at December 31, 2010. Management does not believe that any individual unrealized loss as of December 31, 2012, 2011 or 2010 represented 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 December 31, 2012 and 2011, 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.



	December 31, 2012				December 31, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	16,369	$	16,393	$	19,520	$	19,602
Due after one year through five years	104,917		105,579		312,862		313,930
Due after five years through ten years	51,654		51,637		38,916		39,009
Due after ten years through twenty years	21,369		21,554		—		—
	194,309		195,163		371,298		372,541
Mortgage-backed securities	275,341		277,757		91,281		93,254
	$	469,650	$	472,920	$	462,579	$	465,795

Securities—Held-to-Maturity: The amortized cost, gross gains and losses and estimated fair value of securities—held-to-maturity at December 31, 2012 and 2011 are summarized as follows (dollars in thousands):



	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Percent of Total
Municipal bonds:
Taxable	$	10,326	$	436	$	(157	)	$	10,605	11.5	%
Tax exempt	74,076		5,757		(30		)	79,803		86.3
Total municipal bonds	84,402		6,193		(187		)	90,408		97.8
Corporate bonds	2,050		—		—			2,050		2.2
	$	86,452	$	6,193	$	(187	)	$	92,458	100.0	%
	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Percent of Total
Municipal bonds:
Taxable	$	7,496	$	390	$	—		$	7,886	9.8	%
Tax exempt	66,692		4,281		—			70,973		88.6
Total municipal bonds	74,188		4,671		—			78,859		98.4
Corporate bonds	1,250		—		(2		)	1,248		1.6
	$	75,438	$	4,671	$	(2	)	$	80,107	100.0	%

At December 31, 2012 and 2011, an age analysis of unrealized losses and fair value of related securities—held-to-maturity was as follows (in thousands):



	December 31, 2012
	Less Than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Municipal bonds:
Taxable	$	4,137	$	(157	)	$	—	$	—	$	4,137	$	(157	)
Tax exempt	910		(30		)	—		—		910		(30		)
Total municipal bonds	5,047		(187		)	—		—		5,047		(187		)
	$	5,047	$	(187	)	$	—	$	—	$	5,047	$	(187	)



	December 31, 2011
	Less Than 12 Months				12 Months or More					Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Corporate bonds	$	—	$	—	$	498	$	(2	)	$	498	$	(2	)
	$	—	$	—	$	498	$	(2	)	$	498	$	(2	)

There were no sales of securities—held-to-maturity during the years ended December 31, 2012, 2011 or 2010. The Company recognized no OTTI charges on securities—held-to-maturity for the year ended December 31, 2012 compared to a $3 million OTTI recovery for the year ended December 31, 2011 and a $3 million charge for the year ended December 31, 2010. As of December 31, 2012, there were no securities—held-to-maturity in a nonaccrual status. There were two held-to-maturity non-rated corporate bonds issued by a housing authority in nonaccrual status as of December 31, 2011. There were five securities—held-to-maturity with unrealized losses at December 31, 2012 compared to two at December 31, 2011 and 13 at December 31, 2010. Management does not believe that any individual unrealized losses as of December 31, 2012 or 2011 represented 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 December 31, 2012 and 2011, 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.



	December 31, 2012				December 31, 2011
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	3,323	$	3,410	$	2,707	$	2,768
Due after one year through five years	13,641		14,335		14,420		15,150
Due after five years through ten years	13,295		13,452		9,726		10,254
Due after ten years through twenty years	53,031		57,868		46,741		49,936
Due after twenty years	3,162		3,393		1,844		1,999
	$	86,452	$	92,458	$	75,438	$	80,107

Pledged Securities: The following table presents, as of December 31, 2012, investment securities 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	$	119,426	$	125,433
Interest rate swap counterparties	12,149		12,480
Retail repurchase transaction accounts	107,225		109,479
Other	2,176		2,205
Total pledged securities	$	240,976	$	249,597

The carrying value of investment securities pledged to secure borrowings as of December 31, 2012 was $244.1 million.