on the consolidated financial statements of the Company since it amends only the disclosure requirements for fair value  measurements.  ASU 2011-02,  A Creditor’s Determination of Whether a Restructuring Is a Troubled Debt Restructuring,  provides  guidance clarifying under what circumstances a creditor should classify a restructured loan as a troubled debt restructuring or  “TDR”. A loan is a TDR if both of the following exist: (1) a creditor has granted a concession to the debtor, and (2) the  debtor is experiencing financial difficulties. The ASU clarifies that a creditor should consider all aspects of a restructuring  when evaluating whether it has granted a concession, which include determining whether a debtor can obtain funds from  another source at market rates and assessing the value of additional collateral and guarantees obtained at the time of  restructuring. The ASU provides factors a creditor should consider when determining if a debtor is experiencing financial  difficulties, such as probability of payment default and bankruptcy declarations. The Company adopted the new guidance in  the third quarter of 2011 with retrospective application to January 1, 2011. Adoption of the ASU required expansion of the  Company’s disclosures surrounding TDRs. See Note 6, Loans and Allowance for Loan Losses. Cash equivalents include cash on hand, cash items in process of collection, amounts due from banks, including interest  bearing deposits with other banks, and federal funds sold.  Securities are classified based on management’s intention at the date of purchase. At December 31, 2011, all of the  Company’s securities were classified as available-for-sale. Securities available-for-sale are used as part of the Company’s  interest rate risk management strategy, and they may be sold in response to changes in interest rates, changes in prepayment  risks or other factors. All securities classified as available-for-sale are recorded at fair value with any unrealized gains and  losses reported in accumulated other comprehensive loss, net of the deferred income tax effects. Interest and dividends on  securities, including the amortization of premiums and accretion of discounts are recognized in interest income over the  anticipated life of the security using the effective interest method, taking into consideration prepayment assumptions.  Realized gains and losses from the sale of securities are determined using the specific identification method.  On a quarterly basis, management makes an assessment to determine whether there have been events or economic  circumstances to indicate that a security on which there is an unrealized loss is other-than-temporarily impaired. For equity  securities with an unrealized loss, the Company considers many factors including the severity and duration of the  impairment; the intent and ability of the Company to hold the security for a period of time sufficient for a recovery in value;  and recent events specific to the issuer or industry. Equity securities on which there is an unrealized loss that is deemed to be  other-than-temporary are written down to fair value with the write-down recorded as a realized loss in securities gains  (losses), net. For debt securities with an unrealized loss, an other-than-temporary impairment write-down is triggered when (1) the  Company has the intent to sell a debt security, (2) it is more likely than not that the entity will be required to sell the debt  security before recovery of its amortized cost basis, or (3) the entity does not expect to recover the entire amortized cost basis  of the debt security. If the Company has the intent to sell a debt security or if it is more likely than not that that it will be  required to sell the debt security before recovery, the other-than-temporary write-down is equal to the entire difference  between the debt security’s amortized cost and its fair value. If the Company does not intend to sell the security or it is not  more likely than not that it will be required to sell the security before recovery, the other-than-temporary impairment write- down is separated into the amount that is credit related (credit loss component) and the amount due to all other factors. The  credit loss component is recognized in earnings, as a realized loss in securities gains (losses), and is the difference between  the security’s amortized cost basis and the present value of its expected future cash flows. The remaining difference between  the security’s fair value and the present value of future expected cash flows is due to factors that are not credit related and is  recognized in other comprehensive income, net of applicable taxes. Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value as  determined on an aggregated basis. Estimated fair value is determined on the basis of existing commitments or the current  market value of similar loans. Loan sales are recognized when the transaction closes, the proceeds are collected, and  ownership is transferred. Continuing involvement, through the sales agreement, consists of the right to service the loan for a  fee for the life of the loan, if applicable. Gains on the sale of loans held for sale are recorded as part of mortgage lending income in the Consolidated Statements of Earnings. In the course of conducting the Bank’s mortgage lending activities of originating mortgage loans and selling those  loans in the secondary market, the Bank makes various representations and warranties to the purchaser of the mortgage loans.  Loans held for sale  Securities  Cash Equivalents  page 40