Investment Securities Available For Sale

12 Months Ended

Dec. 31, 2011

Investment Securities Available For Sale [Abstract]

Investment Securities Available For Sale

(3) Investment Securities Available for Sale

The amortized cost and estimated market value of investment securities available for sale at December 31, 2011 and 2010 are as follows (in thousands):

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
U.S. agency obligations	$	102,059	$	760	$	(43	)	$	102,776
State and municipal obligations		18,526		26		(8	)		18,544
Corporate debt securities		55,000		—		(15,551	)		39,449
Equity investments		4,294		250		(34	)		4,510
	$	179,879	$	1,036	$	(15,636	)	$	165,279
	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
U.S. agency obligations	$	41,146	$	41	$	(55	)	$	41,132
State and municipal obligations		10,690		—		(75	)		10,615
Corporate debt securities		55,000		—		(15,144	)		39,856
Equity investments		370		—		(55	)		315
	$	107,206	$	41	$	(15,329	)	$	91,918

There were no gains realized during 2011, 2010 and 2009 on the sale of investment securities available for sale. Realized losses during 2011, 2010 and 2009 on the sale of investment securities totaled $-0-, $-0-, and $4,000, respectively. During 2011, the Company recognized an other-than-temporary impairment loss on equity securities of $148,000.

The amortized cost and estimated market value of investment securities available for sale, excluding equity investments, at December 31, 2011 by contractual maturity, are shown below (in thousands). Actual maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. At December 31, 2011, investment securities available for sale with an amortized cost and estimated market value of $55,000,000 and $39,449,000, respectively, were callable prior to the maturity date.

	Amortized Cost		Estimated Market Value
Less than one year	$	27,927	$	27,960
Due after one year through five years		92,658		93,360
Due after five years through ten years		—		—
Due after ten years		55,000		39,449
	$	175,585	$	160,769

The estimated market value (carrying amount) of investment securities pledged as required security for deposits and for other purposes required by law amounted to $64,219,000 and $31,163,000 at December 31, 2011 and 2010, respectively.

The estimated market value and unrealized loss for investment securities available for sale at December 31, 2011 and 2010, segregated by the duration of the unrealized loss are as follows (in thousands):

	December 31, 2011
	Less than 12 months					12 months or longer					Total
	Estimated Market Value		Unrealized Losses			Estimated Market Value		Unrealized Losses			Estimated Market Value		Unrealized Losses
U.S. Agency obligations	$	20,791	$	(43	)	$	—	$	—		$	20,791	$	(43	)
State and Municipal obligations		421		(1	)		1,935		(7	)		2,356		(8	)
Corporate debt securities		—		—			39,449		(15,551	)		39,449		(15,551	)
Equity investments		1,465		(34	)		—		—			1,465		(34	)
	$	22,677	$	(78	)	$	41,384	$	(15,558	)	$	64,061	$	(15,636	)
	December 31, 2010
	Less than 12 months					12 months or longer					Total
	Estimated Market Value		Unrealized Losses			Estimated Market Value		Unrealized Losses			Estimated Market Value		Unrealized Losses
U.S. Agency obligations	$	20,742	$	(55	)	$	—	$	—		$	20,742	$	(55	)
State and Municipal obligations		9,738		(75	)		—		—			9,738		(75	)
Corporate debt securities		—		—			39,856		(15,144	)		39,856		(15,144	)
Equity investments		104		(16	)		211		(39	)		315		(55	)
	$	30,584	$	(146	)	$	40,067	$	(15,183	)	$	70,651	$	(15,329	)

At December 31, 2011, the amortized cost, estimated market value and credit rating of the individual corporate debt securities in an unrealized loss position for greater than one year are as follows (in thousands):

Security Description	Amortized Cost		Estimated Market Value		Credit Rating Moody's/S&P
BankAmerica Capital	$	15,000	$	10,802		Ba1/BB+
Chase Capital		10,000		6,852		A2/BBB
Wells Fargo Capital		5,000		3,688		A3/A-
Huntington Capital		5,000		3,791		Baa3/BB+
Keycorp Capital		5,000		3,702		Baa3/BBB-
PNC Capital		5,000		3,683		Baa2/BBB
State Street Capital		5,000		3,767		A3/BBB+
SunTrust Capital		5,000		3,164		Baa3/BB+
	$	55,000	$	39,449

At December 31, 2011, the market value of each corporate debt security was below cost. The corporate debt securities are issued by other financial institutions with credit ratings ranging from a high of A2 to a low of BB+ as rated by one of the internationally-recognized credit rating services. These floating-rate securities were purchased during the period May 1998 to September 1998 and have paid coupon interest continuously since issuance. Floating-rate debt securities such as these pay a fixed interest rate spread over 90-day LIBOR. In recent years, the required spread increased for these types of securities causing a decline in the market price. The Company concluded that unrealized losses on available for sale securities were only temporarily impaired at December 31, 2011. In concluding that the impairments were only temporary, the Company considered several factors in its analysis. The Company noted that each issuer made all the contractually due payments when required. There were no defaults on principal or interest payments and no interest payments were deferred. All of the financial institutions were also considered well-capitalized. Based on management's analysis of each individual security, the issuers appear to have the ability to meet debt service requirements for the foreseeable future. Furthermore, although these investment securities are available for sale, the Company does not have the intent to sell these securities and it is more likely than not that the Company will not be required to sell the securities. The Company has held the securities continuously since 1998 and expects to receive its full principal at maturity in 2028 or prior if called by the issuer. The Company has historically not actively sold investment securities and has not utilized the securities portfolio as a source of liquidity. The Company's long range liquidity plans indicate adequate sources of liquidity outside the securities portfolio.

Capital markets in general and the market for these corporate securities in particular have been disrupted since the second half of 2007. In its analysis, the Company considered that the severity and duration of unrecognized losses was at least partly due to the illiquidity caused by market disruptions. Since that time markets have stabilized partly due to steps taken by the U.S. Treasury, the Federal Reserve Board, the Federal Deposit Insurance Corporation and foreign central banks to restore liquidity and confidence in the capital markets. Each of these issuers has been able to raise capital in recent years and the fair values of these securities have increased since the lows reached in the second half of 2008.

Due to the reasons noted above, especially the continuing restoration of the capital markets, the improved valuation of the corporate securities portfolio from the 2008 lows, the capital position of the issuers and the uninterrupted payment of all contractually due interest, management has determined that only a temporary impairment existed at December 31, 2011.