INVESTMENT SECURITIES HELD-TO-MATURITY AND AVAILABLE-FOR-SALE

12 Months Ended

Dec. 31, 2011

INVESTMENT SECURITIES HELD-TO-MATURITY AND AVAILABLE-FOR-SALE [Abstract]

INVESTMENT SECURITIES HELD-TO-MATURITY AND AVAILABLE-FOR-SALE

3.   INVESTMENT SECURITIES HELD-TO-MATURITY AND AVAILABLE-FOR-SALE

The amortized/historical cost, gross unrealized gains and losses and estimated fair value of investment securities held-to-maturity at December 31, 2011 were as follows:

			Unrealized Gains or Losses Recognized in Accumulated Other Comprehensive Loss
	Purchase Amortized / Historical Cost	Recorded Amortized/ Historical Cost (1)	Non-Credit OTTI	Unrealized Gains	Unrealized Losses	Book Value	Other Unrealized Losses	Fair Value
Pooled bank trust preferred securities ("TRUPS")	$17,884	$8,910	$(929)	-	$(1,470)(2)	$6,511	$(1,587)	$4,924

(1) Amount represents the purchase amortized / historical cost less any credit-related OTTI charges recognized through earnings.

(2) Amount represents the remaining unamortized portion of the unrealized loss that was recognized in accumulated other comprehensive loss

     on September 1, 2008 (the day on which these securities were transferred from available-for-sale to held-to-maturity).

There were no sales of investment securities held-to-maturity during the years ended December 31, 2011 or 2010.

On September 1, 2008, the Bank transferred eight TRUPs (i.e., investment securities primarily secured by the preferred debt obligations of a pool of U.S. banks with a small portion secured by debt obligations of insurance companies) with an amortized cost of $19,922 from its available-for-sale portfolio to its held-to-maturity portfolio.  Based upon the lack of an orderly market for these securities, management determined that a formal election to hold them to maturity was consistent with its initial investment decision.  On the date of transfer, the unrealized loss of $8,420 on these securities continued to be recognized as a component of accumulated other comprehensive loss within the Company's consolidated stockholders' equity (net of income tax benefit), and was expected to be amortized over the remaining average life of the securities, which approximated 25.7 years on a weighted average basis.  Activity related to this transfer loss was as follows:

	For the Year Ended December 31,
	2011	2010
Cumulative balance at the beginning of the period	$1,916	$2,100
Loss upon transfer	-	-
Amortization	(446)	(184)
Transfer to credit or non-credit related OTTI	-	-
Cumulative balance at end of the period	$1,470	$1,916
Period end component of accumulated other comprehensive loss	$806	$1,051

At December 31, 2011, the eight TRUPs had an aggregate remaining amortized cost of $17,884 (based upon acquisition cost).  As of December 31, 2011, three of the eight TRUPs continued to make their contractual payments.  The remaining five securities are not making their full contractual payments.

At December 31, 2011, impairment of two of the TRUPs, with an amortized cost of $6,129, was deemed temporary.  These securities remained in an unrealized loss for 12 or more consecutive months, and their cumulative unrealized loss was $2,917 at December 31, 2011, reflecting both illiquidity in the marketplace and concerns over future bank failures.  At December 31, 2011, both of these securities had ratings ranging from "CC" to "Ba1."  Despite both the significant decline in market value and the duration of their impairment, management believes that the unrealized losses on these securities at December 31, 2011 were temporary, and that the full value of the investments will be realized once the market dislocations have been removed, or as the securities continue to make their contractual payments of principal and interest.  In making this determination, management considered the following:

?Based upon an internal review of the collateral backing the TRUPS portfolio, which accounted for current and prospective deferrals, both of the securities could reasonably be expected to continue making all contractual payments

?The Company has the intent and ability to hold these securities until they fully recover their impairment, evidenced by the election to reclassify them as held-to-maturity in 2008

?     There were no cash or working capital requirements nor contractual or regulatory obligations that would compel the Company to sell either of these securities prior to their forecasted recovery or maturity

? Each security has a pool of underlying issuers comprised primarily of banks

?Neither of the securities have exposure to real estate investment trust issued debt (which has experienced high default

rates)

?Each security featured either a mandatory auction or a de-leveraging mechanism that could result in principal repayments to the Bank prior to the stated maturity of the security

?     Each security is characterized by some level of over-collateralization

At December 31, 2011, in management's judgment, the credit quality of the collateral pool underlying six of the Company's eight TRUPS had deteriorated to the point that full recovery of the Company's initial investment was considered uncertain, thus resulting in recognition of OTTI charges.  At December 31, 2011, these six securities had credit ratings ranging from "D" to "Caa3." The Company applied ASC 320-10-65 to determine the credit related component of OTTI for the six TRUPS by discounting the expected future cash flows applicable to the securities at the effective interest rate implicit in the security at the date of acquisition by the Company.

The following table provides a reconciliation of the pre-tax OTTI charges recognized on the Company's investment securities held-to-maturity:

	At or for the Year Ended December 31, 2011
	Credit Related OTTI Recognized in Earnings	Non-Credit OTTI Recognized in Accumulated Other Comprehensive Loss	Total OTTI Charge
Cumulative pre-tax balance at the beginning of the period	$8,247	$2,203	$10,450
OTTI recognized during the period	727	25	752
Reductions and transfers to credit-related OTTI	-	(1,271)	(1,271)
Amortization of previously recognized OTTI	-	(27)	(27)
Cumulative pre-tax balance at end of the period	$8,974	$930	$9,904
Period end component of accumulated other comprehensive loss (net of tax)	-	$510	$510

	At or for the Year Ended December 31, 2010			At or for the Year Ended December 31, 2009
	Credit Related OTTI Recognized in Earnings	Non-Credit OTTI Recognized in Accumulated Other Comprehensive Loss	Total OTTI Charge	Credit Related OTTI Recognized in Earnings	Non-Credit OTTI Recognized in Accumulated Other Comprehensive Loss	Total OTTI Charge
Cumulative pre-tax balance at the beginning of the period	$5,772	$4,425	$10,197	$3,209	$-	$3,209
Cumulative effect adjustment of adopting ASC 320-10-65	-	-	-	(2,289)	2,289	-
OTTI recognized during the period	2,475	282	2,757	4,852	3,004	7,856
Reductions and transfers to credit-related OTTI	-	(2,369)	(2,369)	-	(834)	(834)
Amortization of previously recognized OTTI	-	(135)	(135)	-	(34)	(34)
Cumulative pre-tax balance at end of the period	$8,247	$2,203	$10,450	$5,772	$4,425	$10,197
Period end component of accumulated other comprehensive loss(net of tax)	-	$1,208		-	$2,427	$2,427

The remaining aggregate amortized cost of TRUPs that could be subject to future OTTI charges through earnings was $8,911 at December 31, 2011.  Of this total, unrealized losses of $2,400 have already been recognized as a component of accumulated other comprehensive loss.

The amortized/historical cost, gross unrealized gains and losses and estimated fair value of investment securities available-for-sale at December 31, 2011 were as follows:

	Investment Securities Available-for-Sale
	Amortized/ Historical Cost			Gross Unrealized Gains (1)		Gross Unrealized (Losses) (1)			Estimated Fair Value
Debt securities:
Federal agency obligations	$	170,362		$	37	$	(90	)	$	170,309
Total debt securities		170,362			37		(90	)		170,309
Equity securities:
Mutual fund investments		3,624	(2)		935		-			4,559
TOTAL	$	173,986		$	972	$	(90	)	$	174,868

(1) A net reduction of $483 is recognized within the balance of the accumulated other comprehensive loss for the after tax effect of the net gain of $882 shown in the above table

(2) Amount is net of OTTI charges totaling $1,425 at December 31, 2011 on five actively-managed equity mutual funds.

The following table provides a reconciliation of the pre-tax OTTI charges recognized on the Company's investment securities available-for-sale:

	At or For the Year Ended December 31,
	2011	2010	2009
Cumulative balance at the beginning of the period	$1,425	$3,063	$-
OTTI recognized during the period	-	-	3,063
Reduction of OTTI for securities sold during the period	-	(1,302)	-
Reduction of OTTI for securities transferred to trading during the period	-	(336)	-
Cumulative balance at end of the period	$1,425	$1,425	$3,063

The amortized cost and estimated fair value of the debt securities component of investment securities available-for-sale at December 31, 2011 are shown below by contractual maturity. Actual maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment fees.

	Amortized Cost		Estimated Fair Value
Due after one year through three years	$	169,972	$	169,917
Due after three years through five years		-		-
Due after five years through ten years		390		392
TOTAL	$	170,362	$	170,309

The following summarizes the gross unrealized losses and fair value of investment securities available-for-sale that possessed an unrealized loss as of December 31, 2011, aggregated by investment category and the length of time that the securities were in a continuous unrealized loss position:

	Less than 12 Months Consecutive Unrealized Losses				12 Months or More Consecutive Unrealized Losses				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Losses
Federal agency obligations	$	114,885	$	90		-		-	$	114,885	$	90
TOTAL	$	114,885	$	90		-		-	$	114,885	$	90

The federal agency obligation investments that possessed unrealized losses at December 31, 2011 maintained credit ratings ranging from AA+ to AAA.  Their impairment related solely to changes in market interest rates from their acquisition through December 31, 2011.

During the year ended December 31, 2011, proceeds from the sales of investment securities available-for-sale totaled $226.  A gain of $22 was recognized on these sales.

The amortized/historical cost, gross unrealized gains and losses and estimated fair value of investment securities held-to-maturity at December 31, 2010 were as follows:

			Unrealized Gains or Losses Recognized in Accumulated Other Comprehensive Loss
	Purchase Amortized / Historical Cost	Recorded Amortized/ Historical Cost (1)	Non-Credit OTTI	Unrealized Gains	Unrealized Losses	Book Value	Other Unrealized Losses	Fair Value
TRUPS	$19,008	$10,760	$(2,203)	-	$(1,916)(2)	$6,641	$(2,233)	$4,408

(1) Amount represents the purchase amortized / historical cost less any credit-related OTTI charges recognized through earnings.

(2) Amount represents the remaining unamortized portion of the unrealized loss that was recognized in accumulated other comprehensive loss

     on September 1, 2008 (the day on which these securities were transferred from available-for-sale to held-to-maturity).

At December 31, 2010, the eight TRUPs had an aggregate remaining amortized cost of $19,008.  From the Company's initial investment through December 31, 2010, four of the eight securities had paid all contractual cash flows, while two securities were experiencing a deferral of a portion of their respective quarterly interest payment, and another two securities were experiencing a deferral of their entire quarterly interest payment.

At December 31, 2010, the impairment of two of the TRUPs, with an amortized cost of $7,252, was deemed temporary.  These securities remained in an unrealized loss for 12 or more consecutive months, and their cumulative unrealized loss was $3,951 at December 31, 2010, reflecting both illiquidity in the marketplace and concerns over future bank failures.  At December 31, 2010, these securities had ratings ranging from "CC" to "Ba1" on one and "CCC" to "Ba1" on the other.  Despite both the significant decline in market value and the duration of their impairment, management believes that the unrealized losses on these securities at December 31, 2010 were temporary, and that the full value of the investments will be realized once the market dislocations have been removed, or as the securities continue to make their contractual payments of principal and interest.  In making this determination, management considered the following:

?     Based upon an internal review of the collateral backing the TRUPs portfolio, which accounted for current and prospective deferrals, both of the securities could reasonably be expected to continue making all contractual payments

? The Company has the intent and ability to hold these securities until they fully recover their impairment, evidenced by the election to reclassify them as held-to-maturity in 2008

?There were no cash or working capital requirements nor contractual or regulatory obligations that would compel the Company to sell either of these securities prior to their forecasted recovery or maturity

?Each security has a pool of underlying issuers comprised primarily of banks

?Neither of the securities have exposure to real estate investment trust issued debt (which has experienced high default

rates)

?Each security featured either a mandatory auction or a de-leveraging mechanism that could result in principal repayments to the Bank prior to the stated maturity of the security

?Each security is characterized by some level of over-collateralization

At December 31, 2010, in management's judgment, the credit quality of the collateral pool underlying six of the eight securities deteriorated to the point that full recovery of the Company's initial investment was considered uncertain, thus resulting in recognition of OTTI charges.  At December 31, 2010, these six securities had credit ratings ranging from  "D" to "Caa3."  For these securities, the Company applied the ASC 320-10-65 provisions for determining the credit related component of OTTI by discounting the expected future cash flows applicable to the securities at the effective interest rate implicit in the security at the date of acquisition by the Company.

The amortized/historical cost, gross unrealized gains and losses and estimated fair value of investment securities available-for-sale at December 31, 2010 were as follows:

	Investment Securities Available-for-Sale
	Amortized/ Historical Cost			Gross Unrealized Gains(1)		Gross Unrealized (Losses)(1)			Estimated Fair Value
Debt securities:
Federal agency obligations	$	81,388		$	5	$	(241	)	$	81,152
Total debt securities		81,388			5		(241	)		81,152
Equity securities:
Mutual fund investments		3,537	(2)		957		(4	)		4,490
TOTAL	$	84,925		$	962	$	(245	)	$	85,642

(1) A net reduction of $366 is recognized within the balance of the accumulated other comprehensive loss for the after-tax effect of the net gain of $717 shown in the above table.

(2) Amount is net of OTTI charges totaling $1,425 at December 31, 2010 on five actively-managed equity mutual funds.

The following summarizes the gross unrealized losses and fair value of investment securities available-for-sale that possessed an unrealized loss as of December 31, 2010, aggregated by investment category and the length of time that the securities were in a continuous unrealized loss position:

	Less than 12 Months Consecutive Unrealized Losses				12 Months or More Consecutive Unrealized Losses				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Losses
Federal agency obligations	$	75,756	$	241		-		-	$	75,756	$	241
Fixed Income Mutual Fund		506		4						506		4
TOTAL	$	76,262	$	245		-		-	$	76,262	$	245

The federal agency obligation investments that possessed unrealized losses at December 31, 2010 maintained the highest possible credit rating.  Their impairment related solely to changes in market interest rates from their acquisition through December 31, 2010.  The unrealized loss on the fixed income mutual fund was deemed immaterial in both amount and magnitude at December 31, 2010.  The Company has no intent to sell these securities and it is not more likely than not that the Company will be required to sell these securities before the recovery of their remaining amortized cost.

During the year ended December 31, 2010, proceeds from the sales of investment securities available-for-sale totaled $2,519.  A gain of $609 was recognized on these sales.