MBS AVAILABLE-FOR-SALE

12 Months Ended

Dec. 31, 2011

4. MBS AVAILABLE-FOR-SALE

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

	MBS Available-for-Sale
	Amortized Cost		Gross Unrealized Gains(1)		Gross Unrealized (Losses)(1)			Estimated Fair Value
Federal Home Loan Mortgage Corporation ("FHLMC") pass-through certificates	$	53,662	$	3,386	$	-		$	57,048
FNMA pass-through certificates		16,583		1,144		-			17,727
Government National Mortgage Association ("GNMA") pass-through certificates		763		24		-			787
Collateralized mortgage obligations ("CMOs") issued by agencies		15,128		261		-			15,389
Private label MBS and CMOs		3,013		22		(109	)		2,926
TOTAL	$	89,149	$	4,837	$	(109	)	$	93,877

(1) A net reduction of $2,593 is recognized within the balance of the accumulated other comprehensive loss for the after-tax effect of the net gain of $4,728 shown in the above table.

At December 31, 2011, MBS available-for-sale possessed a weighted average contractual maturity of 17.1 years and a weighted average estimated duration of 1.7 years. During the year ended December 31, 2011, there were no sales of MBS available-for-sale.

The following summarizes the gross unrealized losses and fair value of MBS available-for-sale at 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 Losses		Fair Value		Gross Unrealized Losses
Private label pass-through certificate	$	-	$	-	$	1,505	$	109	$	1,505	$	109
TOTAL	$	-	$	-	$	1,505	$	109	$	1,505	$	109

At December 31, 2011, the Company owned one private label pass-through MBS that possessed unrealized losses for 12 or more consecutive months, with an amortized cost of $1,614 and an unrealized loss of $109. The Company's investment is in the most senior tranche (or repayment pool) of this security. Despite a challenging real estate marketplace, the private label pass-through MBS made contractual principal and interest payments that reduced its principal balance by approximately 32% during the twelve months ended December 31, 2011. At December 31, 2011, the Company performed an analysis of likely potential defaults of the real estate loans underlying this security in the then existing economic environment, and determined that it could reasonably be expected to continue making all contractual payments. The Company has no intent to sell this security and it is not likely that the Company will be required to sell this security before the recovery of its remaining amortized cost.

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

	MBS Available-for-Sale
	Amortized Cost		Gross Unrealized Gains(1)		Gross Unrealized (Losses)(1)			Estimated Fair Value
FHLMC pass-through certificates	$	74,980	$	3,923	$	-		$	78,903
FNMA pass-through certificates		25,034		1,289		-			26,323
GNMA pass-through certificates		833		24		-			857
CMOs issued by agencies		32,953		1,012		-			33,965
Private label MBS and CMOs		4,485		50		(65	)		4,470
TOTAL	$	138,285	$	6,298	$	(65	)	$	144,518

(1) A net reduction of $3,419 is recognized within the balance of the accumulated other comprehensive loss for the after-tax effect of the net gain of $6,233 shown in the above table.

At December 31, 2010, MBS available-for-sale possessed a weighted average contractual maturity of 16.9 years and a weighted average estimated duration of 2.1 years. During the year ended December 31, 2010, there were no sales of MBS available-for-sale.

The following summarizes the gross unrealized losses and fair value of MBS available-for-sale at 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 Losses		Fair Value		Gross Unrealized Losses
Private label pass-through certificate	$	-	$	-	$	2,298	$	65	$	2,298	$	65
TOTAL	$	-	$	-	$	2,298	$	65	$	2,298	$	65

At December 31, 2010, the Company owned one private label pass-through MBS that possessed unrealized losses for 12 or more consecutive months, with an amortized cost of $2,363 and an unrealized loss of $65. The Company's investment is in the most senior tranche (or repayment pool) of this security. Despite a challenging real estate marketplace, the private label pass-through MBS made contractual principal and interest payments that reduced its principal balance by approximately 28% during the twelve months ended December 31, 2010. At December 31, 2010, the Company performed an analysis of likely potential defaults of the real estate loans underlying this security in the then existing economic environment, and determined that it could reasonably be expected to continue making all contractual payments. The Company has no intent to sell this security and it is not likely that the Company will be required to sell this security before the recovery of its remaining amortized cost.