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

At December 31, 2012 and 2011, there were no holdings of investment securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders' equity.

The amortized/historical cost, gross unrealized gains and losses and estimated fair value of investment securities held-to-maturity at December 31, 2012 and 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 Unrecognized Gain	Fair Value
December 31, 2012:
Pooled bank trust preferred securities ("TRUPS")	$16,773	$7,828	$(633)	‑	$(1,268)⁽²⁾	$5,927	$340	$6,267
December 31, 2011:
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, 2012, 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,
	2012			2011
Cumulative balance at the beginning of the period	$	1,470		$	1,916
Loss upon transfer	‑			‑
Amortization		(202	)		(446	)
Transfer to credit or non-credit related OTTI	‑			‑
Cumulative balance at end of the period	$	1,268		$	1,470

At December 31, 2012, the seven remaining TRUPS had an aggregate remaining amortized cost of $16,773 (based upon acquisition cost). As of December 31, 2012, two of the seven TRUPS continued to make their contractual payments. The remaining five securities are not making their full contractual payments.

At December 31, 2012, impairment of two of the TRUPS, with an amortized cost of $5,437, was deemed temporary. These securities remained in an unrealized loss for 12 or more consecutive months, and their cumulative unrealized loss was $1,814 at December 31, 2012, reflecting both illiquidity in the marketplace and concerns over future bank failures. At December 31, 2012, 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 believed that the unrealized losses on these securities at December 31, 2012 were temporary, and that the full value of the investments would be realized once the market dislocations have been removed, or as the securities continued 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, the securities could reasonably be expected to continue making all contractual payments

·	The Company had 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 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, 2012, in management's judgment, the credit quality of the collateral pool underlying five of the Company's seven 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, 2012, these five 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 five 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, 2012
	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	$	8,974		$	930		$	9,904
OTTI recognized during the period		181			6			187
Reductions and transfers to credit-related OTTI		-			(181	)		(181	)
Amortization of previously recognized OTTI		(210	)		(121	)		(331	)
Cumulative pre-tax balance at end of the period	$	8,945		$	634		$	9,579

	At or for the Year Ended December 31, 2011								At or for the Year Ended December 31, 2010
	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	$	8,247	$	2,203		$	10,450		$	5,772	$	4,425		$	10,197
OTTI recognized during the period		727		25			752			2,475		282			2,757
Reductions and transfers to credit-related OTTI		-		(1,271	)		(1,271	)	‑			(2,369	)		(2,369	)
Amortization of previously recognized OTTI		-		(27	)		(27	)	‑			(135	)		(135	)
Cumulative pre-tax balance at end of the period	$	8,974	$	930		$	9,904		$	8,247	$	2,203		$	10,450

The amortized/historical cost, gross unrealized gains and losses and estimated fair value of investment securities available-for-sale at December 31, 2012 and 2011 were as follows:

	Investment Securities Available-for-Sale
	Amortized/ Historical Cost			Gross Unrealized Gains		Gross Unrealized (Losses)		Estimated Fair Value
December 31, 2012:
Debt securities:
Federal agency obligations	$	29,820		$	125	$	-	$	29,945
Total debt securities	$	29,820		$	125	$	-	$	29,945
Equity securities:
Mutual fund investments (1)		2,556	(1)		449		-		3,005
TOTAL	$	32,376		$	574	$	-	$	32,950

(1) The amortized/ historical cost amount is net of OTTI charges totaling $348 at December 31, 2012 on two actively-managed equity mutual funds.

	Investment Securities Available-for-Sale
	Amortized/ Historical Cost			Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
December 31, 2011:
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(1)		3,624	(1)		935		-			4,559
TOTAL	$	173,986		$	972	$	(90	)	$	174,868

(1) 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,
	2012			2011		2010
Cumulative balance at the beginning of the period	$	1,425		$	1,425	$	3,063
Reduction of OTTI for securities sold during the period		(1,077	)		-		(1,302	)
Reduction of OTTI for securities transferred to trading during the period		-			-		(336	)
Cumulative balance at end of the period	$	348		$	1,425	$	1,425

The amortized cost and estimated fair value of the debt securities component of investment securities available-for-sale at December 31, 2012 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	$	29,750	$	29,874
Due after three years through five years		70		71
TOTAL	$	29,820	$	29,945

There were no investment securities available-for-sale that possessed an unrealized loss as of December 31, 2012.

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, 2012, gross proceeds from the sales of investment securities available-for-sale totaled $22,415. A gross gain of $941 was recognized on these sales and there were no gross recognized losses. During the year ended December 31, 2011, gross proceeds from the sales of investment securities available-for-sale totaled $226. A gross gain of $22 was recognized on these sales. During the year ended December 31, 2010, gross proceeds from the sales of investment securities available-for-sale totaled $2,519. A gross gain of $609 was recognized on these sales and there were no gross recognized losses.