Securities

12 Months Ended

Dec. 31, 2012

SecuritiesAbstract

Securities

Note 3: Securities

The amortized cost and approximate fair values, together with gross unrealized gains and losses, of securities are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Available-for-sale Securities:
December 31, 2012:
U.S. government agencies	$	155	$	1	$	1	$	155
Mortgage-backed securities of government-sponsored entities		83,956		1,979		105		85,830
Private-label collateralized mortgage obligations		1,067		39		—		1,106
State and political subdivisions		22,842		1,587		2		24,427
	$	108,020	$	3,606	$	108	$	111,518
December 31, 2011:
U.S. government agencies	$	1,559	$	26	$	1	$	1,584
Mortgage-backed securities of government-sponsored entities		98,816		2,636		124		101,328
Private-label collateralized mortgage obligations		1,693		48		—		1,741
State and political subdivisions		24,694		1,315		25		25,984
	$	126,762	$	4,025	$	150	$	130,637

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Approximate Fair Value
	(In thousands)
Held-to-maturity Securities:
December 31, 2012:
U.S. government agencies	$	130	$	1	$	—	$	131
Mortgage-backed securities of government-sponsored entities		1,469		45		—		1,514
State and political subdivisions		2,149		—		54		2,095
	$	3,748	$	46	$	54	$	3,740
December 31, 2011:
U.S. government agencies	$	145	$	—	$	—	$	145
Mortgage-backed securities of government-sponsored entities		1,527		16		—		1,543
State and political subdivisions		7		—		—		7
	$	1,679	$	16	$	—	$	1,695

The amortized cost and fair value of available-for-sale securities and held-to-maturity securities at December 31, 2012, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
One to five years	$	2,772	$	2,974	$	—	$	—
Five to ten years		5,186		5,452		425		415
After ten years		15,039		16,156		1,854		1,811
		22,997		24,582		2,279		2,226
Mortgage-backed securities of government-sponsored entities		83,956		85,830		1,469		1,514
Private-label collateralized mortgage obligations		1,067		1,106		—		—
Totals	$	108,020	$	111,518	$	3,748	$	3,740

The carrying value of securities pledged as collateral, to secure public deposits, customer repurchase agreements and for other purposes, was $60.4 million and $53.9 million at December 31, 2012 and 2011, respectively.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. The total fair value of these investments at December 31, 2012 and 2011 was $19.0 million and $17.7 million, which represented approximately 17% and 14%, respectively, of the Company’s aggregate amortized cost of the available-for-sale and held-to-maturity investment portfolios. These declines resulted primarily from changes in market interest rates.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary at December 31, 2012.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following table shows the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2012 and 2011:

December 31, 2012
	Less than 12 Months				12 Months or More				Total
Description of    Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(In thousands)
U.S. government agencies	$	—	$	—	$	66	$	1	$	66		1
Mortgage-backed securities of government-sponsored entities		13,636		83		2,107		22		15,743		105
State and political subdivisions		3,162		56		—		—		3,162		56
Total temporarily impaired securities	$	16,798	$	139	$	2,173	$	23	$	18,971	$	162

December  31, 2011
	Less than 12 Months				12 Months or More				Total
Description of     Securities	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(In thousands)
U.S. government agencies	$	—	$	—	$	313	$	1	$	313	$	1
Mortgage-backed securities of government-sponsored entities		16,624		124		—		—		16,624		124
State and political subdivisions		—		—		759		25		759		25
Total temporarily impaired securities	$	16,624	$	124	$	1,072	$	26	$	17,696	$	150

The unrealized losses on the Company’s investments in direct obligations of U.S. government agencies, mortgage-backed securities of government-sponsored entities and municipal securities were caused by changes in interest rates. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2012.