INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2011

INVESTMENT SECURITIES [Abstract]

INVESTMENT SECURITIES

9. INVESTMENT SECURITIES

The amortized cost, unrealized gains and losses and estimated fair values of investments in debt and other securities at September 30, 2011 are summarized as follows:

(in thousands)	Amortized cost		Unrealized gains		Unrealized losses			Estimated fair value
Investment securities available-for-sale:
U.S. Treasury securities	$	2,293	$	21	$	-		$	2,314
Securities of U.S. government agencies and corporations		35,721		287		(2	)		36,006
Obligations of states and political subdivisions		21,918		1,045		(10	)		22,953
Mortgage-backed securities		77,246		489		(259	)		77,476
Total debt securities	$	137,178	$	1,842	$	(271	)	$	138,749

The amortized cost, unrealized gains and losses and estimated fair values of investments in debt and other securities at December 31, 2010 are summarized as follows:

(in thousands)	Amortized cost		Unrealized gains		Unrealized losses			Estimated fair value
Investment securities available-for-sale:
U.S. Treasury securities	$	4,225	$	1	$	-		$	4,226
Securities of U.S. government agencies and corporations		40,937		63		(225	)		40,775
Obligations of states and political subdivisions		20,663		103		(721	)		20,045
Mortgage-backed securities		42,313		177		(190	)		42,300
Total debt securities	$	108,138	$	344	$	(1,136	)	$	107,346

Proceeds from sales of available-for-sale securities were $24,640,000 and $6,558,000 for the nine-month and three-month periods ended September 30, 2011, respectively.  Proceeds from sales of available-for-sale securities were $20,552,000 and $0 for the nine-month and three-month periods ended September 30, 2010, respectively.  Gross realized gains from sales of available-for-sale securities were $633,000 and $177,000 for the nine-month and three-month periods ended September 30, 2011, respectively.  Gross realized gains from sales of available-for-sale securities were $362,000 and $0 for the nine-month and three-month periods ended September 30, 2010, respectively.  There were no gross realized losses from sales of available-for-sale securities for the nine-month and three-month periods ended September 30, 2011.  Gross realized losses from sales of available-for-sale securities were $9,000 and $0 for the nine-month and three-month periods ended September 30, 2010, respectively.

The amortized cost and estimated market value of debt and other securities at September 30, 2011, by contractual maturity, are shown in the following table.

(in thousands)	Amortized cost		Estimated fair value
Due in one year or less	$	26,885	$	27,057
Due after one year through five years		88,241		88,588
Due after five years through ten years		10,390		10,905
Due after ten years		11,662		12,199
	$	137,178	$	138,749

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.  Securities due after one year through five years included mortgage-backed securities with expected maturities totaling $76,070,000.  The maturities on these securities were based on the average lives of the securities.

An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of September 30, 2011, follows:

	Less than 12 months					12 months or more					Total
(in thousands)	Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Securities of U.S.     government agencies     and corporations	$	998	$	(2	)	$	-	$	-		$	998	$	(2	)
Obligations of states and political subdivisions		-		-			356		(10	)		356		(10	)
Mortgage-backed securities		31,855		(259	)		-		-			31,855		(259	)
Total	$	32,853	$	(261	)	$	356	$	(10	)	$	33,209	$	(271	)

No decline in value was considered “other-than-temporary” during 2011.  Twenty securities that had a fair value of $32,853,000 and a total unrealized loss of $261,000 have been in an unrealized loss position for less than twelve months as of September 30, 2011.  In addition, two securities with a fair value of $356,000 and a total unrealized loss of $10,000 have been in an unrealized loss position for more than twelve months as of September 30, 2011.  The declines in market value were primarily attributable to changes in interest rates.  As the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities prior to their anticipated recovery, these investments are not considered other-than-temporarily impaired.

An analysis of gross unrealized losses of the available-for-sale investment securities portfolio as of December 31, 2010, follows:

	Less than 12 months					12 months or more					Total
(in thousands)	Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Securities of U.S.     government agencies     and corporations	$	11,847	$	(225	)	$	-	$	-		$	11,847	$	(225	)
Obligations of states and political subdivisions		12,631		(620	)		1,084		(101	)		13,715		(721	)
Mortgage-backed securities		26,186		(190	)		-		-			26,186		(190	)
Total	$	50,664	$	(1,035	)	$	1,084	$	(101	)	$	51,748	$	(1,136	)

No decline in value was considered “other-than-temporary” during 2010.  Sixty-eight securities that had a fair value of $50,664,000 and a total unrealized loss of $1,035,000 have been in an unrealized loss position for less than twelve months as of December 31, 2010.  In addition, three securities with a fair value of $1,084,000 and a total unrealized loss of $101,000 that have been in an unrealized loss position for more than twelve months as of December 31, 2010.  As the Company does not intend to sell these securities and it is not more likely than not that the Company will be required to sell these securities prior to their anticipated recovery, these investments are not considered other-than-temporarily impaired.

Investment securities carried at $36,696,000 and $35,009,000 at September 30, 2011 and December 31, 2010, respectively, were pledged to secure public deposits or for other purposes as required or permitted by law.