Investment Securities

6 Months Ended

Jun. 30, 2011

Investment Securities

Investment Securities

3. Investment Securities

     The carrying values and approximate fair values of investment securities at June 30, 2011 and 2010, respectively, are presented below. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. There were five and four securities with unrealized losses as of June 30, 2011 and 2010, respectively, that had been in a loss position for less than twelve months. There were no securities with unrealized losses as of June 30, 2011 and 2010 that had been in a loss position for more than twelve months. Because the Company does not intend to sell, nor is it required to sell these investments until a market price recovery or maturity, these investments are not considered other-than-temporarily impaired.

			Gross		Gross
	Amortized		Unrealized		Unrealized
June 30,	Cost		Gains		Losses		Fair Value
	(In Thousands)
2011:
Securities available for sale
U.S. Treasury and government sponsored entities	$	137,256	$	874	$	4	$	138,126
Muncipal securities		14,023		379		—		14,402
U.S. Agency mortgage-backed securities		58		2		—		60
Corporate bonds		29,553		785		48		30,290
Total securities available for sale	$	180,890	$	2,040	$	52	$	182,878
Securities held to maturity
Municipal securities	$	5,142	$	196	$	—	$	5,338
Total securities held to maturity	$	5,142	$	196	$	—	$	5,338
2010:
Securities available for sale
U.S. Treasury and government sponsored entities	$	126,042	$	827	$	65	$	126,804
Muncipal securities		6,174		195		—		6,369
U.S. Agency mortgage-backed securities		79		2		—		81
Corporate bonds		33,625		1,187		37		34,775
Total securities available for sale	$	165,920	$	2,211	$	102	$	168,029
Securities held to maturity
Municipal securities	$	7,018	$	243	$	—	$	7,261
Total securities held to maturity	$	7,018	$	243	$	—	$	7,261

     The amortized cost and fair values of debt securities at June 30, 2011, are distributed by contractual maturity as shown below. 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.

					Weighted
	Amortized				Average
	Cost		Fair Value		Yield
	(In Thousands)
US Treasury and government sponsored entities
Within 1 year	$	43,321	$	43,626		1.09	%
1-5 years		93,935		94,500		0.98	%
Total	$	137,256	$	138,126		1.01	%
U.S. Agency mortgage-backed securities
5-10 years	$	58	$	60		4.45	%
Total	$	58	$	60		4.45	%
Corporate bonds
1-5 years	$	23,938	$	24,498		2.41	%
5-10 years		5,615		5,792		2.02	%
Total	$	29,553	$	30,290		2.34	%
Municipal securities
Within 1 year	$	2,040	$	2,049		2.76	%
1-5 years		5,405		5,571		2.90	%
5-10 years		8,570		8,864		4.45	%
Over 10 years		3,150		3,256		4.79	%
Total	$	19,165	$	19,740		3.89	%

     The proceeds and resulting gains and losses, computed using specific identification, from sales of investment securities for the six months ending June 30, 2011 and 2010, respectively, are as follows:

			Gross		Gross
June 30,	Proceeds		Gains		Losses
	(In Thousands)
2011:
Available for sale securities	$	6,987	$	263	$	—
2010:
Available for sale securities	$	19,363	$	413	$	—

     A summary of interest income for the six months ending June 30, 2011 and 2010 on available for sale investment securities is as follows:

June 30,	2011		2010
	(In Thousands)
US Treasury and government sponsored entities	$	816	$	1,652
U.S. Agency mortgage-backed securities		1		2
Other		482		701
Total taxable interest income	$	1,299	$	2,355
Municipal securities		235		144
Total tax-exempt interest income		235		144
Total	$	1,534	$	2,499

     For the periods ending June 30, 2011, December 31, 2010 and June 30, 2010, we held Federal Home Loan Bank of Seattle ("FHLB") stock with a book value approximately equal to its market value in the amount of $2.0 million for each period. The Company evaluated its investment in FHLB stock for other-than-temporary impairment as of June 30, 2011, consistent with its accounting policy. Based on the Company's evaluation of the underlying investment, including the long-term nature of the investment, the liquidity position of the FHLB of Seattle, the actions being taken by the FHLB of Seattle to address its regulatory capital situation, and the Company's intent and ability to hold the investment for a period of time sufficient to recover the par value, the Company did not recognize an other-than-temporary impairment loss. Even though the Company did not recognize an other-than-temporary impairment loss during the six-month period ending June 30, 2011, continued deterioration in the FHLB of Seattle's financial position may result in future impairment losses.

     The Company has never had any investment in the common or preferred stock of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, which are commonly known as Fannie Mae and Freddie Mac, respectively. Additionally, we held no securities of any single issuer (other than government sponsored entities) that exceeded 10% of our shareholders' equity at June 30, 2011, December 31, 2010 or June 30, 2010.