Investment Securities

3 Months Ended

Mar. 31, 2013

Investment Securities [Abstract]

Investment Securities

4.  Investment Securities

The carrying values and approximate fair values of investment securities at the periods indicated are presented below:

(In Thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2013
Securities available for sale
U.S. Treasury and government sponsored entities	$	139,155	$	410	$	-	$	139,565
Municipal securities		21,626		541		16		22,151
U.S. Agency mortgage-backed securities		33		1		-		34
Corporate bonds		55,889		1,195		3		57,081
Preferred stock		2,501		128		-		2,629
Total securities available for sale	$	219,204	$	2,275	$	19	$	221,460
Securities held to maturity
Municipal securities	$	2,747	$	220	$	-	$	2,967
Total securities held to maturity	$	2,747	$	220	$	-	$	2,967
December 31, 2012
Securities available for sale
U.S. Treasury and government sponsored entities	$	123,959	$	455	$	-	$	124,414
Municipal securities		21,124		613		9		21,728
U.S. Agency mortgage-backed securities		35		1		-		36
Corporate bonds		52,951		1,081		50		53,982
Preferred stock		3,524		234		-		3,758
Total securities available for sale	$	201,593	$	2,384	$	59	$	203,918
Securities held to maturity
Municipal securities	$	2,749	$	229	$	-	$	2,978
Total securities held to maturity	$	2,749	$	229	$	-	$	2,978

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 sixsecurities with unrealized losses as of March 31, 2013and December 31, 2012, respectively, that have been in a loss position for less than twelve months.  There were no securities with unrealized losses as of March 31, 2013 and December 31, 2012 that have been in an unrealized 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.

At March 31, 2013, $31.7 million in securities, or 14%, of the investment portfolio was pledged, as compared to $42.7 million, or 20%, at December 31, 2012.  We held no securities of any single issuer (other than government sponsored entities) that exceeded 10% of our shareholders’ equity at March 31, 2013and December 31, 2012.

The amortized cost and fair values of debt securities at March 31, 2013, 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.  Although preferred stock has no stated maturity, it is aggregated in the calculation of weighted average yields presented below in the category of investments that mature in ten years or more.

(In  Thousands)	Amortized Cost		Fair Value		Weighted Average Yield
US Treasury and government sponsored entities
Within 1 year	$	59,466	$	59,782	0.80	%
1-5 years		79,689		79,783	0.49	%
Total	$	139,155	$	139,565	0.62	%
U.S. Agency mortgage-backed securities
5-10 years	$	33	$	34	4.45	%
Total	$	33	$	34	4.45	%
Corporate bonds
Within 1 year	$	5,173	$	5,209	1.25	%
1-5 years		50,716		51,872	2.16	%
Total	$	55,889	$	57,081	2.07	%
Preferred stock
Over 10 years		2,501		2,629	5.19	%
Total	$	2,501	$	2,629	5.19	%
Municipal securities
Within 1 year	$	2,605	$	2,621	1.86	%
1-5 years		12,784		13,022	1.70	%
5-10 years		8,984		9,475	4.71	%
Total	$	24,373	$	25,118	2.82	%

The proceeds and resulting gains and losses, computed using specific identification, from sales of investment securities for the three months ending March 31, 2013 and 2012, respectively, are as follows:

(In Thousands)	Proceeds		Gross Gains		Gross Losses
2013
Available for sale securities	$	23,528	$	218	$	-
2012
Available for sale securities	$	13,736	$	27	$	-

A summary of interest income for the three months ending March 31, 2013 and 2012 on available for sale investment securities is as follows:

(In Thousands)		2013		2012
US Treasury and government sponsored entities	$	207	$	307
U.S. Agency mortgage-backed securities		-		1
Other		307		300
Total taxable interest income	$	514	$	608
Municipal securities	$	145	$	141
Total tax-exempt interest income		145		141
Total	$	659	$	749

For the periods ending March 31, 2013and December 31, 2012, 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 March 31, 2013, consistent with its accounting policy.  Based on the Company’s evaluation of the underlying investment, including the fact that the FHLB of Seattle recently began redeeming stock at par, the long-term nature of the investment,the liquidity position of the FHLB of Seattle, 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.