NOTE 3 – SECURITIES

The following table provides the amortized cost and fair value for the categories of available for sale securities. Available for sale securities are carried at fair value with net unrealized gains or losses reported on an after tax basis as a component of cumulative other comprehensive income in shareholders’ equity. The fair value of securities is impacted by interest rates, credit spreads, market volatility, and liquidity.

The following table provides the amortized costs and estimated fair values of securities available for sale as of June 30, 2011 and December 31, 2010.

	June 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
			(In Thousands)
U.S. Government agencies	$	89,379	$	125	$	(364	)	$	89,140
Mortgage backed securities		618		20		-			638
Municipals - taxable		240		4		-			244
CRA mutual fund		1,500		-		(6	)		1,494
	$	91,737	$	149	$	(370	)	$	91,516

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
			(In Thousands)
U.S. Government agencies	$	124,388	$	62	$	(2,738	)	$	121,712
Mortgage backed securities		670		-		(40	)		630
Municipals - taxable		470		2		-			472
CRA mutual fund		1,500		-		(7	)		1,493
	$	127,028	$	64	$	(2,785	)	$	124,307

The amortized cost and estimated fair value of securities available for sale as of June 30, 2011 and December 31, 2010 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because some of the securities may be called or prepaid without any penalties.

	June 30, 2011				December 31, 2010
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
	(In Thousands)
U.S. Government agencies:
Due in one year or less	$	5,000	$	5,002	$	5,000	$	5,022
Due after one through five years		19,999		20,047		50,026		49,751
Due after five through ten years		24,984		24,983		29,978		29,181
Due after ten through fifteen years		39,396		39,108		39,384		37,758
Municipals - taxable:
Due after one through five years		240		244		470		472
Mortgage backed securities:
Due after fifteen years		618		638		670		630
CRA Mutual Fund		1,500		1,494		1,500		1,493
Total	$	91,737	$	91,516	$	127,028	$	124,307

The estimated fair value of securities pledged to secure public funds, securities sold under agreements to repurchase, and for other purposes amounted to $54.8 million at June 30, 2011 and $60.9 million at December 31, 2010.

Securities available for sale that have an unrealized loss position at June 30, 2011 and December 31, 2010 are as follows:

	Securities in a loss					Securities in a loss
	Position for less than					Position for 12 Months
	12 Months					or Longer				Total
June 30, 2011	Estimated		Unrealized			Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses			Fair Value		Losses		Fair Value		Losses
Investment securities available	(In Thousands)
for sale:

U.S. Government agencies	$	29,023	$	(364	)	$	-	$	-	$	29,023	$	(364	)
CRA Mutual fund		1,494		(6	)		-		-		1,494		(6	)
Total	$	30,517	$	(370	)	$	-	$	-	$	30,517	$	(370	)

	Securities in a loss					Securities in a loss
	Position for less than					Position for 12 Months
	12 Months					or Longer				Total
December 31, 2010	Estimated		Unrealized			Estimated		Unrealized		Estimated		Unrealized
	Fair Value		Losses			Fair Value		Losses		Fair Value		Losses
Investment securities available	(In Thousands)
for sale:

Mortgage backed securities	$	630	$	(40	)	$	-	$	-	$	630	$	(40	)
U.S. Government agencies		96,623		(2,738	)		-		-		96,623		(2,738	)
CRA Mutual fund		1,493		(7	)		-		-		1,493		(7	)
Total	$	98,746	$	(2,785	)	$	-	$	-	$	98,746	$	(2,785	)

Management does not believe that any individual unrealized loss as of June 30, 2011 or December 31, 2010 is other than a temporary impairment. These unrealized losses are primarily attributable to changes in interest rates and not due to credit deterioration or losses. The Corporation has the ability to hold these securities for a time necessary to recover the amortized cost or until maturity when full repayment would be received.

The Corporation’s restricted stock consists of Federal Home Loan Bank of Atlanta (“FHLB”) stock and Federal Reserve Bank (“FRB”) stock. The amortized costs of the restricted stock as of June 30, 2011 and December 31, 2010 are as follows:

	June 30, 2011		December 31, 2010
Restricted Stock:	(In Thousands)

Federal Reserve Bank stock	$	999	$	999

FHLB stock		4,008		3,439
	$	5,007	$	4,438