7.	Investment Securities

The following table sets forth, at the dates indicated, information regarding the amortized cost and fair values, with gross unrealized gains and losses of the Company's investment securities:

	March 31, 2012
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In Thousands)
Securities available-for-sale
Marketable equity securities	$	618	$	25	$	(17	)	$	626
Total securities available-for-sale	$	618	$	25	$	(17	)	$	626

Securities held-to-maturity
U.S. Treasury securities	$	16,000		-		-		$	16,000
Corporate and industrial
revenue bonds		31,367		5,861		-			37,228
Certificates of deposit		13,210		3		-			13,213
Collateralized mortgage obligations		1,776		92		-			1,868
Total securities held-to-maturity	$	62,353	$	5,956	$	-		$	68,309

Non-marketable securities
Federal Home Loan Bank stock	$	4,277		-		-		$	4,277
Banker's Bank stock		183		-		-			183
Total non-marketable securities	$	4,460	$	-	$	-		$	4,460

	December 31, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In Thousands)
Securities available-for-sale
Marketable equity securities	$	618	$	28	$	(33	)	$	613
Total securities available-for-sale	$	618	$	28	$	(33	)	$	613

Securities held-to-maturity
U.S. Treasury securities	$	26,998	$	1	$	(1	)	$	26,998
Corporate and industrial
revenue bonds		31,576		6,643		-			38,219
Certificates of deposit		13,206		7		-			13,213
Collateralized mortgage obligations		2,072		105		-			2,177
Total securities held-to-maturity	$	73,852	$	6,756	$	(1	)	$	80,607

Non-marketable securities
Federal Home Loan Bank stock	$	4,489		-		-		$	4,489
Banker's Bank stock		183		-		-			183
Total non-marketable securities	$	4,672	$	-	$	-		$	4,672

At March 31, 2012 and December 31, 2011, securities with an amortized cost of $14.9 million and $25.5 million, respectively, were pledged as collateral to support securities sold under agreements to repurchase.

The amortized cost and estimated fair value of debt securities by contractual maturity at March 31, 2012 are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without prepayment penalties. The collateralized mortgage obligations are allocated to maturity categories according to final maturity date.

	Held-to-Maturity
	Amortized Cost		Fair Value
	(In Thousands)
Within 1 year	$	29,209	$	29,212
From 1 to 5 years		3,026		3,404
From 5 to 10 years		10,045		11,067
Over 10 years		20,073		24,626
	$	62,353	$	68,309

Unrealized Losses on Investment Securities

Management conducts, at least on a monthly basis, a review of its investment portfolio including available-for-sale and held-to-maturity securities to determine if the value of any security has declined below its cost or amortized cost and whether such security is other-than-temporarily impaired (“OTTI”). Securities are evaluated individually based on guidelines established by the FASB and the internal policy of the Company and include but are not limited to: (1) intent and ability of the Company to retain the investment for a period of time sufficient to allow for the anticipated recovery in market value; (2) percentage and length of time which an issue is below book value; (3) financial condition and near-term prospects of the issuer; (4) whether the debtor is current on contractually obligated interest and principal payments; (5) the volatility of the market price of the security; and (6) any other information and observable data considered relevant in determining whether other-than-temporary impairment has occurred, including the expectation of receipt of all principal and interest due.

As of March 31, 2012 and December 31, 2011, management determined that there were no securities other-than-temporarily impaired.

The following table presents the fair value of investments with continuous unrealized losses as of March 31, 2012 and December 31, 2011:

	March 31, 2012
	Less Than Twelve Months					Twelve Months and Over				Total
	(In Thousands)
			Gross					Gross				Gross
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Losses			Value		Losses		Value		Losses

Marketable equity securities	$	237	$	(17	)	$	-	$	-	$	237	$	(17	)
Total temporarily impaired securities	$	237	$	(17	)	$	-	$	-	$	237	$	(17	)

	December 31, 2011
	Less Than Twelve Months					Twelve Months and Over				Total
	(In Thousands)
			Gross					Gross				Gross
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Losses			Value		Losses		Value		Losses

Marketable equity securities	$	221	$	(33	)	$	-	$	-	$	221	$	(33	)
U.S. Treasury securities		13,998		(1	)		-		-		13,998		(1	)
Total temporarily impaired securities	$	14,219	$	(34	)	$	-	$	-	$	14,219	$	(34	)

U.S. Treasury Securities

There were no unrealized losses within the U.S. Treasury securities portfolio as of March 31, 2012. At December 31, 2011, unrealized losses related to five U.S. Treasury securities of which all were for less than 12 months.

Collateralized Mortgage Obligations (“CMO”)

As of March 31, 2012, the Company has 12 CMO bonds, or 13 individual issues, with an aggregate book value of $1.8 million, which included four bonds, or six individual issues, with FICO scores less than 650. This risk is mitigated by loan-to-value ratios of less than 65%. Since the purchase of these bonds, interest payments have been current and the Company expects to receive all principal and interest due.

Marketable Equity Securities

Unrealized losses within the marketable equity securities portfolio at March 31, 2012 and December 31, 2011, related to three securities issued by one company in the financial industry. In reviewing these marketable securities for OTTI, it was determined there was no impairement. As of March 31, 2012, and December 31, 2011, none of the three securities had losses for more than 12 months.

Non-Marketable Securities

The Company is a member of the Federal Home Loan Bank (“FHLB”). The FHLB is a cooperatively owned wholesale bank for housing and finance in the six New England States. Its mission is to support the residential mortgage and community development lending activities of its members, which include over 450 financial institutions across New England. As a requirement of membership in the FHLB, the Company must own a minimum required amount of FHLB stock, calculated periodically based primarily on the Company’s level of borrowings from the FHLB. The Company uses the FHLB for much of its wholesale funding needs. As of March 31, 2012 and December 31, 2011, the Company’s investment in FHLB stock totaled $4.3 million, and $4.5 million, respectively.

FHLB stock is a non-marketable equity security and therefore is reported at cost, which equals par value. Shares held in excess of the minimum required amount are generally redeemable at par value. However, in the first quarter of 2009 the FHLB announced a moratorium on such redemptions in order to preserve its capital in response to current market conditions and declining retained earnings. The minimum required shares are redeemable, subject to certain limitations, five years following termination of FHLB membership. The Company has no intention of terminating its FHLB membership. As of March 31, 2012 and December 31, 2011, the Company received $6,000, and $13,000, in dividend income from its FHLB stock investment, respectively. On February 22, 2012, the FHLB announced that the Board of Directors approved the repurchase of excess captial stock from its members. On March 9, 2012, the FHLB repurchased $213,000 representing 42,765 shares from the Company.

The Company periodically evaluates its investment in FHLB stock for impairment based on, among other factors, the capital adequacy of the FHLB and its overall financial condition. No impairment losses have been recorded through March 31, 2012. The Company will continue to monitor its investment in FHLB stock.

Banker’s Bank Northeast stock is carried at cost and is evaluated for impairment based on an estimate of the ultimate recovery to par value. As of March 31, 2012 and December 31, 2011, the Company’s investment in Banker’s Bank totaled $183,000.