Investment Securities

6 Months Ended

Jun. 30, 2011

Investment Securities [Abstract]

Investment Securities

4. Investment Securities

Investment securities at June 30, 2011 and December 31, 2010 are summarized as follows:

	June 30, 2011
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(Amounts in thousands)
Available-for-sale securities:
Securities of U.S. government agencies due:
After 1 but within 5 years	$	34,209	$	276	$	—	$	34,485
		34,209		276		—		34,485
Government sponsored agencies:
Residential mortgage-backed securities due:
After 1 but within 5 years		747		24		—		771
After 5 but within 10 years		19,419		791		—		20,210
After 10 years		41,169		977		325		41,821
		61,335		1,792		325		62,802
Collateralized mortgage obligations due:
After 5 but within 10 years		18,738		290		—		19,028
After 10 years		130,481		1,261		336		131,406
		149,219		1,551		336		150,434
Private label collateralized mortgage obligations due:
After 5 but within 10 years		332		13		—		345
After 10 years		1,265		—		50		1,215
		1,597		13		50		1,560
State and municipal securities due:
Within 1 year		624		4		—		628
After 1 but within 5 years		8,617		414		—		9,031
After 5 but within 10 years		22,895		729		17		23,607
After 10 years		33,273		838		343		33,768
		65,409		1,985		360		67,034
Common and preferred stocks:		1,113		68		37		1,144
Total available-for-sale securities	$	312,882	$	5,685	$	1,108	$	317,459

	December 31, 2010
			Unrealized		Unrealized
	Amortized Cost		Gains		Losses		Fair Value
	(Amounts in thousands)
Available-for-sale securities:
Securities of U.S. government agencies due:
After 1 but within 5 years	$	14,547	$	6	$	3	$	14,550
		14,547		6		3		14,550
Government sponsored agencies:
Residential mortgage-backed securities due:
After 1 but within 5 years		1,040		36		—		1,076
After 5 but within 10 years		7,839		602		—		8,441
After 10 years		41,863		1,132		437		42,558
		50,742		1,770		437		52,075
Collateralized mortgage obligations due:
After 5 but within 10 years		16,063		165		57		16,171
After 10 years		140,021		672		938		139,755
		156,084		837		995		155,926
Private label collateralized mortgage obligations due:
After 5 but within 10 years		406		17		—		423
After 10 years		1,430		—		148		1,282
		1,836		17		148		1,705
State and municipal securities due:
Within 1 year		2,476		18		—		2,494
After 1 but within 5 years		10,680		327		53		10,954
After 5 but within 10 years		21,348		413		236		21,525
After 10 years		38,260		295		906		37,649
		72,764		1,053		1,195		72,622
Common and preferred stocks:		1,113		36		25		1,124
Total available-for-sale securities	$	297,086	$	3,719	$	2,803	$	298,002

Mortgage-backed securities are included in maturity groups based upon stated maturity date. At June 30, 2011, $62.8 million of the Bank’s mortgage-backed securities were pass-through securities and $152.0 million were collateralized mortgage obligations. At December 31, 2010, $52.1 million of the Bank’s mortgage-backed securities were pass-through securities and $157.6 million were collateralized mortgage obligations. Actual maturity will vary based on repayment of the underlying mortgage loans.

Gross realized gains on the sale of securities for the three and six months ended June 30, 2011 were $428,664 and $601,900, respectively. Gross realized gains on the sale of securities for the three and six months ended June 30, 2010 were $844,320 and $888,319, respectively. There were no losses on the sale of securities available-for-sale for the three and six month periods ended June 30, 2011 and 2010.

Investment securities with carrying values of approximately $110,847,763 and $111,803,619 at June 30, 2011 and December 31, 2010, respectively, were pledged as collateral for public deposits and for other purposes as required or permitted by law.

The following table presents the gross unrealized losses and fair value of investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2011 and December 31, 2010. Securities that have been in a loss position for twelve months or more at June 30, 2011 include one collateralized mortgage obligation, one municipal security and one private label collateralized mortgage obligation. The key factors considered in evaluating the collateralized mortgage obligation, private label collateralized mortgage obligations, and municipal securities were cash flows of this investment and the assessment of other relative economic factors. Securities that have been in a loss position for twelve months or more at December 31, 2010 include one mortgage-backed security, one municipal security and one private label collateralized mortgage obligation. The unrealized losses relate to securities that have incurred fair value reductions due to a shift in demand from non-governmental securities and municipals to U.S. Treasury bonds and governmental agencies due to credit market concerns. The unrealized losses are not likely to reverse until market interest rates decline to the levels that existed when the securities were purchased. None of the unrealized losses relate to the marketability of the securities or the issuer’s ability to honor redemption obligations. It is more likely than not that the Company will not have to sell the investments before recovery of their amortized cost bases. For the three and six months ended June 30, 2010, there were no securities available-for-sale deemed to be other than temporarily impaired (“OTTI”).

If management determines that an investment has experienced an other than temporary impairment, the loss is recognized in the income statement.

	Less Than 12 Months				12 Months or More				Total
			Unrealized				Unrealized				Unrealized
June 30, 2011	Fair value		losses		Fair value		losses		Fair value		losses
	(Amounts in thousands)
Securities available-for-sale:
U.S. government agencies	$	—	$	—	$	—	$	—	$	—	$	—
Government sponsored agencies:
Mortgage-backed securities		17,007		325		—		—		17,007		325
Collateralized mortgage obligations		18,200		308		3,553		28		21,753		336
Private label collateralized mortgage obligations		—		—		1,215		50		1,215		50
State and municipal securities		13,793		356		293		4		14,086		360
Common and preferred stocks		74		37		—		—		74		37
Total temporarily impaired securities	$	49,074	$	1,026	$	5,061	$	82	$	54,135	$	1,108

	Less Than 12 Months				12 Months or More				Total
			Unrealized				Unrealized				Unrealized
December 31, 2010	Fair value		losses		Fair value		losses		Fair value		losses
	(Amounts in thousands)
Securities available-for-sale:
U.S. government agencies	$	4,569	$	3	$	—	$	—	$	4,569	$	3
Government sponsored agencies:
Residential mortgage-backed securities		21,637		435		136		2		21,773		437
Collateralized mortgage obligation		76,925		995		—		—		76,925		995
Private label collateralized mortgage obligations		—		—		1,283		148		1,283		148
State and municipal securities		31,775		1,174		276		21		32,051		1,195
Common and preferred stocks, and other		79		25		—		—		79		25
Total temporarily impaired securities	$	134,985	$	2,632	$	1,695	$	171	$	136,680	$	2,803

The aggregate cost of the Company’s cost method investments totaled $9,195,013 at June 30, 2011 and $12,463,510 at December 31, 2010. Cost method investments at June 30, 2011 include $7,814,200 in FHLB stock and $1,380,813 of investments in various trust and financial companies, which are included in other assets. All cost method investments were evaluated for impairment at June 30, 2011 and December 31, 2010. The following factors have been considered in determining the carrying amount of FHLB stock; 1) the recoverability of the par value, 2) the Company has sufficient liquidity to meet all operational needs in the foreseeable future and would not need to dispose of the stock below recorded amounts, 3) redemptions and purchases of the stock are at the discretion of the FHLB, 4) the Company believes the FHLB has the ability to absorb economic losses given the expectation that the various FHLBs’ have a high degree of government support, and 5) the unrealized losses related to securities owned by the FHLB are manageable given the capital levels of the organization. The Company estimated that the fair value equaled or exceeded the cost of each of these investments (that is, the investments were not impaired) on the basis of the redemption provisions of the issuing entities with two exceptions. The Company’s investment in a local community bank was considered to be other than temporarily impaired and $20,000 and $22,154 was charged off in the first and second quarters of 2011, respectively. During the first six months of 2010, the Company’s investment in a financial services company was considered to be OTTI and $27,925 was charged-off. In addition, the Company’s investment in a local community bank was considered to be OTTI and $226,236 was charged-off in 2010. In addition to the impairments listed above, the Company also sold its investment in a financial services company during the first quarter of 2011, resulting in a loss of $79,910.