Investment Securities

Investment securities at September 30, 2012 and December 31, 2011 are summarized as follows:



	September 30, 2012
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(Amounts in thousands)
Available-for-sale securities:
Securities of U.S. government agencies due:
Within 1 year	$	20,008	$	44	$	—	$	20,052
After 1 but within 5 years	12,779		38		—		12,817
	32,787		82		—		32,869
Government sponsored agencies:
Residential mortgage-backed securities due:
Within 1 year	67		1		—		68
After 1 but within 5 years	490		28		—		518
After 5 but within 10 years	11,526		345		—		11,871
After 10 years	68,847		1,972		12		70,807
	80,930		2,346		12		83,264
Collateralized mortgage obligations due:
After 1 but within 5 years	1,743		7		—		1,750
After 5 but within 10 years	10,332		322		—		10,654
After 10 years	124,469		1,060		450		125,079
	136,544		1,389		450		137,483
Private label collateralized mortgage obligations due:
After 5 but within 10 years	190		—		7		183
After 10 years	853		23		—		876
	1,043		23		7		1,059
State and municipal securities due:
Within 1 year	720		11		—		731
After 1 but within 5 years	5,738		367		—		6,105
After 5 but within 10 years	19,025		1,648		—		20,673
After 10 years	24,816		2,444		—		27,260
	50,299		4,470		—		54,769
Common and preferred stocks:	1,115		42		45		1,112
Total available-for-sale securities	$	302,718	$	8,352	$	514	$	310,556



	December 31, 2011
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(Amounts in thousands)
Available-for-sale securities:
Securities of U.S. government agencies due:
Within 1 year	$	9,988	$	51	$	—	$	10,039
After 1 but within 5 years	13,622		65		—		13,687
	23,610		116		—		23,726
Government sponsored agencies:
Residential mortgage-backed securities due:
After 1 but within 5 years	476		18		—		494
After 5 but within 10 years	3,481		281		—		3,762
After 10 years	60,388		959		393		60,954
	64,345		1,258		393		65,210
Collateralized mortgage obligations due:
After 5 but within 10 years	13,986		478		—		14,464
After 10 years	150,915		1,241		592		151,564
	164,901		1,719		592		166,028
Private label collateralized mortgage obligations due:
After 5 but within 10 years	275		10		—		285
After 10 years	1,028		—		57		971
	1,303		10		57		1,256
State and municipal securities due:
Within 1 year	618		5		—		623
After 1 but within 5 years	6,575		347		—		6,922
After 5 but within 10 years	21,252		1,639		19		22,872
After 10 years	40,455		2,255		9		42,701
	68,900		4,246		28		73,118
Common and preferred stocks:	1,113		23		52		1,084
Total available-for-sale securities	$	324,172	$	7,372	$	1,122	$	330,422

Mortgage-backed securities are included in maturity groups based upon stated maturity date. At September 30, 2012, $83.3 million of the Bank's mortgage-backed securities were pass-through securities and $138.5 million were collateralized mortgage obligations. At December 31, 2011, $65.2 million of the Bank's mortgage-backed securities were pass-through securities and $167.3 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 nine months ended September 30, 2012 were $1.3 million and $1.6 million, respectively. Gross realized gains on the sale of securities for the three and nine months ended September 30, 2011 were $1,600,000 million and $2,078,000.0 million, respectively. There were no losses on the sale of securities available-for-sale for the three and nine months ended September 30, 2012 or 2011.

Investment securities with carrying values of approximately $86,037,077 and $120,227,824 at September 30, 2012 and December 31, 2011, 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 September 30, 2012 and December 31, 2011. Securities that have been in a loss position for twelve months or more at September 30, 2012 include one mortgage backed security, one collateralized mortgage obligation and two other securities. The key factors considered in evaluating the collateralized mortgage obligations, private label collateralized mortgage obligations, and municipal securities were cash flows of the 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, 2011 include three mortgage-backed securities, two collateralized mortgage obligations, one private label collateralized mortgage obligation and one common stock. 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 not more likely than not that the Company will have to sell the investments before recovery of their amortized cost bases. For the three and nine months ended September 30, 2012, 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
September 30, 2012	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(Amounts in thousands)
Securities available-for-sale:
Government sponsored agencies:
Residential mortgage-backed securities	$	—	$	—	$	4,204	$	12	$	4,204	$	12
Collateralized mortgage obligations	26,982		198		20,689		252		47,671		450
Private label collateralized mortgage obligations	183		7		—		—		183		7
Common and preferred stocks	—		—		66		45		66		45
Total temporarily impaired securities	$	27,165	$	205	$	24,959	$	309	$	52,124	$	514



	Less Than 12 Months				12 Months or More				Total
December 31, 2011	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(Amounts in thousands)
Securities available-for-sale:
Government sponsored agencies:
Residential mortgage-backed securities	$	13,121	$	45	$	16,751	$	348	$	29,872	$	393
Collateralized mortgage obligation	70,421		505		5,043		87		75,464		592
Private label collateralized mortgage obligations	—		—		971		57		971		57
State and municipal securities	3,429		28		—		—		3,429		28
Common and preferred stocks, and other	6		1		53		51		59		52
Total temporarily impaired securities	$	86,977	$	579	$	22,818	$	543	$	109,795	$	1,122