INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2011

INVESTMENT SECURITIES [Abstract]

INVESTMENT SECURITIES

NOTE 5 – INVESTMENT SECURITIES

The amortized cost and approximate fair value of investment securities as of December 31, 2011 and December 31, 2010 are summarized as follows:

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Treasury and government agencies	$	1,002	$	-	$	(1)		$	1,001
Mortgage-backed securities (1)		55,818		581		(107	)		56,292
Asset-backed securities		622		5		-			627
Municipal securities		2,071		-		(71	)		2,000
Corporate notes		20,000		-		(783	)		19,217
	$	79,513	$	586	$	(962	)	$	79,137
Held to Maturity:
Mortgage-backed securities	$	319,547	$	11,262	$	-		$	330,809

(1)           Includes an interest only strip security of $2,894. 

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Treasury and government agencies	$	1,711	$	-	$	(30	)	$	1,681
Mortgage-backed securities		204,182		561		(3,169	)		201,574
Asset-backed securities		719		3		-			722
Municipal securities		2,088		-		(237	)		1,851
	$	208,700	$	564	$	(3,436	)	$	205,828

The following table shows proceeds from the sale of available for sale investment securities, gross gains and gross losses on those sales of securities:

	December 31,
	2011		2010			2009
Proceeds from sale of available-for-sale investment securities	$	182,743	$	154,287		$	11,816
Proceeds from sale of held-to-maturity investment securities		-		-			2,263
Gross gains		2,731		1,117			236
Gross losses		-		(3	)		-
Net gains		2,731		1,114			236

The following table shows investment securities by stated maturity. Investment securities backed by mortgages have expected maturities that differ from contractual maturities because borrowers have the right to call or prepay, and are, therefore, classified separately with no specific maturity date:

	December 31, 2011
	Available-for-Sale						Held-to-Maturity
	Amortized Cost			Fair Value			Amortized Cost			Fair Value
Due in one year or less		$	1,102		$	1,102		$	-		$	-
Due after one year through five years			22,477			21,626			-			-
Due after five years through ten years			77			78			-			-
Due after ten years			39			39			-			-
			23,695			22,845			-			-
Mortgage-backed securities (1)			55,818			56,292			319,547			330,809
Total investment securities		$	79,513		$	79,137		$	319,547		$	330,809

 (1)           Includes an interest only strip security of $2,894.

In 2009, the Bancorp's decision to sell all of its held to maturity securities resulted from concerns of the economy and the resulting impact on asset quality, the opportunity to take advantage of gains that existed in the three securities and to help maintain regulatory capital ratios within the “Well Capitalized” status before raising capital in June 2010.  The Bancorp considered the portfolio tainted and did not utilize held to maturity securities until two years later.

The Bancorp's investments' gross unrealized losses and fair value, aggregated by investment category and length of time for individual securities that have been in a continuous unrealized loss position, at December 31, 2011 and December 31, 2010 are as follows:

	December 31, 2011
	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available  for Sale:
U.S. Treasury and
government agencies	$	1,001	$	(1	)	$	-	$	-		$	1,001	$	(1	)
Mortgage-backed securities		166		(1	)		412		(106	)		578		(107	)
Municipal securities		-		-			2,000		(71	)		2,000		(71	)
Corporate notes		19,218		(783	)		-		-			19,218		(783	)
Total investment securities available-for-sale	$	20,385	$	(785	)	$	2,412	$	(177	)	$	22,797	$	(962	)

	December 31, 2010
	Less than 12 months							12 months or more							Total
	Fair Value			Unrealized Losses				Fair Value			Unrealized Losses				Fair Value			Unrealized Losses
Available for Sale:
U.S. Treasury and government agencies		$	1,457		$	(29	)		$	116		$	(1	)		$	1,573		$	(30	)
Mortgage-backed securities			134,068			(3,104	)			524			(65	)			134,592			(3,169	)
Municipal securities			-			-				1,851			(237	)			1,851			(237	)
Total investment securities available-for-sale		$	135,525		$	(3,133	)		$	2,491		$	(303	)		$	138,016		$	(3,436	)

At December 31, 2011, there were ten available for sale investment securities in the less than twelve month category and six available-for-sale investment securities in the twelve month or more category. At December 31, 2010, there were thirty-three available-for-sale investment securities in the less than twelve month category and six available-for-sale investment securities in the twelve month or more category. In management's opinion, the unrealized losses reflect primarily changes in interest rates, due to changes in economic conditions and the liquidity of the market and not credit quality. In addition, the Bancorp does not believe that it will be more likely than not that the Bancorp will be required to sell the securities prior to maturity or market price recovery.

At December 31, 2011 and 2010, Customers Bank pledged municipal and mortgage-backed securities of $311,442 and $2,062, respectively as collateral for borrowings.