Securities

6 Months Ended

Jun. 30, 2011

Securities [Abstract]

SECURITIES

NOTE 4. SECURITIES

The following table presents the amortized costs, unrealized gains, unrealized losses and approximate fair values of investment securities at June 30, 2011 and December 31, 2010:

(Dollars in thousands)			As of June 30, 2011
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
Available-for-sale securities	Costs		Gains		Losses			Fair Value
U.S. Treasury and agencies	$	21,959	$	84	$	(61	)	$	21,982
Obligations of state and political subdivisions		57,337		854		(310	)		57,881
Residential mortgage backed securities and collateralized mortgage obligations		39,080		318		(89	)		39,309
Corporate securities		23,342		191		(101	)		23,432
Other asset backed securities		19,656		26		(102	)		19,580
Total	$	161,374	$	1,473	$	(663	)	$	162,184

(Dollars in thousands)			As of December 31, 2010
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
Available-for-sale securities	Costs		Gains		Losses			Fair Value
U.S. Treasury and agencies	$	26,814	$	6	$	(489	)	$	26,331
Obligations of state and political subdivisions		67,004		82		(2,935	)		64,151
Residential mortgage backed securities and collateralized mortgage obligations		65,052		446		(251	)		65,247
Corporate securities		29,019		28		(90	)		28,957
Other asset backed securities		4,569		—		(20	)		4,549
Total	$	192,458	$	562	$	(3,785	)	$	189,235

The amortized cost and estimated fair value of available-for-sale securities as of June 30, 2011 are shown below.

(Dollars in thousands)	Available-for-sale
	Amortized Cost		Fair Value
AMOUNTS MATURING IN:
One year or less	$	248	$	249
One year through five years		25,562		25,531
Five years through ten years		60,370		60,907
After ten years		75,194		75,497
	$	161,374	$	162,184

The amortized cost and fair value of collateralized mortgage obligations and mortgage backed securities are presented by their expected average life, rather than contractual maturity, in the preceding table. Expected maturities may differ from contractual.

As of June 30, 2011, the Company held $79.1 million in securities with safekeeping institutions for pledging purposes. Of this amount, $29.5 million is currently pledged for public funds collateral, collateralized repurchase agreements, and Federal Home Loan Bank (FHLB) borrowings.

The following table presents the cash proceeds from sales of securities and their associated gross realized gains and gross realized losses that have been included in earnings for the three and six months ended June 30, 2011 and 2010:

(Dollars in thousands)	Three months ended						Six months ended
	2011			2010			2011			2010
Proceeds from sales of securities	$	53,835		$	6,047		$	76,883		$	24,205
Gross realized gains on sales of securities	$	719		$	145		$	987		$	1,078
Gross realized losses on sales of securities	$	(64	)	$	(12	)	$	(74	)	$	(14	)

Other-Than-Temporarily Impaired Debt Securities

For each security in an unrealized loss position, we assess whether we intend to sell the security, or it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis less any current period credit losses.

For debt securities that are considered other-than-temporarily impaired in which we do not intend and will not be required to sell prior to recovery of our amortized cost basis, impairment is separated into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and the amount due to factors not credit related is recognized in other comprehensive income.

We do intend to sell temporarily impaired securities, and it is more likely than not that we will not have to sell those securities before recovery of the cost basis. Additionally, we have evaluated the credit ratings of our investment securities and their issuers and/or insurers, if applicable. Based on our evaluation, management has determined that no investment security in our investment portfolio is other-than-temporarily impaired.

The following tables present the current fair value and associated unrealized losses on investments with unrealized losses at June 30, 2011 and December 31, 2010. The tables also illustrate whether these securities have had unrealized losses for less than 12 months or for 12 months or longer.

						As of June 30, 2011
	Less than 12 months					12 months or more				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses		Value		Losses
U.S. Treasury and agencies	$	5,948	$	(61	)	$	—	$	—	$	5,948	$	(61	)
Obligations of state and political subdivisions		19,974		(310	)		—		—		19,974		(310	)
Residential mortgage backed securities and collateralized mortgage obligations		11,242		(89	)		—		—		11,242		(89	)
Corporate securities		13,131		(101	)		—		—		13,131		(101	)
Other asset backed securities		14,003		(102	)		—		—		14,003		(102	)
Total temporarily impaired securities	$	64,298	$	(663	)	$	—	$	—	$	64,298	$	(663	)

						As of December 31, 2010
	Less than 12 months					12 months or more				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses		Value		Losses
U.S. Treasury and agencies	$	18,829	$	(489	)	$	—	$	—	$	18,829	$	(489	)
Obligations of state and political subdivisions		52,414		(2,935	)		—		—		52,414		(2,935	)
Residential mortgage backed securities and collateralized mortgage obligations		26,477		(251	)		—		—		26,477		(251	)
Corporate securities		14,494		(90	)		—		—		14,494		(90	)
Other asset backed securities		4,549		(20	)		—		—		4,549		(20	)
Total temporarily impaired securities	$	116,763	$	(3,785	)	$	—	$	—	$	116,763	$	(3,785	)

At June 30, 2011 and December 31, 2010, 62 and 159 securities were in an unrealized loss position, respectively.

The unrealized losses associated with debt securities of U.S. government agencies and corporate securities are primarily driven by changes in interest rates and not due to the credit quality of the securities. Furthermore, securities backed by GNMA, FNMA, or FHLMC have the explicit or implicit guarantee of the full faith and credit of the U.S. Federal Government. Obligations of U.S. states and political subdivisions in our portfolio are all investment grade without delinquency history. These securities will continue to be monitored as part of our ongoing impairment analysis, but are expected to perform. As a result, we concluded that these securities were not other-than-temporarily impaired as of June 30, 2011.

The unrealized losses associated with asset backed securities and non agency CMO’s were primarily related to securities backed by commercial and residential mortgages. All of these securities were above investment grade at June 30, 2011 and December 31, 2010, as rated by at least one major rating agency. For the CMO’s and asset backed securities, we estimate loss projections for each security by assessing loans collateralizing the security and determining expected default rates and loss severities. Based upon our assessment of expected credit losses of each security given the performance of the underlying collateral and credit enhancements where applicable, we concluded that these securities were not other-than-temporarily impaired as of June 30, 2011.