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Investment Securities
3 Months Ended
Mar. 31, 2012
Investment Securities [Abstract]  
INVESTMENT SECURITIES
NOTE 2: INVESTMENT SECURITIES

The amortized cost and estimated fair values of investment securities, as of the dates indicated, are summarized as follows:
 
   
March 31, 2012
 
(Dollars in thousands)
 
Amortized
Cost
   
Unrealized
Gains
   
Unrealized
Losses
   
Estimated
Fair Value
 
Held To Maturity
                       
Government Sponsored Entities (GSE) mortgage-backed securities
  $ 13,159     $ 489     $     $ 13,648  
Corporate bonds
    5,920       13       (132 )     5,801  
Collateralized mortgage obligations GSE
    7,822       121             7,943  
State and Municipal tax-exempt
    12,376       602             12,978  
Total
  $ 39,277     $ 1,225     $ (132 )   $ 40,370  
 
                               
Available For Sale
                               
US Government agency obligations
  $ 44,249     $ 138     $ (34 )   $ 44,353  
GSE mortgage-backed securities
    33,489       628       (51 )     34,066  
Collateralized mortgage obligations GSE
    5,838       25             5,863  
Corporate bonds
    36,555       367       (539 )     36,383  
Asset-backed securities
    6,709       90             6,799  
Equity securities
    27             (13 )     14  
Total
  $ 126,867     $ 1,248     $ (637 )   $ 127,478  
 
                               
 
December 31, 2011
 
(Dollars in thousands)
 
Amortized
Cost
   
Unrealized
Gains
   
Unrealized
Losses
   
Estimated
Fair Value
 
Held To Maturity
                       
Government Sponsored Entities (GSE) mortgage-backed securities
  $ 14,363     $ 493     $     $ 14,856  
Corporate Bonds
    1,548       18             1,566  
Collateralized mortgage obligations GSE
    8,139       163             8,302  
State and Municipal tax-exempt
    12,377       580             12,957  
Total
  $ 36,427     $ 1,254     $     $ 37,681  
 
                               
Available For Sale
                               
US Government agency obligations
  $ 43,698     $ 194     $ (1 )   $ 43,891  
GSE mortgage-backed securities
    24,792       533       (12 )     25,313  
Collateralized mortgage obligations GSE
    6,148       24       (20 )     6,152  
Corporate bonds
    27,141       84       (878 )     26,347  
Asset-backed securities
    5,737       78             5,815  
Equity securities
    27             (15 )     12  
Total
  $ 107,543     $ 913     $ (926 )   $ 107,530  
 
                               

Included in unrealized losses are market losses on securities that have been in a continuous unrealized loss position for twelve months or more and those securities that have been in a continuous unrealized loss position for less than twelve months. The table below details the aggregate unrealized losses and aggregate fair value of the underlying securities whose fair values are below their amortized cost at March 31, 2012 and December 31, 2011.
 
   
March 31, 2012
 
(Dollars in thousands)
 
Total
Fair Value
   
Total
Unrealized
Loss
   
Fair Value
Impaired
Less Than
12 Months
   
Unrealized
Loss
Less Than
12 Months
   
Fair Value
Impaired
More Than
12 Months
   
Unrealized
Loss
More Than
12 Months
 
Held To Maturity
                                   
Corporate bonds
  $ 4,241     $ (132 )   $ 4,241     $ (132 )   $     $  
Total
  $ 4,241     $ (132 )   $ 4,241     $ (132 )   $     $  
 
                                               
 
                                               
Available For Sale
                                               
US Government agency obligations
  $ 5,615     $ (34 )   $ 5,615     $ (34 )   $     $  
GSE mortgage-backed securities
    10,585       (51 )     10,585       (51 )            
Corporate bonds
    20,182       (539 )     15,474       (113 )     4,708       (426 )
Equity securities
    14       (13 )                 14       (13 )
Total
  $ 36,396     $ (637 )   $ 31,674     $ (198 )   $ 4,722     $ (439 )
 
                                               

   
December 31, 2011
 
(Dollars in thousands)
 
Total
Fair Value
   
Total
Unrealized
Loss
   
Fair Value
Impaired
Less Than
12 Months
   
Unrealized
Loss
Less Than
12 Months
   
Fair Value
Impaired
More Than
12 Months
   
Unrealized
Loss
More Than
12 Months
 
Available For Sale
                                   
US Government agency obligations
  $ 1,522     $ (1 )   $ 1,522     $ (1 )   $     $  
GSE mortgage-backed securities
    4,428       (12 )     4,428       (12 )            
Collateralized mortgage obligations GSE
    4,554       (20 )     4,554       (20 )            
Corporate bonds
    18,023       (878 )     14,232       (477 )     3,791       (401 )
Equity securities
    12       (15 )                 12       (15 )
Total
  $ 28,539     $ (926 )   $ 24,736     $ (510 )   $ 3,803     $ (416 )
 
                                               
As of March 31, 2012, there were 5 mortgage backed securities, 20 corporate bonds, 3 US Government agency notes, 1 collateralized mortgage obligation and 6 equity securities which were in an unrealized loss position. Twenty-four of these 35 securities did not meet the criteria of having market value loss greater than 10% of book value or had been impaired for more than 12 months. DNB does not intend to sell these securities and management of DNB does not expect to be required to sell any of these securities prior to a recovery of its cost basis. Management does not believe any individual unrealized loss as of March 31, 2012 represents an other-than-temporary impairment. There were 5 corporate bonds and 6 equity securities that were impaired for more than 12 months. Three of the corporate bonds that were impaired for more than 12 months had a market value loss of greater than 10% of book value. DNB reviews its investment portfolio on a quarterly basis judging each investment for other-than-temporary impairment (OTTI). The OTTI analysis focuses on duration and amount a security is below book. As of March 31, 2012, the following securities were reviewed:
 
Corporate bonds. The unrealized loss on six investments in the Corporate Bond portfolio was caused by interest rate increases and increased spreads in this sector. Some of the bonds have been downgraded since they were purchased. The book value of the five securities is $5.1 million and the unrealized loss is $426,000. Two of the bonds have been impaired for more than twelve months and had a loss less than 10% of the book value. Three of the bonds have been impaired for more than twelve months and had a loss greater than 10% of the book value. The contractual terms of those investments do not permit the issuer to settle these securities at a price less than the amortized cost basis of the investments. Based on this analysis and an evaluation of DNB's ability and intent to hold these investments for a reasonable period of time sufficient for each security to increase to DNB's cost, DNB does not intend to sell these investments and it is not more likely than not that DNB will be required to sell the investments before recovery of their cost, DNB does not consider these investments to be other-than-temporarily impaired at March 31, 2012.
 
Equity securities.  DNB's investment in six marketable equity securities consist primarily of investments in common stock of community banks in Pennsylvania. The unrealized losses on the six investments in the Equity securities portfolio were all impaired for more than twelve months. The severity and duration of the impairment are driven by higher collateral losses, wider credit spreads, and changes in interest rates within the financial services sector. DNB evaluated the prospects of all issuers in relation to the severity and duration of the impairment. Based on this analysis and an evaluation of DNB's ability and intent to hold these investments for a reasonable period of time sufficient for each security to increase to DNB's cost, DNB does not intend to sell these investments and it is not more likely than not that DNB will be required to sell the investments before recovery of their cost, DNB does not consider these investments to be other-than-temporarily impaired at March 31, 2012.
 
The amortized cost and estimated fair value of investment securities as of March 31, 2012, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because certain securities may be called or prepaid without penalties.
 
   
Held to Maturity
   
Available for Sale
 
(Dollars in thousands)
 
Amortized
Cost
   
Estimated
Fair Value
   
Amortized
Cost
   
Estimated
Fair Value
 
Due in one year or less
  $     $     $ 2,565     $ 2,563  
Due after one year through five years
                58,789       58,954  
Due after five years through ten years
    6,372       6,536       24,030       23,971  
Due after ten years
    32,905       33,834       41,456       41,976  
No stated maturity
                27       14  
Total investment securities
  $ 39,277     $ 40,370     $ 126,867     $ 127,478  
 
                               

DNB sold no securities and $3.3 million from the AFS portfolio during the three month period ending March 31, 2012 and 2011, respectively. Gains and losses resulting from investment sales, redemptions or calls were as follows:
 
   
Three Months Ended
March 31
 
(Dollars in thousands)
 
2012
   
2011
 
Gross realized gains-AFS
  $     $ 1  
Net realized gain
  $     $ 1  
 
               

 
At March 31, 2012 and 2011, investment securities with a carrying value of approximately $96 million and $106 million, respectively, were pledged to secure public funds, repurchase agreements, FHLBP advances and for other purposes as required by law.