INVESTMENT SECURITIES (In Thousands)

A summary of the amortized costs and the approximate fair values of securities at December 31, 2011 and 2010 is presented below. Amortized cost is reported net of other-than-temporary impairment charges.

Securities Available-for-Sale



	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
December 31, 2011
U.S. Agency Obligations	$	116,055	$	116,393	$	342	$	4
State and Municipal Obligations	44,712		44,999		305		18
Collateralized Mortgage Obligations - Residential	144,362		149,669		5,526		219
Mortgage-Backed Securities - Residential	237,756		243,043		5,287		—
Corporate and Other Debt Securities	1,015		1,015		—		—
Mutual Funds and Equity Securities	1,365		1,419		69		15
Total Securities Available-for-Sale	$	545,265	$	556,538	$	11,529	$	256
December 31, 2010
U.S. Agency Obligations	$	97,943	$	98,173	$	326	$	96
State and Municipal Obligations	89,471		89,528		72		15
Collateralized Mortgage Obligations - Residential	161,247		166,964		6,692		975
Mortgage-Backed Securities - Residential	159,636		159,926		2,532		2,242
Corporate and Other Debt Securities	1,516		1,417		—		99
Mutual Funds and Equity Securities	1,333		1,356		70		47
Total Securities Available-for-Sale	$	511,146	$	517,364	$	9,692	$	3,474

Securities Held-to-Maturity:



	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
December 31, 2011
State and Municipal Obligations	$	149,688	$	158,059	$	8,378	$	7
Corporate and Other Debt Securities	1,000		1,000		—		—
Total Securities Held-to-Maturity	$	150,688	$	159,059	$	8,378	$	7
December 31, 2010
State and Municipal Obligations	$	158,938	$	161,713	$	2,911	$	136
Corporate and Other Debt Securities	1,000		1,000		—		—
Total Securities Held-to-Maturity	$	159,938	$	162,713	$	2,911	$	136

As reported in the Consolidated Balance Sheets, Other Investments include Federal Home Loan Bank of New York (“FHLBNY”) and Federal Reserve Bank (“FRB”) stock, which are reported at cost. FHLBNY and FRB stock are restricted investment securities and amounted to $5,691 and $1,031 at December 31, 2011, respectively and $7,743 and $859 at December 31, 2010, respectively. The required level of FHLBNY stock is based on the amount of FHLBNY borrowings (see Note 9) and is pledged to secure those borrowings. While some Federal Home Loan Banks have stopped paying dividends and repurchasing stock upon reductions in debt levels, the FHLBNY continues to pay dividends and repurchase its stock. Accordingly, we have not recognized any impairment on our holdings of FHLBNY common stock. However, the FHLBNY has reported impairment issues among its holdings of mortgage-backed securities.

A summary of the maturities of securities as of December 31, 2011 is presented below. Mutual funds and equity securities, which have no stated maturity, are not included in the table below. Collateralized mortgage obligations and other mortgage-backed-securities are included in the schedule based on their expected average lives. Actual maturities will differ from the table below because issuers may have the right to call or prepay obligations with or without prepayment penalties.



Debt Securities:	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within One Year:
U.S. Agency Obligations	$	34,041	$	34,058	$	—	$	—
State and Municipal Obligations	10,937		10,962		13,814		13,940
Collateralized Mortgage Obligations - Residential	8,931		9,120		—		—
Mortgage-Backed Securities - Residential	2,347		2,423		—		—
Total	56,256		56,563		13,814		13,940
From 1 - 5 Years:
U.S. Agency Obligations	82,014		82,335		—		—
State and Municipal Obligations	30,171		30,378		64,168		66,046
Collateralized Mortgage Obligations - Residential	119,298		123,273		—		—
Mortgage-Backed Securities - Residential	204,382		208,441		—		—
Corporate and Other Debt Securities	15		15		—		—
Total	435,880		444,442		64,168		66,046
From 5 - 10 Years:
State and Municipal Obligations	1,061		1,115		63,352		69,285
Collateralized Mortgage Obligations - Residential	16,133		17,276		—		—
Mortgage-Backed Securities - Residential	22,516		23,308		—		—
Total	39,710		41,699		63,352		69,285
Over 10 Years:
State and Municipal Obligations	2,543		2,544		8,354		8,788
Mortgage-Backed Securities - Residential	8,511		8,871		—		—
Corporate and Other Debt Securities	1,000		1,000		1,000		1,000
Total	12,054		12,415		9,354		9,788
Total Debt Securities	$	543,900	$	555,119	$	150,688	$	159,059

The following table sets forth the components of interest and dividend income on securities available-for-sale, securities held-to-maturity and other investments for the year ended December 31:



Components of Investment Securities Interest and Dividend Income	2011		2010		2009
Available-for-Sale:
Taxable Interest Income	$	11,881	$	14,050	$	14,138
Nontaxable Interest Income	1,017		634		468
Dividend Income	54		54		47
Total Interest and Dividend Income, on Securities Available-for-Sale	$	12,952	$	14,738	$	14,653
Held-to-Maturity
Taxable Interest Income	$	80	$	82	$	63
Nontaxable Interest Income	4,674		5,197		5,074
Total Interest Income, on Securities Held-to-Maturity	$	4,754	$	5,279	$	5,137
Other Investments	$	387	$	515	$	491

The fair value of securities pledged to secure repurchase agreements amounted to $26,293 and $51,581 at December 31, 2011 and 2010, respectively. The fair value of securities pledged to secure public and trust deposits and for other purposes totaled $415,542 and $382,142 at December 31, 2011 and 2010, respectively. Other mortgage-backed securities at December 31, 2011 and 2010 included $873 and $1,598, respectively, of loans previously securitized by Arrow, which it continues to service.

Information on temporarily impaired securities at December 31, 2011 and 2010, segregated according to the length of time such securities had been in a continuous unrealized loss position, is summarized as follows:



December 31, 2011	Less than 12 Months				12 Months or Longer				Total
Available-for-Sale Portfolio:	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Agency Securities	$	25,956	$	4	—		—		$	25,956	$	4
State & Municipal Obligations	4,505		18		—		—		4,505		18
Collateralized Mortgage Obligations - Residential	9,857		204		5,715		15		15,572		219
Mutual Funds and Equity Securities	—		—		78		15		78		15
Total Securities Available-for-Sale	$	40,318	$	226	$	5,793	$	30	$	46,111	$	256
Held-to-Maturity Portfolio
State & Municipal Obligations	$	510	$	7	$	—	$	—	$	510	$	7

The table above for December 31, 2011 consists of 27 securities where the current fair value is less than the related amortized cost. These unrealized losses do not reflect any deterioration of the credit worthiness of the issuing entities. Agency issues, including mortgage-backed securities, are all rated Aaa by Moody's and AA+ by Standards and Poor. The municipal obligations are general obligations supported by the general taxing authority of the issuer, and in some cases are insured. Obligations issued by school districts are supported by state aid. For any non-rated municipal securities, credit analysis is performed in-house based upon data that has been submitted by the issuers to the NY State Comptroller. That analysis shows no deterioration in the credit worthiness of the municipalities. Subsequent to December 31, 2011, there were no securities downgraded below investment grade.

The unrealized losses on these temporarily impaired securities are primarily the result of changes in interest rates for fixed rate securities where the interest rate received is less than the current rate available for new offerings of similar securities, changes in market spreads as a result of shifts in supply and demand, and/or changes in the level of prepayments for mortgage related securities. Because we do not currently intend to sell any of our temporarily impaired securities, and because it is not more likely-than-not we would be required to sell the securities prior to recovery, the impairment is considered temporary.



December 31, 2010	Less than 12 Months				12 Months or Longer				Total
Available-for-Sale Portfolio:	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. Agency Securities	$	23,928	$	72	5,976		24		$	29,904	$	96
State & Municipal Obligations	11,632		11		2,432		4		14,064		15
Collateralized Mortgage Obligations - Residential	32,027		975		—		—		32,027		975
Mortgage-Backed Securities - Residential	69,461		1,957		12,129		285		81,590		2,242
Corporate & Other Debt Securities	283		48		949		51		1,232		99
Mutual Funds and Equity Securities	1,095		47		—		—		1,095		47
Total Securities Available-for-Sale	$	138,426	$	3,110	$	21,486	$	364	$	159,912	$	3,474
Held-to-Maturity Portfolio
State & Municipal Obligations	$	6,449	$	73	$	4,552	$	63	$	11,001	$	136

The table above for December 31, 2010 consists of 104 securities where the current fair value is less than the related amortized cost. These unrealized losses do not reflect any deterioration of the credit worthiness of the issuing entities. Agency-backed CMOs are all rated AAA, as are the mortgage-backed securities. The municipal obligations are general obligations supported by the general taxing authority of the issuer, and in some cases are insured. Obligations issued by school districts are supported by state aid. For any non-rated municipal securities, third party credit analysis shows no deterioration in the credit worthiness of the municipalities. Corporate and other debt securities consist of one private placement trust preferred, and one trust preferred pool. The private placement trust preferred is rated AAA by Standard & Poor’s; the trust preferred pool is rated investment grade, with the privately issued securities securing the note performing. Subsequent to December 31, 2010, there were no securities downgraded below investment grade.

Other-Than-Temporary Impairment

At December 31, 2011 and 2010, mutual funds and equity securities included shares of one common stock that had been deemed to be other-than-temporarily impaired in 2009. The common stock had a book value of $1,094 after the recognition of $375 in losses charged to earnings for the year ended December 31, 2009. The approximate fair value for this security was $1,103 and $1,050 at December 31, 2011 and 2010.