Note 4 – Investments

The amortized cost and fair value of investment securities at September 30, 2011 and December 31, 2010 were as follows (in thousands):

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
September 30, 2011	Cost		Gains		Losses			Value
Available-for-sale securities:
U.S. Agency securities	$	156,583	$	2,176	$	(55	)	$	158,704
Obligations of state and political subdivisions		93,114		3,510		(20	)		96,604
Corporate obligations		8,301		228		-			8,529
Mortgage-backed securities in government sponsored entities		35,758		2,482		-			38,240
Equity securities in financial institutions		969		243		(50	)		1,162
Total available-for-sale securities	$	294,725	$	8,639	$	(125	)	$	303,239

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
December 31, 2010	Cost		Gains		Losses			Value
Available-for-sale securities:
U.S. Agency securities	$	117,390	$	1,535	$	(441	)	$	118,484
Obligations of state and political subdivisions		78,164		603		(1,845	)		76,922
Corporate obligations		8,415		268		(2	)		8,681
Mortgage-backed securities in government sponsored entities		43,183		2,832		-			46,015
Equity securities in financial institutions		914		303		(16	)		1,201
Total available-for-sale securities	$	248,066	$	5,541	$	(2,304	)	$	251,303

The following table shows the Company's gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time, that the individual securities have been in a continuous unrealized loss position, at September 30, 2011 and December 31, 2010 (in thousands). As of September 30, 2011 and December 31, 2010, the Company owned 19 and 85 securities whose fair value was less than their cost basis, respectively.

September 30, 2011	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. Agency securities	$	35,524	$	(55	)	$	-	$	-		$	35,524	$	(55	)
Obligations of state and political subdivisions		1,052		(14	)		769		(6	)		1,821		(20	)
Equity securities in financial institutions		78		(50	)		-		-			78		(50	)

Total securities	$	36,654	$	(119	)	$	769	$	(6	)	$	37,423	$	(125	)

December 31, 2010	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
U.S. Agency securities	$	38,502	$	(441	)	$	-	$	-		$	38,502	$	(441	)
Obligations of states and political subdivisions		45,335		(1,784	)		526		(61	)		45,861		(1,845	)
Corporate obligations		1,157		(2	)		-		-			1,157		(2	)
Equity securities in financial institutions		139		(16	)		-		-			139		(16	)

Total securities	$	85,133	$	(2,243	)	$	526	$	(61	)	$	85,659	$	(2,304	)

As of September 30, 2011, the Company's investment securities portfolio contained unrealized losses on obligations of U.S Agency securities, states and political subdivisions, and certain financial institutions equity securities. For fixed maturity investments management considers whether the present value of cash flows expected to be collected are less than the security's amortized cost basis (the difference defined as the credit loss), the magnitude and duration of the decline, the reasons underlying the decline and the Company's intent to sell the security or whether it is more likely than not that the Company would be required to sell the security before its anticipated recovery in market value, to determine whether the loss in value is other than temporary. Once a decline in value is determined to be other than temporary, if the Company does not intend to sell the security, and it is more-likely-than-not that it will not be required to sell the security, before recovery of the security's amortized cost basis, the charge to earnings is limited to the amount of credit loss. Any remaining difference between fair value and amortized cost (the difference defined as the non-credit portion) is recognized in other comprehensive income, net of applicable taxes. Otherwise, the entire difference between fair value and amortized cost is charged to earnings. For equity securities where the fair value has been significantly below cost for one year, the Company's policy is to recognize an impairment loss unless sufficient evidence is available that the decline is not other than temporary and a recovery period can be predicted. The Company has concluded that any impairment of its investment securities portfolio outlined in the above table is not other than temporary and is the result of interest rate changes, sector credit rating changes, or company-specific rating changes that are not expected to result in the non-collection of principal and interest during the period.

Proceeds from sales of securities available-for-sale for the nine months ended September 30, 2011 and 2010 were $9,790,000 and $8,871,000, respectively. For the three months ended September 30, 2011, there were sales of $1,969,000 of available-for-sale securities. There were no sales during the three month period ended September 30, 2010. The gross gains and losses were as follows (in thousands):

	Three Months Ended					Nine months Ended
	September 30,					September 30,
	2011			2010		2011			2010
Gross gains	$	161		$	-	$	424		$	99
Gross losses		(44	)		-		(73	)		-
Net gains	$	117		$	-	$	351		$	99

Investment securities with an approximate carrying value of $175,946,000 and $162,742,000 at September 30, 2011 and December 31, 2010, respectively, were pledged to secure public funds and certain other deposits.

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The amortized cost and fair value of debt securities at September 30, 2011, by contractual maturity, are shown below (in thousands):

	Amortized
	Cost		Fair Value
Available-for-sale debt securities:
Due in one year or less	$	9,243	$	9,325
Due after one year through five years		100,897		102,579
Due after five years through ten years		33,644		34,650
Due after ten years		149,972		155,523
Total	$	293,756	$	302,077