2. Investment Securities

The portfolio of securities consisted of the following (in thousands):

	June 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	91,238	$	1,091	$	-	$	92,329
Obligations of state and political subdivisions		94,691		4,963		8		99,646
GSE mortgage-backed securities		77,030		2,674		-		79,704
Collateralized mortgage obligations		49,773		842		22		50,593
	$	312,732	$	9,570	$	30	$	322,272

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	116,560	$	1,138	$	-	$	117,698
Obligations of state and political subdivisions		105,376		3,593		117		108,852
GSE mortgage-backed securities		10,642		830		-		11,472
Collateralized mortgage obligations		24,894		936		43		25,787
	$	257,472	$	6,497	$	160	$	263,809

	June 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	340	$	4	$	-	$	344

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	1,588	$	20	$	-	$	1,608

With the exception of three private-label collateralized mortgage obligations (“CMOs”) with a combined balance remaining of $166,000 at June 30, 2011, all of the Company's CMOs are government-sponsored enterprise securities.

The amortized cost and fair value of debt securities at June 30, 2011 by contractual maturity are shown in the following table (in thousands) with the exception of mortgage-backed securities and collateralized mortgage obligations. Expected maturities may differ from contractual maturities for mortgage-backed securities and collateralized mortgage obligations because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	34,134	$	34,333
Due after one year through five years		108,481		111,892
Due after five years through ten years		36,681		38,899
Due after ten years		6,633		6,851
Mortgage-backed securities and collateralized mortgage obligations		126,803		130,297
	$	312,732	$	322,272

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	140	$	143
Due after one year through five years		200		201
	$	340	$	344

Details concerning investment securities with unrealized losses are as follows (in thousands):

	June 30, 2011
	Securities with losses under 12 months				Securities with losses over 12 months				Total
Available-for-sale:	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Obligations of state and political subdivisions	$	697	$	8	$	-	$	-	$	697	$	8
Collateralized mortgage obligations		5,010		17		166		5		5,176		22
	$	5,707	$	25	$	166	$	5	$	5,873	$	30

	December 31, 2010
	Securities with losses under 12 months				Securities with losses over 12 months				Total
Available-for-sale:	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Obligations of state and political subdivisions	$	6,919	$	117	$	-	$	-	$	6,919	$	117
Collateralized mortgage obligations		4,689		36		227		7		4,916		43
	$	11,608	$	153	$	227	$	7	$	11,835	$	160

Management evaluates each quarter whether unrealized losses on securities represent impairment that is other than temporary. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities. If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management then reviews for potential other than temporary impairment based upon other qualitative factors. In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market's perception of the issuer's financial health and the security's credit quality. If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined. If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.

The unrealized losses on debt securities at June 30, 2011 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased. Of the 159 securities issued by state and political subdivisions, one contained unrealized losses at June 30, 2011. Three of the 22 collateralized mortgage obligations also contained unrealized losses. Management identified no impairment related to credit quality. At June 30, 2011, management had the intent and ability to hold impaired securities and no impairment was evaluated as other than temporary. As a result, no other than temporary impairment losses were recognized during the three months ended June 30, 2011.

During the six months ended June 30, 2011, the Company sold five securities classified as available for sale and one security classified as held to maturity. Of the available for sale securities, four securities were sold with gains totaling $94,000 and one security was sold at a loss of $4,000 for a net gain of $90,000. The securities were sold as a result of an external review performed on the municipal securities portfolio. The decision to sell the one held to maturity security, which was sold at a gain of $9,000, was based on the inability to obtain current financial information on the municipality. The sale was consistent with action taken on other securities with a similar deficiency, as identified in the external review. The Company did not sell any investment securities during the six month period ending June 30, 2010.

Securities with an aggregate carrying value of approximately $139.1 million and $150.6 million at June 30, 2011 and December 31, 2010, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.