INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2011

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

NOTE 3 – INVESTMENT SECURITIES

The following summaries reflect the book value, unrealized gains and losses, approximate market value, and tax-equivalent yields of investment securities listed by type of issuer and maturity at June 30, 2011 and at December 31, 2010.

	June 30, 2011
	Book		Unrealized Holding				Fair
	Value		Gains		Losses		Value	Yield(1)
AVAILABLE FOR SALE
Government Sponsored Enterprises
Within one year	$  23,192	$         58		$           -		$  23,250		.61%
One to five years	166,626	1,083		-		167,709		1.08%
Six to ten years	32,701	130		-		32,831		1.66%
	222,519	1,271		-		233,790		1.12%
Mortgage Backed Securities
One to five years	105	7		-		112		5.87%
Six to ten years	2,389	145		-		2,534		4.08%
Over ten years	9,365	147		-		9,512		3.09%
	11,859	299		-		12,158		3.29%
State, county and municipal
Within one year	265	4		-		269		5.47%
One to five years	1,371	39		-		1,410		4.18%
Six to ten years	16,245	681		27		16,899		5.25%
Over ten years	6,690	92		38		6,744		4.81%
	24,571	816		65		25,322		5.08%
Other Investments
CRA Qualified Investment Fund	1,085	-		-		1,085		-%
Other	36	-		-		36		-%
	1,121	-		-		1,121		-%
Total available for sale	$260,070	$   2,386		$        65		$262,391		1.58%
HELD TO MATURITY
Government Sponsored Enterprises
One to five years	$    4,000	$          3		$           -		$    4,003		1.03%
State, county and municipal
One to five years	$    1,097	$        45		$           -		$    1,142		4.74%
Six to ten years	7,054	269		-		7,323		5.38%
Over ten years	2,878	44		1		2,921		4.86%
	11,029	358		1		11,386		5.18%
Total held to maturity	$  15,029	$      361		$           1		$  15,389		4.06%
(1) Tax equivalent adjustment based on a 34% tax rate.

As of June 30, 2011, the Bank did not hold any securities of an issuer that exceeded 10% of stockholders’ equity. The net unrealized holding gains on available for sale securities component of capital was $1,392, net of deferred income taxes, as of June 30, 2011.

	December 31, 2010
	Book		Unrealized Holding				Fair
	Value		Gains		Losses		Value		Yield(1)
AVAILABLE FOR SALE
Government Sponsored Enterprises
Within one year	$      6,035	$       21		$         2		$      6,054		.98%
One to five years	180,903	328		650		180,581		1.13%
Six to ten years	58,047	137		322		57,862		1.87%
	244,985	486		974		244,497		1.30%
Mortgage Backed Securities
Six to ten years	2,112	90		-		2,202		4.01%
Over ten years	8,090	102		86		8,106		3.31%
	10,202	192		86		10,308		3.46%
State, county and municipal
Within one year	950	4		-		954		6.26%
One to five years	1,395	40		-		1,435		6.28%
Six to ten years	12,531	332		82		12,781		5.41%
Over ten years	4,442	5		142		4,305		4.93%
	19,318	381		224		19,475		5.41%
Other Investments
CRA Qualified Investment Fund	1,065	-		-		1,065		-%
Other	36	-		-		36		-%
	1,101	-		-		1,101		-%
Total available for sale	$ 275,606	$ 1,059		$  1,284		$  275,381		1.67%
HELD TO MATURITY
Government Sponsored Enterprises
One to five years	10,000	25		4		10,021		1.33%
State, county and municipal
One to five years	$     1,103	$      46		$          -		$     1,149		4.74%
Six to ten years	5,847	149		14		5,982		5.48%
Over ten years	3,728	-		96		3,632		4.85%
	10,678	195		110		10,763		5.25%
Total held to maturity	$   20,678	$    220		$     114		$   20,784		3.34%

(1) Tax equivalent adjustment on tax exempt obligations based on a 34% tax rate

As of the year ended December 31, 2010, the Bank did not hold any securities of an issuer that exceeded 10% of stockholders' equity.

     The following table shows gross unrealized losses and fair value, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2011 and December 31, 2010:

	June 30, 2011
AVAILABLE FOR SALE State, county, and municipal           HELD TO MATURITY State, county, and municipal	Less than        twelve months		Twelve months                 or more		Total
	Fair value	Unrealized      losses	Fair value	Unrealized       losses	Fair value	Unrealized     losses
	$     4,609	$           65	$              -	$             -	$     4,609	$           65
	$         301	$              1	$              -	$              -	$        301	$             1

	December 31, 2010
	Less than         twelve months		Twelve months            or more		Total
AVAILABLE FOR SALE Government Sponsored Enterprises State, county, and municipal                Mortgage backed securities                          Total	Fair value	Unrealized     losses	Fair value	Unrealized     losses	Fair value	Unrealized     losses
	$   132,747 5,882          5,005	$           973    207                87	$             - 323                -	$              - 17                  -	$    132,747 6,205         5,005	$         973 224              87
	$  143,634	$       1,267	$        323	$           17	$  143,957	$     1,284
HELD TO MATURITY                Government Sponsored Enterprises State, county, and municipal	$       1,996          4,534	$               4              110	$             -                -	$              -                 -	1,996         4,534	$             4            110
Total	$      6,530	$          114	$             -	$              -	$      6,530	$        114

Securities classified as available for sale are recorded at fair market value.  At June 2011, there were no available for sale securities in a continuous loss position for twelve months or more.  At December 31, 2010, the Company owned $323 of available for sale securities in a continuous loss position for twelve months or more with $17 of unrealized losses consisting of one municipal security.

     Securities classified as held to maturity are recorded at cost.  At June 30, 2011, and December 31, 2010 there were no held to maturity securities in a continuous loss position for twelve months or more. 

       Investment securities with an aggregate par value of $168,071 ($170,996 fair value) at June 30, 2011 and $204,917 ($207,349 fair value) at December 31, 2010 were pledged to secure public deposits and for other purposes required by law.

     For the six-month periods ended June 30, 2011 and 2010, there were no sales of available for sale securities. During all of 2010 $20,758 of par value available for sale securities were sold for a gain of $993.

     For the six-month periods ended June 30, 2011 and 2010, there were no sales of held to maturity securities.  During all of 2010, the Company sold $2,255 par value ($2,370 fair value) of held to maturity securities, consisting of four securities, for a net gain of $73.  Two of these held to maturity securities, $770 par value ($785 fair value), were sold under exception “a.” of ASC 320-10-25-6 as a result of both securities losing their rating due to a downgrade of the insurer.  Two of these held to maturity securities, $1,485 par value ($1,585 fair value), were sold under exception “d.” of ASC 320-10-25-6 because the primary regulator of the Company’s subsidiary bank has increased scrutiny of capital and its components and, consequently, due to continued uncertainty in the municipal bond markets, the amount of investment in individual municipal securities issuers.  In response to these regulatory concerns related to capital and its components, the Company sold all of its municipal securities of individual issuers in excess of $600, including all municipal securities in this size category classified held to maturity as well as those classified available for sale.  We believe that the sale of these held to maturity securities should not be considered inconsistent with the original classification and the remaining portfolio is not tainted.

     Management reviews securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.  Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the fact that Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost.