Securities

3 Months Ended

Mar. 31, 2013

Securities

Securities

Note 7 – Securities

The book values and approximate fair values of investment securities at March 31, 2013 and December 31, 2012 are summarized as follows:

	March 31, 2013									December 31, 2012
	Amortized		Fair		Unrealized					Amortized		Fair		Unrealized
($ in thousands)	Cost		Value		Gains		(Losses)			Cost		Value		Gains		(Losses)
Securities available for sale:
Government-sponsored enterprise securities	$	11,500		11,588		88		—			11,500		11,596		96		—
Mortgage-backed securities		147,749		150,773		3,577		(553	)		143,539		146,926		3,717		(330	)
Corporate bonds		3,998		3,865		67		(200	)		3,998		3,813		75		(260	)
Equity securities		3,985		3,988		23		(20	)		5,026		5,017		16		(25	)
Total available for sale	$	167,232		170,214		3,755		(773	)		164,063		167,352		3,904		(615	)
Securities held to maturity:
State and local governments	$	55,649		60,758		5,109		—			56,064		61,496		5,432		—

Included in mortgage-backed securities at March 31, 2013 were collateralized mortgage obligations with an amortized cost of $282,000 and a fair value of $295,000. Included in mortgage-backed securities at December 31, 2012 were collateralized mortgage obligations with an amortized cost of $381,000 and a fair value of $396,000. All of the Company’s mortgage-backed securities, including collateralized mortgage obligations, were issued by government-sponsored corporations.

The Company owned Federal Home Loan Bank (FHLB) stock with a cost and fair value of $3,894,000 at March 31, 2013 and $4,934,000 at December 31, 2012, which is included in equity securities above and serves as part of the collateral for the Company’s line of credit with the FHLB. The investment in this stock is a requirement for membership in the FHLB system. Periodically the FHLB recalculates the Company’s required level of holdings, and the Company either buys more stock or the FHLB redeems a portion of the stock at cost.

The following table presents information regarding securities with unrealized losses at March 31, 2013:

($ in thousands)	Securities in an Unrealized Loss Position for Less than 12 Months				Securities in an Unrealized Loss Position for More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government-sponsored enterprise securities	$	—		—		—		—		—		—
Mortgage-backed securities		35,219		553		—		—		35,219		553
Corporate bonds		—		—		800		200		800		200
Equity securities		—		—		24		20		24		20
State and local governments		—		—		—		—		—		—
Total temporarily impaired securities	$	35,219		553		824		220		36,043		773

The following table presents information regarding securities with unrealized losses at December 31, 2012:

($ in thousands)	Securities in an Unrealized Loss Position for Less than 12 Months				Securities in an Unrealized Loss Position for More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government-sponsored enterprise securities	$	—		—		—		—		—		—
Mortgage-backed securities		26,330		330		—		—		26,330		330
Corporate bonds		—		—		740		260		740		260
Equity securities		—		—		30		25		30		25
State and local governments		—		—		—		—		—		—
Total temporarily impaired securities	$	26,330		330		770		285		27,100		615

In the above tables, all of the non-equity securities that were in an unrealized loss position at March 31, 2013 and December 31, 2012 are bonds that the Company has determined are in a loss position due to interest rate factors, the overall economic downturn in the financial sector, and the broader economy in general. The Company has evaluated the collectability of each of these bonds and has concluded that there is no other-than-temporary impairment. The 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 the amortized cost. The Company has also concluded that each of the equity securities in an unrealized loss position at March 31, 2013 and December 31, 2012 was in such a position due to temporary fluctuations in the market prices of the securities. The Company’s policy is to record an impairment charge for any of these equity securities that remains in an unrealized loss position for twelve consecutive months unless the amount is insignificant.

The aggregate carrying amount of cost-method investments was $3,894,000 and $4,934,000 at March 31, 2013 and December 31, 2012, respectively, which was the FHLB stock discussed above. The Company determined that none of its cost-method investments were impaired at either period end.

The book values and approximate fair values of investment securities at March 31, 2013, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Securities Available for Sale				Securities Held to Maturity
	Amortized		Fair		Amortized		Fair
($ in thousands)	Cost		Value		Cost		Value
Debt securities
Due within one year	$	—		—		—		—
Due after one year but within five years		14,498		14,653		5,610		6,121
Due after five years but within ten years		—		—		33,627		36,758
Due after ten years		1,000		800		16,412		17,879
Mortgage-backed securities		147,749		150,773		—		—
Total debt securities		163,247		166,226		55,649		60,758
Equity securities		3,985		3,988		—		—
Total securities	$	167,232		170,214		55,649		60,758

At March 31, 2013 and December 31, 2012 investment securities with carrying values of $101,094,000 and $78,519,000, respectively, were pledged as collateral for public and private deposits.

The Company recorded no gains or losses on securities during the three months ended March 31, 2013. There were $9,641,000 in sales of securities during the three months ended March 31, 2012, which resulted in a net gain of $446,000. During the three months ended March 31, 2012, the Company recorded a net gain of $6,000 related to the call of municipal securities.