Investment Securities

9 Months Ended

Sep. 30, 2011

Investment Securities [Abstract]

Investment Securities

NOTE D—INVESTMENT SECURITIES

The following tables provide the composition of investment securities at September 30, 2011 and December 31, 2010 (dollars in thousands):

		$39,798		$39,798		$39,798		$39,798
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at September 30, 2011
Ginnie Mae and GSE mortgage-backed pass-through securities	$	35,811	$	578	$	21	$	36,368
Municipal securities		2,321		78		—		2,399
Mutual fund		1,666		102		—		1,768
	$	39,798	$	758	$	21	$	40,535

		$39,798		$39,798		$39,798		$39,798
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2010
Ginnie Mae and GSE mortgage-backed pass-through securities	$	29,210	$	336	$	110	$	29,436
Ginnie Mae collateralized mortgage obligations		5,335		8		2		5,341
Municipal securities		2,228		12		76		2,164
Mutual fund		1,626		41		—		1,667
	$	38,399	$	397	$	188	$	38,608

The amortized cost and fair value of securities available for sale at September 30, 2011, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available for Sale
	Amortized Cost		Fair Value
Within one year	$	—	$	—
One to five years		104		108
Five to ten years		376		389
After ten years		1,841		1,902
		2,321		2,399
Ginnie Mae and GSE mortgage-backed pass-through securities		35,811		36,368
Mutual fund		1,666		1,768
	$	39,798	$	40,535

Mortgage-backed pass-through securities: The contractual cash flows of those investments are guaranteed by either Ginnie Mae, a U.S. Government agency, or by Fannie Mae and Freddie Mac, U.S. Government-sponsored entities, institutions which the U.S. Government has affirmed its commitment to support. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company's investment.

Municipal Securities: The municipal securities at September 30, 2011 consist of non-rated local issue tax increment revenue bonds that were issued during the quarter with the proceeds being used primarily to redeem notes held by Ameriana Bank.

Mutual fund: The mutual fund balance at September 30, 2011 consisted of an investment in the CRA Qualified Investment mutual fund, whose portfolio composition is primarily in debt securities with an average credit quality rating of AAA.

Certain investment securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at September 30, 2011 and December 31, 2010 were $4,292,000 and $9,159,000, respectively, which was approximately 10.6% and 23.7%, respectively, of the Company's investment portfolio at these dates.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following table shows the Company's investments' 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 September 30, 2011 and December 31, 2010 (dollars in thousands):

		00000000		00000000		00000000		00000000		00000000		00000000
At September 30, 2011	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Ginnie Mae and GSE mortgage-backed pass-through securities	$	4,292	$	21	$	—	$	—	$	4,292	$	21
	$	4,292	$	21	$	—	$	—	$	4,292	$	21

		00000000		00000000		00000000		00000000		00000000		00000000
At December 31, 2010	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Ginnie Mae and GSE mortgage-backed pass-through securities	$	5,055	$	109	$	51	$	1	$	5,106	$	110
Ginnie Mae collateralized mortgage obligations		2,225		2		—		—		2,225		2
Municipal securities		1,828		76		—		—		1,828		76
	$	9,108	$	187	$	51	$	1	$	9,159	$	188

Together with mortgage loans, investment securities with a total market value of $5,341,000 were pledged at December 31, 2010 to secure FHLB advances and four letters of credit. No investment securities were pledged at September 30, 2011 to secure FHLB advances and the four letters of credit.

Investment securities with a total market value of $9,608,000 and $9,047,000 were pledged at September 30, 2011 and December 31, 2010, respectively, to secure a repurchase agreement.

A gross gain of $206,000 resulting from sales of available-for-sale securities was realized during the three-month period ended September 30, 2011, with a net tax expense of $70,000, compared to a gross gain of $104,000 for the three-month period ended September 30, 2010, with a tax expense of $35,000.

A gross gain of $721,000 and a gross loss of $15,000 resulting from sales of available-for-sale securities were realized during the first nine months of 2011, with a net tax expense of $240,000, compared to a gross gain of $212,000 and a gross loss of $3,000 for the first nine months of 2010, with a net tax expense of $71,000.