Investment Securities

9 Months Ended

Sep. 30, 2012

Investment Securities [Abstract]

INVESTMENT SECURITIES

NOTE D— INVESTMENT SECURITIES

The following tables provide the composition of investment securities at September 30, 2012 and December 31, 2011 (dollars in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at September 30, 2012
Ginnie Mae and GSE mortgage-backed pass-through securities	$	36,290	$	1,186	$	—	$	37,476
Ginnie Mae collateralized mortgage obligations		2,599		—		9		2,590
Municipal securities		2,323		27		—		2,350
Mutual fund		1,723		127		—		1,850
	$	42,935	$	1,340	$	9	$	44,266

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available for sale at December 31, 2011
Ginnie Mae and GSE mortgage-backed pass-through securities	$	39,280	$	443	$	9	$	39,714
Municipal securities		2,322		29		—		2,351
Mutual fund		1,689		93		—		1,782
	$	43,291	$	565	$	9	$	43,847

The amortized cost and fair value of securities available for sale at September 30, 2012 by contractual maturity are shown below (dollars in thousands). 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		163		166
Five to ten years		421		426
After ten years		1,739		1,758
Municipal securities		2,323		2,350
Ginnie Mae and GSE mortgage-backed pass-through securities		36,290		37,476
Ginnie Mae collateralized mortgage obligations		2,599		2,590
Mutual fund		1,723		1,850
	$	42,935	$	44,266

Mortgage-backed pass-through securities: The contractual cash flows of these 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.

Collateralized mortgage obligations: The contractual cash flows of these investments are guaranteed by Ginnie Mae, a U.S. Government agency. 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, 2012 consisted of non-rated local issue tax increment revenue bonds that were issued during the third quarter of 2011.

Mutual fund: The mutual fund balance at September 30, 2012 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, 2012 and December 31, 2011 were $2,618,000 and $4,199,000, respectively, which was approximately 5.9% and 9.6%, 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, 2012 and December 31, 2011 (dollars in thousands):

At September 30, 2012	Less Than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Ginnie Mae collateralized mortgage obligations	$	2,590	$	9	$	—	$	—	$	2,590	$	9

At December 31, 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	$	4,180	$	8	$	19	$	1	$	4,199	$	9

Investment securities with a total market value of $9,303,000 and $9,369,000 were pledged at September 30, 2012 and December 31, 2011, respectively, to secure a repurchase agreement.

There were no sales of available-for-sale securities during the three-month period ended September 30, 2012, compared to sales resulting in a gross gain of $206,000 for the three-month period ended September 30, 2011, with a tax expense of $70,000.

A gross gain of $89,000 resulting from sales of available-for-sale securities was realized during the nine-month period ended September 30, 2012, with a tax expense of $30,000, compared to a gross gain of $721,000 and a gross loss of $15,000 for the nine-month period ended September 30, 2011, with a net tax expense of $240,000.