Federal Bank Stocks

12 Months Ended

Dec. 31, 2011

Banking and Thrift [Abstract]

Federal Home Loan Bank Advances, Disclosure [Text Block]

6. Federal Bank Stocks

The Bank is a member of the FHLB and the FRB. As a member of these federal banking systems, the Bank maintains an investment in the capital stock of the respective regional banks, which are carried at cost. These stocks are purchased and redeemed at par as directed by the federal banks and levels maintained are based primarily on borrowing and other correspondent relationships. The Bank’s investment in FHLB and FRB stocks was $2.7 million and $984,000, respectively, at December 31, 2011, and $3.3 million and $838,000, respectively, at December 31, 2010. The FHLB notified member banks in December 2008 that it was suspending dividend payments and the repurchase of capital stock; however, due to its improved financial condition, since the fourth quarter of 2010, the FHLB has repurchased a portion of the Bank’s excess capital stock each quarter. The repurchases totaled $611,000 and $173,000, respectively, for the years ended December 31, 2011 and 2010. Offsetting these repurchases were purchases of FRB capital stock of $146,000 and $176,000, respectively, for the years ended December 31, 2011 and 2010.

Management evaluated the FHLB capital stock for impairment in accordance with relevant accounting guidance. Management’s determination of whether these investments are impaired is based on their assessment of the ultimate recoverability of their cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of their cost is influenced by criteria such as: (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB.

Management believes no impairment charge is necessary related to the FHLB capital stock as of December 31, 2011.