Securities Available for Sale

6 Months Ended

Jun. 30, 2011

Securities Available for Sale [Abstract]

Securities Available for Sale

(8) Securities Available For Sale

The following table shows the gross unrealized losses and fair value for the securities available for sale portfolio, 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
	Less than twelve months						Twelve months or more							Total
	# of		Fair		Unrealized		# of		Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Investments		Value		Losses		Investments		Value		Losses			Value		Losses
Other marketable securities:
Corporate preferred stock		0	$	0		0		1	$	175		(525	)	$	175		(525	)
Total temporarily impaired securities		0	$	0		0		1	$	175		(525	)	$	175		(525	)

	December 31, 2010
	Less than twelve months							Twelve months or more							Total
	# of		Fair		Unrealized			# of		Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Investments		Value		Losses			Investments		Value		Losses			Value		Losses
Other marketable securities:
U.S. Government agency obligations		10	$	47,610		(266	)		0	$	0		0		$	47,610		(266	)
Corporate preferred stock		0		0		0			1		175		(525	)		175		(525	)
Total temporarily impaired Securities		10	$	47,610		(266	)		1	$	175		(525	)	$	47,785		(791	)

We review our investment portfolio on a quarterly basis for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the market liquidity for the investment, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer, and our intent and ability to hold the investment for a period of time sufficient to recover the temporary loss.

The unrealized losses reported for corporate preferred stock at June 30, 2011 related to a single trust preferred security that was issued by the holding company of a small community bank. Typical of most trust preferred issuances, the issuer has the ability to defer interest payments for up to five years with interest payable on the deferred balance. In October 2009, the issuer elected to defer its scheduled interest payments as allowed by the terms of the security agreement. The issuer’s subsidiary bank has incurred operating losses due to increased provisions for loan losses but still meets the regulatory requirements to be considered “adequately capitalized” based on its most recent regulatory filing. Based on information furnished by the issuer, it is anticipated that the entity will improve its capital position and be “well capitalized” after a branch sale is completed, for which a sale agreement has been signed. In addition, the owners of the issuing bank appear to have the ability to make additional capital contributions, if needed, to enhance the bank’s capital position. Based on a review of the issuer, it was determined that the trust preferred security was not other-than-temporarily impaired at June 30, 2011. The Company does not intend to sell the preferred stock and has the intent and ability to hold it for a period of time sufficient to recover the temporary loss. Management believes that the Company will receive all principal and interest payments contractually due on the security and that the decrease in the market value is primarily due to a lack of liquidity in the market for trust preferred securities and the deferral of interest by the issuer. Management will continue to monitor the credit risk of the issuer and may be required to recognize other-than-temporary impairment charges on this security in future periods.

A summary of securities available for sale at June 30, 2011 and December 31, 2010 is as follows:

			Gross unrealized		Gross unrealized
(Dollars in thousands)	Amortized cost		gains		losses			Fair value
June 30, 2011:
Mortgage-backed securities:
FHLMC	$	14,274		705		0			14,979
FNMA		10,023		632		0			10,655
Collateralized mortgage obligations:
FHLMC		732		25		0			757
FNMA		381		8		0			389
		25,410		1,370		0			26,780
Other marketable securities:
U.S. Government agency obligations		106,916		376		0			107,292
Corporate preferred stock		700		0		(525	)		175
		107,616		376		(525	)		107,467
	$	133,026		1,746		(525	)		134,247

			Gross unrealized		Gross unrealized
(Dollars in thousands)	Amortized cost		gains		losses			Fair value
December 31, 2010:
Mortgage-backed securities:
FHLMC	$	17,555		719		0			18,274
FNMA		12,800		692		0			13,492
Collateralized mortgage obligations:
FHLMC		1,299		44		0			1,343
FNMA		382		15		0			397
		32,036		1,470		0			33,506
Other marketable securities:
U.S. Government agency obligations		117,931		218		(266	)		117,883
Corporate preferred stock		700		0		(525	)		175
		118,631		218		(791	)		118,058
	$	150,667		1,688		(791	)		151,564

The following table indicates amortized cost and estimated fair value of securities available for sale at June 30, 2011 based upon contractual maturity adjusted for scheduled repayments of principal and projected prepayments of principal based upon current economic conditions and interest rates.

	Amortized		Fair
(Dollars in thousands)	cost		Value
Due less than one year	$	107,426		108,247
Due after one year through five years		23,477		24,325
Due after five years through ten years		1,423		1,500
Due after ten years		700		175
Total	$	133,026		134,247

The allocation of mortgage-backed securities and collateralized mortgage obligations in the table above is based upon the anticipated future cash flow of the securities using estimated mortgage prepayment speeds.