Note 7 – Securities

The book values and approximate fair values of investment securities at June 30, 2011 and December 31, 2010 are summarized as follows:

	June 30, 2011									December 31, 2010
	Amortized		Fair		Unrealized					Amortized		Fair		Unrealized
($ in thousands)	Cost		Value		Gains		(Losses)			Cost		Value		Gains		(Losses)

Securities available for sale:
Government-sponsored enterprise securities	$	32,149		32,380		251		(20	)		43,432		43,273		214		(373	)
Mortgage-backed securities		109,809		113,134		3,936		(611	)		104,660		107,460		3,270		(470	)
Corporate bonds		13,193		13,117		279		(355	)		15,754		15,330		35		(459	)
Equity securities		12,903		13,213		343		(33	)		14,858		15,119		301		(40	)
Total available for sale	$	168,054		171,844		4,809		(1,019	)		178,704		181,182		3,820		(1,342	)

Securities held to maturity:
State and local governments	$	57,593		59,860		2,336		(68	)		54,011		53,305		517		(1,223	)
Other		−		−		−		−			7		7		−		−
Total held to maturity	$	57,593		59,860		2,336		(68	)		54,018		53,312		517		(1,223	)

Included in mortgage-backed securities at June 30, 2011 were collateralized mortgage obligations with an amortized cost of $2,029,000 and a fair value of $2,100,000. Included in mortgage-backed securities at December 31, 2010 were collateralized mortgage obligations with an amortized cost of $2,644,000 and a fair value of $2,740,000.

The Company owned Federal Home Loan Bank stock with a cost and fair value of $12,809,000 and $14,759,000 at June 30, 2011 and December 31, 2010, respectively, which is included in equity securities above and serves as part of the collateral for the Company's line of credit with the Federal Home Loan Bank. The investment in this stock is a requirement for membership in the Federal Home Loan Bank system.

The following table presents information regarding securities with unrealized losses at June 30, 2011:

($ 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	$	5,978		20		−		−		5,978		20
Mortgage-backed securities		36,343		611		−		−		36,343		611
Corporate bonds		2,028		18		2,963		337		4,991		355
Equity securities		9		3		22		30		31		33
State and local governments		3,671		68		−		−		3,671		68
Total temporarily impaired securities	$	48,029		720		2,985		367		51,014		1,087

The following table presents information regarding securities with unrealized losses at December 31, 2010:

	Securities in an Unrealized Loss Position for Less than 12 Months				Securities in an Unrealized Loss Position for More than 12 Months				Total
(in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government-sponsored enterprise securities	$	18,607		373		–		–		18,607		373
Mortgage-backed securities		21,741		470		–		–		21,741		470
Corporate bonds		7,548		55		2,900		404		10,448		459
Equity securities		3		1		29		39		32		40
State and local governments		35,289		1,223		–		–		35,289		1,223
Total temporarily impaired securities	$	83,188		2,122		2,929		443		86,117		2,565

In the above tables, all of the non-equity securities that were in an unrealized loss position at June 30, 2011 and December 31, 2010 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 June 30, 2011 and December 31, 2010 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 $12,809,000 and $14,766,000 at June 30, 2011 and December 31, 2010, respectively, which included the Federal Home Loan Bank 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 June 30, 2011, 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	$	−		−		627		637
Due after one year but within five years		35,145		35,424		1,576		1,653
Due after five years but within ten years		−		−		21,418		22,563
Due after ten years		10,197		10,073		33,972		35,007
Mortgage-backed securities		109,809		113,134		−		−
Total debt securities		155,151		158,631		57,593		59,860

Equity securities		12,903		13,213		−		−
Total securities	$	168,054		171,844		57,593		59,860

At June 30, 2011 and December 31, 2010, investment securities with book values of $105,816,000 and $75,654,000, respectively, were pledged as collateral for public and private deposits and securities sold under agreements to repurchase.

There were $2,510,000 in sales of securities during the six months ended June 30, 2011, which resulted in a net gain of $8,000. There were no securities sales during the first six months of 2010. During the six months ended

June 30, 2011, the Company recorded a net loss of $5,000 related to write-downs of the Company's equity portfolio and recorded a net gain of $71,000 related to the call of several securities. During the six months ended June 30, 2010, the Company recorded a gain of $24,000 related to the call of several municipal securities.