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Securities
 6 Months Ended
Jun. 30, 2012
Securities  
Securities

 

Note 6 - Securities

 

The book values and approximate fair values of investment securities at June 30, 2012 and December 31, 2011 are summarized as follows:

 

    June 30, 2012     December 31, 2011  
    Amortized     Fair     Unrealized     Amortized     Fair     Unrealized  
($ in thousands)   Cost     Value     Gains     (Losses)     Cost     Value     Gains     (Losses)  
                                                 
Securities available for sale:                                                                
 Government-sponsored enterprise securities   $ 29,504       29,626       122       —       34,511       34,665       170      (16 )
 Mortgage-backed securities     115,674       119,536       3,862       —       120,032       124,105       4,164       (91 )
 Corporate bonds     13,186       13,139       253       (300 )     13,189       12,488       279       (980 )
 Equity securities     9,195       9,606       438       (27 )     10,998       11,368       409       (39 )
Total available for sale   $ 167,559       171,907       4,675       (327 )     178,730       182,626       5,022       (1,126 )
                                                                 
Securities held to maturity:                                                                
 State and local governments   $ 56,182       61,676       5,494       —       57,988       62,754       4,766       —  
Total held to maturity   $ 56,182       61,676       5,494       —       57,988       62,754       4,766       —  

 

Included in mortgage-backed securities at June 30, 2012 were collateralized mortgage obligations with an amortized cost of $663,000 and a fair value of $684,000. Included in mortgage-backed securities at December 31, 2011 were collateralized mortgage obligations with an amortized cost of $1,462,000 and a fair value of $1,515,000. All of the Company's mortgage-backed securities, including collateralized mortgage obligations, were issued by government-sponsored corporations.

 

The Company owned Federal Home Loan Bank (FHLB) stock with a cost and fair value of $9,102,000 at June 30, 2012 and $10,904,000 at December 31, 2011, which is included in equity securities above and serves as part of the collateral for the Company's line of credit with the FHLB. The investment in this stock is a requirement for membership in the FHLB system.

 

The following table presents information regarding securities with unrealized losses at June 30, 2012:

 

 

($ 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   $ —       —       —       —       —       —  
 Mortgage-backed securities     —       —       —       —       —       —  
 Corporate bonds     —       —       5,029       300       5,029       300  
 Equity securities     —       —       31       27       31       27  
 State and local governments     —       —       —       —       —       —  
     Total temporarily impaired securities   $ —       —       5,060       327       5,060       327  

 

The following table presents information regarding securities with unrealized losses at December 31, 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   $ 8,984       16       —       —       8,984       16  
 Mortgage-backed securities     14,902       61       9,302       30       24,204       91  
 Corporate bonds     4,588       458       2,773       522       7,361       980  
 Equity securities     4       2       22       37       26       39  
 State and local governments     —       —       —       —       —       —  
     Total temporarily impaired securities   $ 28,478       537       12,097       589       40,575       1,126  
                                                 

 

In the above tables, all of the non-equity securities that were in an unrealized loss position at June 30, 2012 and December 31, 2011 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, 2012 and December 31, 2011 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 $9,102,000 at June 30, 2012 and $10,904,000 at December 31, 2011, respectively, which was the FHLB 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, 2012, 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   $ 3,004       3,040       350       358  
Due after one year but within five years     26,497       26,679       2,958       3,210  
Due after five years but within ten years     3,000       3,000       29,731       32,673  
Due after ten years     10,189       10,046       23,143       25,435  
Mortgage-backed securities     115,674       119,536       —       —  
Total debt securities     158,364       162,301       56,182       61,676  
                                 
Equity securities     9,195       9,606       —       —  
Total securities   $ 167,559       171,907       56,182       61,676  

 

At June 30, 2012 investment securities with a book value of $86,865,000 were pledged as collateral for public deposits. At December 31, 2011, investment securities with a book value of $47,418,000 were pledged as collateral for public and private deposits and securities sold under agreements to repurchase.

 

There were $9,641,000 in sales of securities during the six months ended June 30, 2012, which resulted in a net gain of $439,000. There were $2,518,000 in sales during the six months ended June 30, 2011, which resulted in a net gain of $8,000. During the six months ended June 30, 2012 and 2011, the Company recorded a net gain of $11,000 and $71,000, respectively, related to the call of several municipal and bond securities. Also, during the six months ended June 30, 2012 and 2011, the Company recorded a net loss of $1,000 and $5,000, respectively, related to write-downs of the Company's equity portfolio.