3. SECURITIES AVAILABLE FOR SALE

The following is a summary of securities available for sale at December 31:


	2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
Debt securities*:
U.S. Treasury	$	300	$	0	$	0		$	300
GSE collateralized mortgage obligations		222,400		5,480		(44	)		227,836
GSE mortgage-backed securities		477,555		10,322		(123	)		487,754
Corporate notes		5,532		0		(1,184	)		4,348
Municipal bonds		5,257		507		0			5,764

Total debt securities		711,044		16,309		(1,351	)		726,002
Mutual funds		14,710		227		(19	)		14,918

Total	$	725,754	$	16,536	$	(1,370	)	$	740,920


	2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(In thousands)
Debt securities*:
GSE bonds	$	125,429	$	1,059	$	(770	)	$	125,718
GSE collateralized mortgage obligations		101,312		2,146		(257	)		103,201
GSE mortgage-backed securities		282,205		4,628		(1,999	)		284,834
Corporate note		4,473		0		(765	)		3,708
Municipal bonds		5,258		55		(31	)		5,282

Total debt securities		518,677		7,888		(3,822	)		522,743
Mutual funds		5,462		57		0			5,519

Total	$	524,139	$	7,945	$	(3,822	)	$	528,262

*	As of December 31, 2011 and 2010, Government Sponsored Enterprises (GSE) included GNMA, FHLB, FNMA, FHLMC, and FFCB, and are all residential based investments.

At year-end 2011 and 2010, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders' equity.

The proceeds from sales of securities and the associated gains are listed below:


	2011		2010		2009
	(In thousands)
Proceeds	$	139,458	$	208,142	$	239,734
Gross gains		1,219		6,296		4,413
Gross losses		0		0		(3	)

The tax expense related to these net realized gains and losses was $446 thousand, $3.3 million and $2.3 million, respectively.

The proceeds from calls of securities were $83.3 million, $35.3 million and $24.6 million for 2011, 2010 and 2009 with gross gains of $70 thousand, $100 thousand and $17 thousand, respectively. There were no losses on calls.

The amortized cost and estimated fair value of debt securities at December 31, 2011, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.


	Amortized Cost		Estimated Fair Value
	(In thousands)
Available for sale:
Due within one year	$	300	$	300
Due after one year through five years		340		357
Due after five years through ten years		2,480		2,781
Due after ten years		7,969		6,974
GSE collaterized mortgage obligations		222,400		227,836
GSE mortgage-backed securities		477,555		487,754
Mutual funds		14,710		14,918

	$	725,754	$	740,920

Securities with carrying values of approximately $425.5 million and $270.3 million at December 31, 2011 and 2010, respectively, were pledged to secure public deposits, various borrowings and for other purposes as required or permitted by law.

The following table shows the gross unrealized losses and fair value of securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2011 and 2010.


At December 31, 2011:	Less than 12 months							12 months or longer							Total
Description of Securities	Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses
	(In thousands)
GSE collaterized mortgage obligations		2	$	3,305	$	(28	)		1	$	14,007	$	(16	)		3	$	17,312	$	(44	)
GSE mortgage-backed securities		5		38,082		(123	)		0		0		0			5		38,082		(123	)
Corporate note		0		0		0			1		3,303		(1,184	)		1		3,303		(1,184	)
Municipal bonds		1		5,229		(19	)		0		0		0			1		5,229		(19	)

		8	$	46,616	$	(170	)		2	$	17,310	$	(1,200	)		10	$	63,926	$	(1,370	)


At December 31, 2010:	Less than 12 months							12 months or longer							Total
Description of Securities	Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses			Number of Securities		Fair Value		Gross Unrealized Losses
	(In thousands)
GSE bonds		4	$	65,465	$	(770	)		0	$	0	$	0			4	$	65,465	$	(770	)
GSE collaterized mortgage obligations		3		9,091		(187	)		2		17,337		(70	)		5		26,428		(257	)
GSE mortgage-backed securities		7		99,555		(1,999	)		0		0		0			7		99,555		(1,999	)
Corporate note		0		0		0			1		3,708		(765	)		1		3,708		(765	)
Municipal bonds		5		1,929		(31	)		0		0		0			5		1,929		(31	)

		19	$	176,040	$	(2,987	)		3	$	21,045	$	(835	)		22	$	197,085	$	(3,822	)

We evaluate securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the financial condition and near-term prospects of the issuer; the length of time and the extent to which the fair value has been less than cost, and our intention to sell, or it is more likely than not that it will be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis. In analyzing an issuer's financial condition, we consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer's financial condition.

The corporate notes at December 31, 2011 and 2010 primarily consists of one bond with an amortized cost of $4.5 million and an unrealized loss of $1.2 million at December 31, 2011. The bond is scheduled to mature in May 2047, with a first call date option in May 2012. Management determined this unrealized loss did not represent other-than-temporary impairment at December 31, 2011 as the investment is rated investment grade and there are no credit quality concerns with the obligor. The market value decline is deemed to be due to the current market volatility and is not reflective of management's expectations of their ability to fully recover this investment. Interest on the corporate note has been paid as agreed and management believes this will continue in the future and the bond will be repaid in full as scheduled. For these reasons, no other-than-temporary impairment was recognized on the corporate note at December 31, 2011.

We consider the losses on our investments in an unrealized loss position at December 31, 2011 to be temporary based on: 1) the likelihood of recovery; 2) the information relative to the extent and duration of the decline in market value; and 3) the Company's intention not to sell, or it is more likely than not that it will not be required to sell, a security in an unrealized loss position before recovery of its amortized cost basis.