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Investment Securities | 12 Months Ended
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Dec. 31, 2011
Investment Securities [Abstract] |
INVESTMENT SECURITIES | NOTE 4 — INVESTMENT SECURITIES The following is a summary of investment securities held to maturity:
|  | Amortized Cost |  |  | Gross Unrealized Gain |  |  | Gross Unrealized Loss |  |  | Estimated Fair Value |
|  | (In Thousands) |
December 31, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Municipal Bonds |  | $ | 9,815 |  |  | $ | 98 |  |  | $ | 46 |  |  | $ | 9,867 |
Municipal Bonds-Tax Exempt |  |  | 38,797 |  |  |  | 117 |  |  |  | 522 |  |  |  | 38,392 |
Mortgage-Backed Securities (1) |  |  | 3,137 |  |  |  | 2 |  |  |  | 11 |  |  |  | 3,128 |
U.S. government Agency Securities |  |  | 7,993 |  |  |  | 2 |  |  |  | 19 |  |  |  | 7,976 |
|  | $ | 59,742 |  |  | $ | 219 |  |  | $ | 598 |  |  | $ | 59,363 |
December 31, 2010: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Municipal Bonds |  | $ | 696 |  |  | $ | — |  |  | $ | — |  |  | $ | 696 |
Mortgage-Backed Securities (1) |  |  | 149 |  |  |  | 2 |  |  |  | — |  |  |  | 151 |
|  | $ | 845 |  |  | $ | 2 |  |  | $ | — |  |  | $ | 847 |
(1) | Collateralized by residential mortgages and guaranteed by U.S. government sponsored entities.
The following is a summary of investment securities available for sale:
|  | Amortized Cost |  |  | Gross Unrealized Gain |  |  | Gross Unrealized Loss |  |  | Estimated Fair Value |
|  | (In Thousands) |
December 31, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-Backed Securities (1) |  | $ | 110,433 |  |  | $ | 2,573 |  |  | $ | 1 |  |  | $ | 113,005 |
Collateralized Mortgage Obligations (1) |  |  | 161,214 |  |  |  | 1,883 |  |  |  | 260 |  |  |  | 162,837 |
U.S. Government Agency Securities |  |  | 72,385 |  |  |  | 168 |  |  |  | 5 |  |  |  | 72,548 |
Municipal Bonds |  |  | 3,389 |  |  |  | 93 |  |  |  | — |  |  |  | 3,482 |
Municipal Bonds-Tax Exempt |  |  | 5,901 |  |  |  | 237 |  |  |  | — |  |  |  | 6,138 |
Corporate Bonds |  |  | 20,460 |  |  |  | — |  |  |  | 624 |  |  |  | 19,836 |
Other Securities |  |  | 3,318 |  |  |  | 58 |  |  |  | 41 |  |  |  | 3,335 |
Equity Securities |  |  | 647 |  |  |  | 85 |  |  |  | 51 |  |  |  | 681 |
|  | $ | 377,747 |  |  | $ | 5,097 |  |  | $ | 982 |  |  | $ | 381,862 |
December 31, 2010: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-Backed Securities (1) |  | $ | 108,436 |  |  | $ | 2,137 |  |  | $ | 731 |  |  | $ | 109,842 |
Collateralized Mortgage Obligations (1) |  |  | 139,053 |  |  |  | 470 |  |  |  | 2,330 |  |  |  | 137,193 |
U.S. Government Agency Securities |  |  | 114,066 |  |  |  | 98 |  |  |  | 830 |  |  |  | 113,334 |
Municipal Bonds |  |  | 4,388 |  |  |  | 48 |  |  |  | 11 |  |  |  | 4,425 |
Municipal Bonds-Tax Exempt |  |  | 18,032 |  |  |  | — |  |  |  | 1,429 |  |  |  | 16,603 |
Corporate Bonds |  |  | 20,449 |  |  |  | 13 |  |  |  | 257 |  |  |  | 20,205 |
Asset-Backed Securities |  |  | 7,115 |  |  |  | 269 |  |  |  | — |  |  |  | 7,384 |
Other Securities |  |  | 3,305 |  |  |  | — |  |  |  | 46 |  |  |  | 3,259 |
Equity Securities |  |  | 647 |  |  |  | 226 |  |  |  | — |  |  |  | 873 |
|  | $ | 415,491 |  |  | $ | 3,261 |  |  | $ | 5,634 |  |  | $ | 413,118 |
(1) | Collateralized by residential mortgages and guaranteed by U.S. government sponsored entities.
The amortized cost and estimated fair value of investment securities at December 31, 2011, by contractual maturity, are shown below. Although mortgage-backed securities and collateralized mortgage obligations have contractual maturities through 2041, 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.
|  | Available for Sale |  |  | Held to Maturity |
|  | Amortized Cost |  |  | Estimated Fair Value |  |  | Amortized Cost |  |  | Estimated Fair Value |
|  | (In Thousands) |
Within One Year |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Over One Year Through Five Years |  |  | 58,600 |  |  |  | 58,064 |  |  |  | 697 |  |  |  | 698 |
Over Five Years Through Ten Years |  |  | 40,686 |  |  |  | 41,016 |  |  |  | 25,950 |  |  |  | 25,859 |
Over Ten Years |  |  | 6,167 |  |  |  | 6,259 |  |  |  | 29,958 |  |  |  | 29,678 |
Mortgage-Backed Securities |  |  | 110,433 |  |  |  | 113,005 |  |  |  | 3,137 |  |  |  | 3,128 |
Collateralized Mortgage Obligations |  |  | 161,214 |  |  |  | 162,837 |  |  |  | — |  |  |  | — |
Equity Securities |  |  | 647 |  |  |  | 681 |  |  |  | — |  |  |  | — |
|  | $ | 377,747 |  |  | $ | 381,862 |  |  | $ | 59,742 |  |  | $ | 59,363 |
In accordance with FASB ASC 320, “Investments – Debt and Equity Securities,” amended current other-than-temporary-impairment (“OTTI”) guidance, we periodically evaluate our investments for OTTI. In 2010, we owned an investment security in mutual funds (“Special Series A Shares”) with an aggregate carrying value of $925,000. During 2010, the issuer of the Special Series A Shares completed a comprehensive restructuring which resulted in the exchange of our Special Series A Shares into common shares of the issuer. Based on the closing price of the shares at September 30, 2010, we recorded an OTTI charge of $790,000 to write down the value of the investment securities to their fair value. We perform periodic reviews for impairment in accordance with FASB ASC 320. Gross unrealized losses on investment securities available for sale, the estimated fair value of the related securities and the number of securities aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows as of December 31, 2011 and 2010:
|  | Holding Period |
|  | Less than 12 Months |  |  | 12 Months or More |  |  | Total |
Investment Securities Available for Sale |  | Gross Unrealized Losses |  |  | Estimated Fair Value |  |  | Number of Securities |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |  |  | Number of Securities |  |  | Gross Unrealized Losses |  |  | Estimated Fair Value |  |  | Number of Securities |
|  | (In Thousands, Except Number of Securities) |
December 31, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-Backed Securities |  | $ | 1 |  |  | $ | 3,076 |  |  |  | 1 |  |  | $ | — |  |  | $ | — |  |  |  | — |  |  | $ | 1 |  |  | $ | 3,076 |  |  |  | 1 |
Collateralized Mortgage Obligation |  |  | 260 |  |  |  | 36,751 |  |  |  | 16 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 260 |  |  |  | 36,751 |  |  |  | 16 |
U.S. Government Agency Securities |  |  | 5 |  |  |  | 6,061 |  |  |  | 2 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 5 |  |  |  | 6,061 |  |  |  | 2 |
Other Securities |  |  | 1 |  |  |  | 12 |  |  |  | 1 |  |  |  | 41 |  |  |  | 959 |  |  |  | 1 |  |  |  | 42 |  |  |  | 971 |  |  |  | 2 |
Corporate Bonds |  |  | 41 |  |  |  | 4,445 |  |  |  | 2 |  |  |  | 582 |  |  |  | 15,391 |  |  |  | 4 |  |  |  | 623 |  |  |  | 19,836 |  |  |  | 6 |
Equity Securities |  |  | 51 |  |  |  | 85 |  |  |  | 1 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 51 |  |  |  | 85 |  |  |  | 1 |
|  | $ | 359 |  |  | $ | 50,430 |  |  |  | 23 |  |  | $ | 623 |  |  | $ | 16,350 |  |  |  | 5 |  |  | $ | 982 |  |  | $ | 66,780 |  |  |  | 28 |
December 31, 2010: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Mortgage-Backed Securities |  | $ | 731 |  |  | $ | 62,738 |  |  |  | 16 |  |  | $ | — |  |  | $ | — |  |  |  | — |  |  | $ | 731 |  |  | $ | 62,738 |  |  |  | 16 |
Collateralized Mortgage Obligation |  |  | 2,330 |  |  |  | 99,993 |  |  |  | 20 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 2,330 |  |  |  | 99,993 |  |  |  | 20 |
Municipal Bonds |  |  | 1,440 |  |  |  | 16,907 |  |  |  | 11 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,440 |  |  |  | 16,907 |  |  |  | 11 |
U.S. Government Agency Securities |  |  | 830 |  |  |  | 69,266 |  |  |  | 14 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 830 |  |  |  | 69,266 |  |  |  | 14 |
Other Securities |  |  | 3 |  |  |  | 1,997 |  |  |  | 2 |  |  |  | 43 |  |  |  | 957 |  |  |  | 1 |  |  |  | 46 |  |  |  | 2,954 |  |  |  | 3 |
Corporate Bonds |  |  | 257 |  |  |  | 17,210 |  |  |  | 5 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 257 |  |  |  | 17,210 |  |  |  | 5 |
|  | $ | 5,591 |  |  | $ | 268,111 |  |  |  | 68 |  |  | $ | 43 |  |  | $ | 957 |  |  |  | 1 |  |  | $ | 5,634 |  |  | $ | 269,068 |  |  |  | 69 |
The impairment losses described previously are not included in the table above. All individual securities that have been in a continuous unrealized loss position for 12 months or longer as of December 31, 2011 and 2010 had investment grade ratings upon purchase. The issuers of these securities have not established any cause for default on these securities and the various rating agencies have reaffirmed these securities’ long-term investment grade status as of December 31, 2011. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated. The unrealized losses on investments in U.S. agencies securities were caused by interest rate increases subsequent to the purchase of these securities. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than par. Because the Bank does not intend to sell the securities in this class and it is not likely that the Bank will be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until contractual maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired. The unrealized losses on corporate bonds are not considered other-than-temporarily impaired as the bonds are rated investment grade and there are no credit quality concerns with the issuers. Interest payments have been made as agreed and management believe this will continue in the future and the bonds will be repaid in full as scheduled. Of the residential mortgage-backed securities and collateralized mortgage obligations portfolio in an unrealized loss position at December 31, 2011, all of them are issued and guaranteed by U.S. government sponsored entities. The unrealized losses on residential mortgage-backed securities and collateralized mortgage obligations were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities, and no concerns regarding the underlying credit of the issuers or the underlying collateral. It is expected that these securities will not be settled at a price less than the amortized cost of each investment. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because the Bank does not intend to sell the securities in this class and it is not likely that the Bank will be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until contractual maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired FASB ASC 320 requires an entity to assess whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. We do not intend to sell these securities and it is not more likely than not that we will be required to sell the investments before the recovery of its amortized cost bases. Therefore, in management’s opinion, all securities that have been in a continuous unrealized loss position for the past 12 months or longer as of December 31, 2011 and 2010 are not other-than-temporarily impaired, and therefore, no impairment charges as of December 31, 2011 and 2010 are warranted. Investment securities available for sale with carrying values of $45.8 million and $118.0 million as of December 31, 2011 and 2010, respectively, were pledged to secure FHLB advances, public deposits and for other purposes as required or permitted by law. Realized gains and losses on sales of investment securities, proceeds from sales of investment securities and the tax expense on sales of investment securities were as follows for the periods indicated:
|  | Year Ended December 31, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (In Thousands) |
Gross Realized Gains on Sales of Investment Securities |  | $ | 2,674 |  |  | $ | 228 |  |  | $ | 2,327 |
Gross Realized Losses on Sales of Investment Securities |  |  | (1,039 | ) |  |  | (106 | ) |  |  | (494 | )
Net Realized Gains on Sales of Investment Securities |  | $ | 1,635 |  |  | $ | 122 |  |  | $ | 1,833 |
Proceeds from Sales of Investment Securities |  | $ | 155,468 |  |  | $ | 31,832 |  |  | $ | 93,685 |
Tax Expense on Sales of Investment Securities |  | $ | 687 |  |  | $ | 52 |  |  | $ | 771 |
There were $1.6 million, and $122,000 and $1.8 million in net realized gains on sales of securities available for sale during the years ended December 31, 2011, 2010 and 2009, respectively. In 2011, $6.5 million ($3.8 million, net of income taxes) of net unrealized losses arose during the year and was included in comprehensive income and $249,000 ($145,000, net of income taxes) of previously net unrealized gains were realized in earnings. In 2010, $3.6 million ($2.1 million, net of income taxes) of net unrealized losses arose during the year and was included in comprehensive income and $205,000 ($119,000, net of income taxes) of previously net unrealized gains were realized in earnings. In 2009, $515,000 ($298,000, net of income taxes) of net unrealized gains arose during the year and was included in comprehensive income and $220,000 ($127,000, net of income taxes) of previously net unrealized gains were realized in earnings.

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