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Securities
 6 Months Ended
Jun. 30, 2011
Securities  
Securities

NOTE 4.  Securities

 

Amortized costs and fair values of securities available for sale at June 30, 2011 and December 31, 2010 were as follows:

 

 

Gross

Gross

Amortized

Unrealized

Unrealized

Fair

Cost

Gains

(Losses)

Value

June 30, 2011

(in thousands)

Obligations of U.S. government

     corporations and agencies

 $             25,672

 $                  696

 $                    (1)

 $             26,367

Mortgage-backed securities

24,728

                     795

(33)

                25,490

Obligations of states and

     political subdivisions

43,072

1,337

                   (107)

                44,302

Corporate securities

13,484

                  1,049

                     (82)

                14,451

Equity securities

2,054

                     189

                         -

                  2,243

 $           109,010

 $               4,066

 $                (223)

 $           112,853

December 31, 2010

(in thousands)

Obligations of U.S. government

     corporations and agencies

 $             32,716

 $                  531

 $                  (97)

 $             33,150

Mortgage-backed securities

15,706

                     524

(73)

                16,157

Obligations of states and

     political subdivisions

42,511

928

                   (531)

                42,908

Corporate securities

14,464

                     994

                     (57)

                15,401

Equity securities

2,054

                     124

                         -

                  2,178

 $           107,451

 $               3,101

 $                (758)

 $           109,794

 

Sales of securities available for sale totaled $4,849,000 during the first six months of 2011.  During the first six months of 2010, the Company sold $2,853,000 in available for sale securities for a net gain of $98,000.
 

The fair value and gross unrealized losses for securities available for sale, totaled by the length of time that individual securities have been in a continuous gross unrealized loss position, at June 30, 2011 and December 31, 2010 were as follows:

 

Less than 12 months

12 months or more

Total

 

Gross

 

Gross

 

Gross

Unrealized

Unrealized

Unrealized

Fair Value

Losses

Fair Value

Losses

Fair Value

Losses

June 30, 2011

(in thousands)

Obligations of U.S. government

     corporations and agencies

 $              999

 $              1

 $                -  

 $            -  

 $              999

 $              1

Mortgage-backed securities

              2,821

               33

                     -

                 -

              2,821

               33

Obligations of states and

     political subdivisions

              2,723

               63

                 299

               44

              3,022

             107

Corporate securities

                     -

                 -

                   42

               82

                   42

               82

Equity securities

                     -

                 -

                     -

                 -

                     -

                 -

 $           6,543

 $            97

 $              341

 $          126

 $           6,884

 $          223

December 31, 2010

(in thousands)

Obligations of U.S. government

     corporations and agencies

 $           6,916

 $            97

 $                  -

 $              -

 $           6,916

 $            97

Mortgage-backed securities

              4,355

               73

                     -

                 -

              4,355

               73

Obligations of states and

     political subdivisions

            11,464

             481

                 320

               50

            11,784

             531

Corporate securities

              1,047

               57

                     -

                 -

              1,047

               57

Equity securities

                     -

                 -

                     -

                 -

                     -

                 -

 $         23,782

 $          708

 $              320

 $            50

 $         24,102

 $          758

 

 

 

 

Gross unrealized losses on available for sale securities included thirteen (13) and thirty-five (35) debt securities at June 30, 2011 and December 31, 2010, respectively.  The Company evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation.  The Company's mortgage-backed securities are issued by U.S. government agencies, which guarantee payments to investors regardless of the status of the underlying mortgages.  Consideration is given to the length of time and the amount of an unrealized loss, the financial condition of the issuer, and the intent and ability of the Company to retain its investment in the issuer long enough to allow for an anticipated recovery in fair value.  The fair value of a security reflects its liquidity as compared to similar instruments, current market rates on similar instruments, and the creditworthiness of the issuer.  Absent any change in the liquidity of a security or the creditworthiness of the issuer, prices will decline as market rates rise and vice-versa.  The primary cause of the unrealized losses at June 30, 2011 and December 31, 2010 was changes in market interest rates.  Since the losses can be primarily attributed to changes in market interest rates and not expected cash flows or an issuer's financial condition, the unrealized losses are deemed to be temporary.  The Company's holdings of corporate securities and equity securities represent investments in larger financial institutions.  The current economic crisis involving housing, liquidity and credit were the primary causes of the unrealized losses on these securities at December 31, 2010 and June 30, 2011.  The Company monitors the financial condition of these issuers continuously and will record other-than-temporary impairment if the recovery of value is unlikely.

 

The Company's securities are exposed to various risks, such as interest rate, market, currency and credit risks.  Due to the level of risk associated with certain securities and the level of uncertainty related to changes in the value of securities, it is at least reasonably possible that changes in risks in the near term would materially affect securities reported in the financial statements.  In addition, recent economic uncertainty and market events have led to unprecedented volatility in currency, commodity, credit and equity markets culminating in failures of some banking and financial services firms and government intervention to solidify others.  These recent events underscore the level of investment risk associated with the current economic environment, and accordingly the level of risk in the Company's securities.

 

Securities having a carrying value of $24,958,000 at June 30, 2011 were pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes required by law.
 

The composition of restricted investments at June 30, 2011 and December 31, 2010 was as follows:

 

 

June 30, 2011

December 31, 2010

(in thousands)

Federal Reserve Bank Stock

 $                       344

 $                       344

Federal Home Loan Bank Stock

                       3,446

3,498

Community Bankers' Bank Stock

                          140

140

 $                    3,930

 $                    3,982