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Securities
9 Months Ended
Sep. 30, 2011
Securities [Abstract] 
Securities

NOTE 4. Securities

 

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

  

   

Gross

Gross

  
 

Amortized

Unrealized

Unrealized

Fair

 

Cost

Gains

(Losses)

Value

 

September 30, 2011

 

(in thousands)

Obligations of U.S. government

        

     corporations and agencies

 $             24,658

 $                  977

 $                      -

 $             25,635

Mortgage-backed securities

                32,519

                  1,404

                         -

                33,923

Obligations of states and

        

     political subdivisions

                43,113

                  2,105

                     (45)

                45,173

Corporate securities

                12,498

                     785

                   (217)

                13,066

Equity securities

                  2,054

                     145

                         -

                  2,199

 

 $           114,842

 $               5,416

 $                (262)

 $           119,996

         
 

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 and calls of securities available for sale totaled $4,849,000 during the first nine months of 2011 for a net gain of $155,000. During the first nine 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 September 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

 

September 30, 2011

 

(in thousands)

Obligations of U.S. government

            

     corporations and agencies

 $                  -

 $              -

 $                  -

 $              -

 $                  -

 $              -

Mortgage-backed securities

                     -

                 -

                     -

                 -

                     -

                 -

Obligations of states and

            

     political subdivisions

                 543

                 5

                 296

               40

                 839

               45

Corporate securities

              3,356

             142

                   50

               75

              3,406

             217

Equity securities

                     -

                 -

                     -

                 -

                     -

                 -

 

 $           3,899

 $          147

 $              346

 $          115

 $           4,245

 $          262

             
 

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 nine (9) and thirty-five (35) debt securities at September 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 September 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 September 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 $17,581,000 at September 30, 2011 were pledged to secure securities sold under agreements to repurchase and other purposes required by law.

 

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

  

 

September 30, 2011

  

December 31, 2010

 

(in thousands)

       

Federal Reserve Bank Stock

 $                       344

 

 $                       344

Federal Home Loan Bank Stock

                       3,219

 

                       3,498

Community Bankers' Bank Stock

                          140

 

                          140

 

 $                    3,703

 

 $                    3,982