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INVESTMENT SECURITIES | 12 Months Ended
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Dec. 31, 2011
INVESTMENT SECURITIES |
(3) | INVESTMENT SECURITIES
Debt and equity securities have been classified in the balance sheets according to management’s intent. Investment securities at December 31, 2011 and 2010 are summarized as follows:
(In thousands) |  | Amortized Cost |  |  | Gross Unrealized Gains |  |  | Gross Unrealized Losses |  |  | Fair Value |
December 31, 2011: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency mortgage-backed securities |  | $ | 11,689 |  |  | $ | 542 |  |  | $ | 11 |  |  | $ | 12,220 |
Agency CMO |  |  | 23,196 |  |  |  | 152 |  |  |  | 60 |  |  |  | 23,288 |
Privately-issued CMO |  |  | 896 |  |  |  | 16 |  |  |  | 32 |  |  |  | 880 |
Other debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency notes and bonds |  |  | 41,971 |  |  |  | 395 |  |  |  | 3 |  |  |  | 42,363 |
Municipal obligations |  |  | 25,800 |  |  |  | 1,501 |  |  |  | 0 |  |  |  | 27,301 |
Subtotal – debt securities |  |  | 103,552 |  |  |  | 2,606 |  |  |  | 106 |  |  |  | 106,052 |
Mutual funds |  |  | 5,369 |  |  |  | 52 |  |  |  | 33 |  |  |  | 5,388 |
Total securities available for sale |  | $ | 108,921 |  |  | $ | 2,658 |  |  | $ | 139 |  |  | $ | 111,440 |
Securities held to maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency mortgage-backed securities |  | $ | 16 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 16 |
Total securities held to maturity |  | $ | 16 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 16 |
December 31, 2010: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency mortgage-backed securities |  | $ | 12,101 |  |  | $ | 580 |  |  | $ | 0 |  |  | $ | 12,681 |
Agency CMO |  |  | 11,987 |  |  |  | 46 |  |  |  | 65 |  |  |  | 11,968 |
Privately-issued CMO |  |  | 1,688 |  |  |  | 10 |  |  |  | 46 |  |  |  | 1,652 |
Other debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency notes and bonds |  |  | 42,400 |  |  |  | 297 |  |  |  | 317 |  |  |  | 42,380 |
Municipal obligations |  |  | 29,366 |  |  |  | 371 |  |  |  | 281 |  |  |  | 29,456 |
Subtotal – debt securities |  |  | 97,542 |  |  |  | 1,304 |  |  |  | 709 |  |  |  | 98,137 |
Mutual funds |  |  | 2,705 |  |  |  | 36 |  |  |  | 27 |  |  |  | 2,714 |
Total securities available for sale |  | $ | 100,247 |  |  | $ | 1,340 |  |  | $ | 736 |  |  | $ | 100,851 |
Securities held to maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency mortgage-backed securities |  | $ | 18 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 18 |
Municipal obligations |  |  | 14 |  |  |  | 0 |  |  |  | 0 |  |  |  | 14 |
Total securities held to maturity |  | $ | 32 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 32 |
The amortized cost and fair value of debt securities as of December 31, 2011, by contractual maturity, are shown below. Expected maturities of mortgage-backed securities may differ from contractual maturities because the mortgages underlying the obligations may be prepaid without penalty.
|  | Securities Available for Sale |  |  | Securities Held to Maturity |
|  | Amortized |  |  | Fair |  |  | Amortized |  |  | Fair |
(In thousands) |  | Cost |  |  | Value |  |  | Cost |  |  | Value |
Due in one year or less |  | $ | 2,299 |  |  | $ | 2,313 |  |  | $ | 0 |  |  | $ | 0 |
Due after one year through five years |  |  | 10,495 |  |  |  | 10,607 |  |  |  | 0 |  |  |  | 0 |
Due after five years through ten years |  |  | 17,025 |  |  |  | 17,577 |  |  |  | 0 |  |  |  | 0 |
Due after ten years |  |  | 37,952 |  |  |  | 39,167 |  |  |  | 0 |  |  |  | 0 |
|  |  | 67,771 |  |  |  | 69,664 |  |  |  | 0 |  |  |  | 0 |
Mortgage-backed securities and CMO |  |  | 35,781 |  |  |  | 36,388 |  |  |  | 16 |  |  |  | 16 |
|  | $ | 103,552 |  |  | $ | 106,052 |  |  | $ | 16 |  |  | $ | 16 |
At December 31, 2011, certain investment securities were pledged under retail repurchase agreements and to secure Federal Home Loan Bank advances at December 31, 2011. (See Notes 9 and 10) Information pertaining to investment securities available for sale with gross unrealized losses at December 31, 2011, aggregated by investment category and the length of time that individual investment securities have been in a continuous loss position, follows:
|  | Number of |  |  |  |  |  | Gross |
|  | Investment |  |  | Fair |  |  | Unrealized |
(Dollars in thousands) |  | Positions |  |  | Value |  |  | Losses |
Continuous loss position less than twelve months: |  |  |  |  |  |  |  |  |  |  |  |
Agency mortgage-backed securities |  |  | 2 |  |  | $ | 2,067 |  |  | $ | 11 |
Agency CMO |  |  | 9 |  |  |  | 7,402 |  |  |  | 60 |
Agency notes and bonds |  |  | 2 |  |  |  | 2,061 |  |  |  | 3 |
Total less than twelve months |  |  | 13 |  |  |  | 11,530 |  |  |  | 74 |
Continuous loss position more than twelve months: |  |  |  |  |  |  |  |  |  |  |  |
Privately-issued CMO |  |  | 1 |  |  |  | 237 |  |  |  | 32 |
Mutual fund |  |  | 1 |  |  |  | 346 |  |  |  | 33 |
Total more than twelve months |  |  | 2 |  |  |  | 583 |  |  |  | 65 |
Total securities available for sale |  |  | 15 |  |  | $ | 12,113 |  |  | $ | 139 |
At December 31, 2011, the Company did not have any securities held to maturity with an unrealized loss. Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. At December 31, 2011, the 13 U.S. government agency debt securities, including agency mortgage-backed securities, agency CMOs and agency notes and bonds in a loss position had depreciated approximately 0.6% from the amortized cost basis. All of the U.S. government agency securities are issued by U.S. government agencies or government-sponsored enterprises, or are secured by first mortgage loans. These unrealized losses related principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As the Company has the ability to hold the U.S. government agency debt securities until maturity, or for the foreseeable future if classified as available for sale, no declines are deemed to be other-than-temporary. At December 31, 2010, the privately-issued CMO in a loss position had depreciated approximately 11.8% from the amortized cost basis. The Company evaluates the existence of a potential credit loss component related to the decline in fair value of the privately-issued CMO portfolio each quarter using an independent third party analysis. At December 31, 2011, the privately-issued CMO in a loss position had an amortized cost of $269,000 and a fair value of $237,000, and had been downgraded to a substandard regulatory classification in 2009 due to a downgrade of the security’s credit quality rating by various rating agencies. Based on the independent third party analysis performed in December 2011, the Company recognized an other-than-temporary impairment loss of $36,000 representing the credit loss component of the unrealized loss. While management does not anticipate further credit-related impairment losses at December 31, 2011, additional deterioration in market and economic conditions may have an adverse impact on the credit quality in the future. During the year ended December 31, 2011, the Company realized gross gains on sales of available for sale U.S. government agency mortgage-backed securities of $16,000 and gross losses on sales of available for sale municipal obligations of $24,000.

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- Definition The entire disclosure for cash, cash equivalents, investments in debt and equity instruments (including cost and equity investees and related income statement amounts), equity and cost method investments, investments in joint ventures and any other investment. + References No definition available. + Details
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