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Investment Securities | 9 Months Ended
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Sep. 30, 2012
Investment Securities |
2. | Investment Securities
Debt and equity securities have been classified in the consolidated balance sheets according to management’s intent. Investment securities at September 30, 2012 and December 31, 2011 are summarized as follows:
|  |  |  |  | Gross |  |  | Gross |  |  |  |
|  | Amortized |  |  | Unrealized |  |  | Unrealized |  |  | Fair |
(In thousands) |  | Cost |  |  | Gains |  |  | Losses |  |  | Value |
September 30, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Securities available for sale: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency mortgage-backed securities |  | $ | 22,022 |  |  | $ | 538 |  |  | $ | 9 |  |  | $ | 22,551 |
Agency CMO |  |  | 24,278 |  |  |  | 169 |  |  |  | 90 |  |  |  | 24,357 |
Privately-issued CMO |  |  | 666 |  |  |  | 19 |  |  |  | 28 |  |  |  | 657 |
Other debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency notes and bonds |  |  | 42,119 |  |  |  | 330 |  |  |  | 1 |  |  |  | 42,448 |
Municipal obligations |  |  | 28,331 |  |  |  | 1,750 |  |  |  | 20 |  |  |  | 30,061 |
Subtotal—debt securities |  |  | 117,416 |  |  |  | 2,806 |  |  |  | 148 |  |  |  | 120,074 |
Mutual funds |  |  | 3,263 |  |  |  | 56 |  |  |  | 18 |  |  |  | 3,301 |
Total securities available for sale |  | $ | 120,679 |  |  | $ | 2,862 |  |  | $ | 166 |  |  | $ | 123,375 |
Securities held to maturity: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Agency mortgage-backed securities |  | $ | 14 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 14 |
Total securities held to maturity |  | $ | 14 |  |  | $ | 0 |  |  | $ | 0 |  |  | $ | 14 |
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 |
Agency notes and bonds, agency mortgage-backed securities and agency collateralized mortgage obligations (CMO) include securities issued by the Government National Mortgage Association (GNMA), a U.S. government agency, and the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC) and the Federal Home Loan Bank (FHLB), which are government-sponsored enterprises. Privately-issued CMOs are issued by special-purpose entities that are generally collateralized by first position residential mortgage loans and first position residential home equity loans. The amortized cost and fair value of debt securities as of September 30, 2012, 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 |
|  | Cost |  |  | Value |  |  | Cost |  |  | Value |
(In thousands) |  |  |  |  |  |  |  |  |  |  |  |
Due in one year or less |  | $ | 832 |  |  | $ | 835 |  |  | $ | 0 |  |  | $ | 0 |
Due after one year through five years |  |  | 6,537 |  |  |  | 6,669 |  |  |  | 0 |  |  |  | 0 |
Due after five years through ten years |  |  | 19,406 |  |  |  | 19,859 |  |  |  |  |  |  |  |  |
Due after ten years |  |  | 43,675 |  |  |  | 45,146 |  |  |  | 0 |  |  |  | 0 |
|  |  | 70,450 |  |  |  | 72,509 |  |  |  | 0 |  |  |  | 0 |
Mortgage-backed securities and |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
CMO |  |  | 46,966 |  |  |  | 47,565 |  |  |  | 14 |  |  |  | 14 |
|  | $ | 117,416 |  |  | $ | 120,074 |  |  | $ | 14 |  |  | $ | 14 |
Information pertaining to investment securities available for sale with gross unrealized losses at September 30, 2012, aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows:
|  | Number of Investment Positions |  |  | Fair Value |  |  | Gross Unrealized Losses |
(Dollars in thousands) |  |  |  |  |  |  |  |  |
Continuous loss position less than twelve months: |  |  |  |  |  |  |  |  |  |  |  |
Agency notes and bonds |  |  | 3 |  |  | $ | 3,049 |  |  | $ | 1 |
Agency CMO |  |  | 10 |  |  |  | 9,798 |  |  |  | 86 |
Agency mortgage-backed securities |  |  | 1 |  |  |  | 2,075 |  |  |  | 9 |
Muncipal obligations |  |  | 5 |  |  |  | 1,638 |  |  |  | 20 |
Total less than twelve months |  |  | 19 |  |  |  | 16,560 |  |  |  | 116 |
Continuous loss position more than twelve months: |  |  |  |  |  |  |  |  |  |  |  |
Privately-issued CMO |  |  | 1 |  |  |  | 202 |  |  |  | 28 |
Agency CMO |  |  | 2 |  |  |  | 1,105 |  |  |  | 4 |
Mutual fund |  |  | 1 |  |  |  | 374 |  |  |  | 18 |
Total more than twelve months |  |  | 4 |  |  |  | 1,681 |  |  |  | 50 |
Total securities available for sale |  |  | 23 |  |  | $ | 18,241 |  |  | $ | 166 |
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 recover in fair value. At September 30, 2012, the 21 U.S. government agency debt securities, including agency notes and bonds, mortgage-backed securities and CMO, and municipal obligations in a loss position had depreciated approximately 0.7% from the amortized cost basis. All of the U.S. government agency securities and municipal obligations are issued by U.S. government agencies, government-sponsored enterprises and municipal governments, or are secured by first mortgage loans and municipal project revenues. 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 debt securities until maturity, or the foreseeable future if classified as available for sale, no declines are deemed to be other-than-temporary. At September 30, 2012, the privately-issued CMO in a loss position had depreciated approximately 12.2% from the amortized cost basis. The Company evaluates the existence of a potential credit loss component related to the decline in fair values of the privately-issued CMO portfolio each quarter using an independent third party analysis. At September 30, 2012, the privately-issued CMO in a loss position had an amortized cost of $230,000 and a fair value of $202,000, and had been downgraded to a substandard regulatory classification in 2009 due to a downgrade of the security’s credit quality by various rating agencies. Based on the independent third party analysis performed in September 2012, the Company did not recognize an other-than-temporary impairment loss during the quarter ended September 30, 2012. While management did not anticipate a credit-related impairment loss at September 30, 2012, any future deterioration in market and economic conditions may have an adverse impact on the credit quality in future periods.

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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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