Note 4 - Securities

A summary of the amortized cost and fair value of securities, with gross unrealized gains and losses, follows:


				December 31, 2011
		Amortized		Gross Unrealized					Fair
		Cost		Gains	Losses				Value
Held-to-maturity
U.S. agency obligations	$	8,133	$	400	$	-		$	8,533

Available-for-sale
U.S. agency obligations	$	25,416	$	117	$	(48	)	$	25,485
Mortgage-backed securities		3,938		5		(4	)		3,939
Municipals		19,062		241		(389	)		18,914

	$	48,416	$	363	$	(441	)	$	48,338

				December 31, 2010
		Amortized		Gross Unrealized					Fair
		Cost		Gains	Losses				Value
Held-to-maturity
U.S. agency obligations	$	14,297	$	304	$	-		$	14,601

Available-for-sale
U.S. agency obligations	$	14,758	$	24	$	(441	)	$	14,341
Mortgage-backed securities		18,057		1		(296	)		17,762
Municipals		5,787		15		(337	)		5,465
Corporates		1,033		-		(15	)		1,018

	$	39,635	$	40	$	(1,089	)	$	38,586

Temporarily Impaired Securities

The following tables show the gross unrealized losses and fair value of the Bank's investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2011 and 2010:


December 31, 2011		Less than 12 months				More than 12 months					Total
		Fair	Unrealized			Fair		Unrealized			Fair	Unrealized
		Value	Losses			Value		Losses			Value	Losses

U.S. agency obligations	$	13,593	$	48		$	-	$	-	$	13,593	$	48
Mortgage-backed securities		985		4			-		-		985		4
Municipals		12,852		389			-		-		12,852		389

Total temporarily impaired											$
securities	$	27,430	$	441		$	-	$	-		27,430	$	441

December 31, 2010		Less than 12 months				More than 12 months					Total
		Fair	Unrealized			Fair		Unrealized			Fair	Unrealized
		Value	Losses			Value		Losses			Value	Losses

U.S. agency obligations	$	11,808	$	441		$	-	$	-	$	11,808	$	441
Mortgage-backed securities		16,740		296			-		-		16,740		296
Corporates		-		-		1,018			15		1,018		15
Municipals		3,178		303		590			34		3,768		337

Total temporarily impaired
securities	$	31,726	$	1,040	$	1,608		$	49	$	33,334	$	1,089

U.S. agency obligations. The unrealized losses on the 6 investments in U.S. agency obligations at December 31, 2011 were caused by interest rate increases. The contractual terms of those investments do no permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Bank does not intend to sell the investments and it is not more likely than not that the Bank will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Bank does not consider those investments to be other-than-temporarily impaired at December 31, 2011. Each of these 6 investments carries an investment grade rating of AA.

Mortgage-backed securities. The unrealized losses on the 1 investment in mortgage-backed securities at December 31, 2011 were caused by interest rate increases. The contractual cash flows of these investments are guaranteed by an agency of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost bases of the Bank's investment. Because the decline in market value is attributable to changes in interest rates and not credit quality, and the Bank does not intend to sell the investments and it is not more likely than not that the Bank will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Bank does not consider those investments to be other-than-temporarily impaired at December 31, 2011. This investment carries an investment grade rating of AA.

Municipals. The unrealized losses on the 13 investments in municipal obligations at December 31, 2011 were caused by interest rate increases. The contractual terms of those investments do no permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Bank does not intend to sell the investments and it is not more likely than not that the Bank will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Bank does not consider those investments to be other-than-temporarily impaired at December 31, 2011. Each of these 13 investments carries an investment grade rating of AA or above.

The amortized costs and fair values of securities at December 31, 2011, by contractual maturity, are shown below. 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.


		Held-to-Maturity				Available-for-Sale
		Amortized	Fair			Amortized			Fair
		Cost	Values			Cost	Values

Due in one year or less	$	-	$	-	$	-	$		-
Due after one year through five years		-		-		-			-
Due after five years through ten years		2,072		2,362		7,284			7,361
Due after ten years		6,061		6,171		41,132			40,977

	$	8,133	$	8,533	$	48,416		$	48,338

The Bank sold $44,671 of securities available-for-sale in 2011. Gross realized gains amounted to $1,228 and gross realized losses amounted to $46. The Bank sold $43,657 of securities available-for-sale in 2010. Gross realized gains amounted to $372 and gross realized losses amounted to $14.

The amortized costs of securities pledged as collateral for public deposits and other short term borrowings were approximately $19,334 and $18,860 (fair value of $19,806 and $19,105) at December 31, 2011 and 2010, respectively.