Note 7 - Investments

The following tables summarize the Bank’s holdings for both securities held-to-maturity and securities available-for-sale as of September 30, 2012 and December 31, 2011 (amounts in thousands):


		September 30, 2012
	Amortized	Gross Unrealized		Fair Value
	Costs	Gains	(Losses)
Held-to-Maturity
US agency obligations	$ 3,081	$ 364	$ -	$ 3,445

Available-for-Sale
US agency obligations	$ 23,824	$ 384	($15)	$ 24,193
Mortgage-backed securities	2,639	12	-	2,651
Municipals	21,967	748	(46)	22,669
Other	2,672	75	-	2,747
	$ 51,102	$ 1,219	($61)	$ 52,260

		December 31, 2011
	Amortized	Gross Unrealized		Fair Value
	Costs	Gains	(Losses)
Held-to-Maturity
US agency obligations	$ 8,133	$ 400	$ -	$ 8,533

Available-for-Sale
US 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

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 September 30, 2012 and December 31, 2011 (amounts in thousands):


	Less than 12 months		More than 12 months		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
September 30, 2012	Value	Losses	Value	Losses	Value	Losses
Description of securities
U.S. agency obligations	$ 1,120	$ 15	$ -	$ -	$ 1,120	$ 15
Municipals	1,236	46	-	-	1,236	46
Total	$ 2,356	$ 61	$ -	$ -	$ 2,356	$ 61

	Less than 12 months		More than 12 months		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
December 31, 2011	Value	Losses	Value	Losses	Value	Losses
Description of securities
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	$ 27,430	$ 441	$ -	$ -	$ 27,430	$ 441

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and may do so 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, (3) the intent of Financial, if any, to sell the security; (4) whether Financial more likely than not will be required to sell the security before recovering its cost; and (5) whether Financial does not expect to recover the security’s entire amortized cost basis (even if Financial does not intend to sell the security).

At September 30, 2012, the Company did not consider the unrealized losses as other-than-temporary losses due to the nature of the securities involved. As of September 30, 2012, the Bank owned 4 securities that were being evaluated for other than temporary impairment. One of these securities was S&P rated AAA and 3 were S&P rated AA. As of September 30, 2012, one of these securities was an obligation of a government sponsored entity and three were municipal issues.

Based on the analysis performed by management as mandated by the Bank’s investment policy, management believes the default risk to be minimal. Because the Bank expects to recover the entire amortized cost basis, no declines currently are deemed to be other-than-temporary.