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Investment Securities
 6 Months Ended
Jun. 30, 2012
Investment Securities [Abstract]  
Investment Securities
6. Investment Securities

The cost basis and fair values of investment securities are summarized as follows (in thousands):

Investment securities available for sale (AFS):

 

                                 
    June 30, 2012  
    Cost
Basis		     Gross
Unrealized
Gains		     Gross
Unrealized
Losses		     Fair Value  

U.S. Agency

   $ 7,248     $ 70     $ (1 )    $ 7,317  

U.S. Agency mortgage- backed securities

     156,701       6,960       (26 )      163,635  

Corporate bonds

     5,991       —         (47 )      5,944  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 169,940     $ 7,030     $ (74 )    $ 176,896  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

Investment securities held to maturity (HTM):

 

                                 
    June 30, 2012  
    Cost
Basis		     Gross
Unrealized
Gains		     Gross
Unrealized
Losses		     Fair
Value		  

U.S. Agency mortgage- backed securities

   $ 10,895     $ 638     $ —       $ 11,533  

Other securities

     4,000       —         (76 )      3,924  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 14,895     $ 638     $ (76 )    $ 15,457  
   

 

 

    

 

 

    

 

 

    

 

 

  

Investment securities available for sale (AFS):

 

                                 
    December 31, 2011  
    Cost
Basis		     Gross
Unrealized
Gains		     Gross
Unrealized
Losses		     Fair
Value		  

U.S. Agency

   $ 10,689     $ 48     $ (28 )    $ 10,709  

U.S. Agency mortgage- backed securities

     165,484       6,737       (7 )      172,214  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 176,173     $ 6,785     $ (35 )    $ 182,923  
   

 

 

    

 

 

    

 

 

    

 

 

  

Investment securities held to maturity (HTM):

 

                                 
    December 31, 2011  
    Cost
Basis		     Gross
Unrealized
Gains		     Gross
Unrealized
Losses		     Fair
Value		  

U.S. Agency mortgage- backed securities

   $ 9,280     $ 643     $ —       $ 9,923  

Other securities

     3,000       —         (9 )      2,991  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 12,280     $ 643     $ (9 )    $ 12,914  
   

 

 

    

 

 

    

 

 

    

 

 

  

Maintaining investment quality is a primary objective of the Company’s investment policy which, subject to certain limited exceptions, prohibits the purchase of any investment security below a Moody’s Investor’s Service or Standard & Poor’s rating of “A.” At June 30, 2012, 94.6% of the portfolio was rated “AAA” as compared to 98.4% at December 31, 2011. 1.1% of the portfolio was either rated below “A” or unrated at June 30, 2012. The Company has no exposure to subprime mortgage loans in the investment portfolio. At June 30, 2012, the Company’s consolidated investment securities portfolio had a modified duration of approximately 1.47 years. Total proceeds from the sale of AFS securities were $4.2 million for the second quarter and first six months of 2012. The Company had $59,000 of gross investment security gains and $47,000 of gross investment security losses in the second quarter and first six months of 2012 compared to no gross investment security gains or losses in the second quarter of 2011 and $358,000 of gross investment security losses for the first six months of 2011.

The book value of securities, both available for sale and held to maturity, pledged to secure public and trust deposits, and certain Federal Home Loan Bank borrowings was $95,922,000 at June 30, 2012 and $83,235,000 at December 31, 2011.

The following tables present information concerning investments with unrealized losses as of June 30, 2012 and December 31, 2011 (in thousands):

Investment securities available for sale:

 

                                                 
    June 30, 2012  
    Less than 12 months     12 months or longer     Total  
    Fair
Value		     Unrealized
Losses		     Fair
Value		     Unrealized
Losses		     Fair
Value		     Unrealized
Losses		  

U.S. Agency

   $ 1,248     $ (1 )    $ —       $ —       $ 1,248     $ (1 ) 

U.S. Agency mortgage-backed securities

     10,066       (21 )      469       (5 )      10,535       (26 ) 

Corporate bonds

     5,944       (47 )      —         —         5,944       (47 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 17,258     $ (69 )    $ 469     $ (5 )    $ 17,727     $ (74 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Investment securities held to maturity:

 

                                                 
    June 30, 2012  
    Less than 12 months     12 months or longer     Total  
    Fair
Value		     Unrealized
Losses		     Fair
  Value  		     Unrealized
Losses		     Fair
Value		     Unrealized
Losses		  

Other securities

   $ 2,924     $ (76 )    $ —       $ —       $ 2,924     $ (76 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 2,924     $ (76 )    $ —       $ —       $ 2,924     $ (76 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment securities available for sale:

 

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

U.S. Agency

   $ 3,161     $ (28 )    $ —       $ —       $ 3,161     $ (28 ) 

U.S. Agency mortgage-backed securities

     613       (7 )      —         —         613       (7 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 3,774     $ (35 )    $ —       $ —       $ 3,774     $ (35 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Investment securities held to maturity:

 

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

Other securities

   $ 1,991     $ (9 )    $ —       $ —       $ 1,991     $ (9 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 1,991     $ (9 )    $ —       $ —       $ 1,991     $ (9 ) 
   

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

The unrealized losses are primarily a result of increases in market yields from the time of purchase. In general, as market yields rise, the value of securities will decrease; as market yields fall, the fair value of securities will increase. There are 15 positions that are considered temporarily impaired at June 30, 2012. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired. Management has also concluded that based on current information we expect to continue to receive scheduled interest payments as well as the entire principal balance. Furthermore, management does not intend to sell these securities and does not believe it will be required to sell these securities before they recover in value.

Contractual maturities of securities at June 30, 2012, are shown below (in thousands). Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without prepayment penalties.

Investment securities available for sale:

 

                                 
    June 30, 2012  

Cost Basis

   U. S. Agency     U.S. Agency
Mortgage-
Backed
Securities		     Corporate
Bonds		     Total Investment
Securities
Available For Sale		  

After 1 year but within 5 years

   $ 7,248     $ —       $ 5,991     $ 13,239  

After 5 years but within 10 years

     —         14,006       —         14,006  

After 10 years but within 15 years

     —         73,138       —         73,138  

Over 15 years

     —         69,557       —         69,557  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 7,248     $ 156,701     $ 5,991     $ 169,940  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

                                 
    June 30, 2012  

Fair Value

   U.S. Agency     U.S. Agency
Mortgage-
Backed
Securities		     Corporate
Bonds		     Total Investment
Securities
Available For Sale		  

After 1 year but within 5 years

   $ 7,317     $ —       $ 5,944     $ 13,261  

After 5 years but within 10 years

     —         14,881       —         14,881  

After 10 years but within 15 years

     —         76,219       —         76,219  

Over 15 years

     —         72,535       —         72,535  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 7,317     $ 163,635     $ 5,944     $ 176,896  
   

 

 

    

 

 

    

 

 

    

 

 

  

Investment securities held to maturity:

 

                         
    June 30, 2012  

Cost Basis

   U.S. Agency
Mortgage-
Backed
Securities		     Other
Securities		     Total Investment
Securities Held
To Maturity		  
       

Within 1 year

   $ —       $ 1,000     $ 1,000  

After 1 year but within 5 years

     —         3,000       3,000  

Over 15 years

     10,895       —         10,895  
   

 

 

    

 

 

    

 

 

  

Total

   $ 10,895     $ 4,000     $ 14,895  
   

 

 

    

 

 

    

 

 

  

 

                         
    June 30, 2012  

Fair Value

   U.S. Agency
Mortgage-
Backed
Securities		     Other
Securities		     Total Investment
Securities Held
To Maturity		  
       

Within 1 year

   $ —       $ 1,000     $ 1,000  

After 1 year but within 5 years

     —         2,924       2,924  

Over 15 years

     11,533       —         11,533  
   

 

 

    

 

 

    

 

 

  

Total

   $ 11,533     $ 3,924     $ 15,457