Investment Securities Available for Sale

6 Months Ended

Jun. 30, 2011

Investment Securities Available for Sale

Investment Securities Available for Sale

3. Investment Securities Available for Sale

Amortized cost and estimated fair value of securities available for sale are summarized as follows:

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
June 30, 2011	Cost		Gains		Losses		Value
(dollars in thousands)
U. S. Government agency securities	$	102,989	$	1,470	$	63	$	104,396
Residential mortgage backed securities	91,839		2,773		95		94,517
Municipal bonds	49,387		1,470		124		50,733
Other equity investments	445		—		72		373
	$	244,660	$	5,713	$	354	$	250,019

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
December 31, 2010	Cost		Gains		Losses		Value
(dollars in thousands)
U. S. Government agency securities	$	67,288	$	1,253	$	143	$	68,398
Residential mortgage backed securities	107,425		2,903		419		109,909
Municipal bonds	49,459		658		749		49,368
Other equity investments	445		—		72		373
	$	224,617	$	4,814	$	1,383	$	228,048

Gross unrealized losses and fair value by length of time that the individual available for sale securities have been in a continuous unrealized loss position are as follows:

	Less than				12 Months
	12 Months				or Greater				Total
	Estimated				Estimated				Estimated
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
June 30, 2011	Value		Losses		Value		Losses		Value		Losses
(dollars in thousands)
U. S. Government agency securities	$	29,179	$	63	$	—	$	—	$	29,179	$	63
Residential mortgage backed securities	8,054		95		—		—		8,054		95
Municipal bonds	9,522		124		—		—		9,522		124
Other equity investments	—		—		106		72		106		72
	$	46,755	$	282	$	106	$	72	$	46,861	$	354

	Less than				12 Months
	12 Months				or Greater				Total
	Estimated				Estimated				Estimated
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2010	Value		Losses		Value		Losses		Value		Losses
(dollars in thousands)
U. S. Government agency securities	$	7,122	$	143	$	—	$	—	$	7,122	$	143
Residential mortgage backed securities	31,605		419		—		—		31,605		419
Municipal bonds	21,874		749		—		—		21,874		749
Other equity investments	—		—		106		72		106		72
	$	60,601	$	1,311	$	106	$	72	$	60,707	$	1,383

The unrealized losses that exist are generally the result of changes in market interest rates and interest spread relationships since original purchases. The weighted average duration of debt securities, which comprise 99.9% of total investment securities, is relatively short at 3.2 years. The gross unrealized loss on other equity investments represents common stock of one local banking company owned by the Company, and traded on a broker “bulletin board” exchange. The estimated fair value is determined by broker quoted prices. The unrealized loss is deemed a result of generally weak valuations for many smaller community bank stocks. The individual banking company is profitable and has a satisfactory capital position. If quoted prices are not available, fair value is measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. The Company does not believe that the investment securities that were in an unrealized loss position as of June 30, 2011 represent an other-than-temporary impairment for the reasons noted. The Company does not intend to sell the investments and it is more likely than not that the Company will not have to sell the securities before recovery of its amortized cost basis, which may be maturity. In addition, at June 30, 2011, the Company held $9.7 million in equity securities in a combination of Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stocks which are required to be held for regulatory purposes and are not marketable.

The amortized cost and estimated fair value of investments available for sale by contractual maturity are shown in the table below.  Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2011				December 31, 2010
	Amortized		Estimated		Amortized		Estimated
(dollars in thousands)	Cost		Fair Value		Cost		Fair Value
U. S. Government agency securities maturing:
One year or less	$	37,824	$	37,864	$	—	$	—
After one year through five years	60,316		61,639		60,175		61,398
After five years through ten years	4,849		4,893		7,113		7,000
Residential mortgage backed securities	91,839		94,517		107,425		109,909
Municipal bonds maturing:
Five years through ten years	11,389		11,777		7,250		7,356
After ten years	37,998		38,956		42,209		42,012
Other equity investments	445		373		445		373
	$	244,660	$	250,019	$	224,617	$	228,048

The carrying value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase, and certain lines of credit with correspondent banks at June 30, 2011 was $198.9 million. As of June 30, 2011 and December 31, 2010, there were no holdings of securities of any one issuer, other than the U.S. Government and U.S. Government agency securities that exceeded ten percent of shareholders’ equity.