2. INVESTMENT SECURITIES HELD TO MATURITY

A summary of amortized cost and approximate fair value of investment securities held to maturity included in the consolidated statements of condition as of June 30, 2011 and December 31, 2010 follows:

	June 30, 2011
			Gross		Gross			Approximate
	Carrying		Unrecognized		Unrecognized			Fair
(In Thousands)	Amount		Gains		Losses			Value
U.S. Government-Sponsored Entities	$	52,387	$	17	$	(103	)	$	52,301
Mortgage-Backed Securities -
Residential		60,180		1,186		(167	)		61,199
State and Political Subdivisions		18,899		140		-			19,039
Trust Preferred Pooled Securities		9,106		-		(1,056	)		8,050
Total	$	140,572	$	1,343	$	(1,326	)	$	140,589

	December 31, 2010
			Gross		Gross			Approximate
	Carrying		Unrecognized		Unrecognized			Fair
(In Thousands)	Amount		Gains		Losses			Value
U.S. Government-Sponsored Entities	$	45,485	$	11	$	(790	)	$	44,706
Mortgage-Backed Securities -
Residential		67,745		921		(494	)		68,172
State and Political Subdivisions		17,671		184		(31	)		17,824
Trust Preferred Pooled Securities		9,376		-		(1,640	)		7,736
Total	$	140,277	$	1,116	$	(2,955	)	$	138,438

The following tables present the Corporation's investment securities held to maturity with continuous unrealized losses and the approximate fair value of these investments as of June 30, 2011 and December 31, 2010.

	June 30, 2011
						Duration of Unrealized Loss
	Less Than 12 Months					12 Months or Longer					Total
	Approximate					Approximate					Approximate
	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
(In Thousands)	Value		Losses			Value		Losses			Value		Losses
U.S. Government-
Sponsored
Entities	$	40,995	$	(103	)	$	-	$	-		$	40,995	$	(103	)
Mortgage-Backed
Securities -
Residential		12,142		(167	)		-		-			12,142		(167	)
Trust Preferred
Pooled Securities		-		-			2,210		(1,056	)		2,210		(1,056	)
Total	$	53,137	$	(270	)	$	2,210	$	(1,056	)	$	55,347	$	(1,326	)

	December 31, 2010
						Duration of Unrealized Loss
	Less Than 12 Months					12 Months or Longer					Total
	Approximate					Approximate					Approximate
	Fair		Unrecognized			Fair		Unrecognized			Fair		Unrecognized
(In Thousands)	Value		Losses			Value		Losses			Value		Losses
U.S. Government-
Sponsored
Entities	$	39,707	$	(790	)	$	-	$	-		$	39,707	$	(790	)
Mortgage-Backed
Securities -
Residential		32,553		(494	)		-		-			32,553		(494	)
State & Political
Subdivisions		9,667		(31	)		-		-			9,667		(31	)
Trust Preferred
Pooled Securities		-		-			1,782		(1,640	)		1,782		(1,640	)
Total	$	81,927	$	(1,315	)	$	1,782	$	(1,640	)	$	83,709	$	(2,955	)

The trust preferred pooled securities within the Corporation's held to maturity investment portfolio are collateralized by trust preferred securities issued primarily by individual bank holding companies, but also by insurance companies and real estate investment trusts. There has been little or no active trading in these securities for several years; therefore the Corporation believes in most cases it is more appropriate to estimate fair value using discounted cash flow analysis. As of December 31, 2008, to estimate fair value, and determine whether the securities were other-than-temporarily impaired, the Corporation retained and worked with a third party to review the issuers (the collateral) underlying each of the securities. Among the factors analyzed were the issuers' profitability, credit quality, asset mix, capital adequacy, leverage and liquidity position, as well as an overall assessment of credit, profitability and capital trends within the portfolio's issuer universe. These factors provided an assessment of the portion of the collateral of each security which was likely to default in future periods. The cash flows associated with the collateral likely to default, together with the cash flows associated with collateral which had already deferred or defaulted, were then eliminated. In addition, the Corporation assumed constant rates of default in excess of those based upon the historic performance of the underlying collateral. The resulting cash flows were then discounted to the current period to determine fair value for each security. The discount rate utilized was based on a risk-free rate (LIBOR) plus spreads appropriate for the product, which include consideration of liquidity and credit uncertainty.

Each quarter since December 2008, to periodically assess the credit assumptions and related input data that could affect the fair value of each security, Management compared actual deferrals and defaults to the assumed deferrals and defaults included in the valuation model.

As of each year end since December 2008, the Corporation again worked with a third party to model the securities and review its valuation. The modeling process and related assumptions were similar to the process and related assumptions employed as of December 31, 2008. In 2010, as a result of this process additional impairment charges of $581 thousand were recorded on three trust preferred pooled securities for the year ended December 31, 2010. No additional impairment charges were recorded for the quarter ended June 30, 2011.

Further significant downturns in the real estate markets and/or the economy could cause additional issuers to defer paying dividends on these securities and/or ultimately default. Such occurrences, if beyond those assumed in the current valuation, could cause an additional write-down of the portfolio, with a negative impact on earnings; however, the Corporation has already recorded a substantial write-down of its trust preferred pooled securities portfolio. We do not expect that an additional write-down would have a material effect on the cash flows from the securities or on our liquidity position.

At June 30, 2011, other-than-temporary impairment recognized in accumulated other comprehensive income totaled $3.0 million.

Management has determined that any unrecognized losses on the U.S. Government-sponsored entities and mortgage-backed securities held to maturity at June 30, 2011, are temporary and due to interest rate fluctuations and/or volatile market conditions, rather than the creditworthiness of the issuers. The Corporation monitors creditworthiness of issuers periodically, including issuers of trust preferred securities on a quarterly basis. The Corporation does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.