Securities

12 Months Ended

Dec. 31, 2011

Securities and Securities Sold under agreements to Repurchase and overnight Borrowings [Abstract]

Securities

NOTE C -SECURITIES

Year end investment securities were as follows (in thousands):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale, December 31, 2011
Federal agencies	$	28,303	$	132	$	—		$	28,435
U.S. government sponsored entities and agencies		22,855		101		—			22,956
States and political subdivisions		32,324		1,124		(3	)		33,445
Asset-backed securities		2,487		—		(11	)		2,476
Mortgage-backed securities		3,007		25		—			3,032
Total	$	88,976	$	1,382	$	(14	)	$	90,344

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale, December 31, 2010
Federal agencies	$	24,117	$	26	$	(37	)	$	24,106
U.S. government sponsored entities and agencies		6,685		3		(10	)		6,678
States and political subdivisions		25,225		372		(227	)		25,370
Asset-backed securities		2,487		—		(11	)		2,476
Mortgage-backed securities		573		25		—			598
Total	$	59,087	$	426	$	(285	)	$	59,228

Securities with unrealized losses at December 31, 2011 and 2010 that have not been recognized in income are as follows (in thousands):

2011	Continued Unrealized Loss for Less than 12 Months					Continued Unrealized Loss for 12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Description of Securities
States and political subdivisions	$	1,005	$	(3	)	$	—	$	—		$	1,005	$	(3	)
Mortgage-backed securities		—		—			2,487		(11	)		2,487		(11	)
Total temporarily impaired	$	1,005	$	(3	)	$	2,487	$	(11	)	$	3,492	$	(14	)

2010	Continued Unrealized Loss for Less than 12 Months					Continued Unrealized Loss for 12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
Description of Securities
Federal agencies	$	13,335	$	(37	)	$	—	$	—		$	13,335	$	(37	)
U.S. government sponsored entities and agencies		2,997		(10	)		—		—			2,997		(10	)
States and political subdivisions		5,257		(218	)		883		(9	)		6,140		(227	)
Asset-backed securities		2,487		(11	)		—		—			2,487		(11	)
Total temporarily impaired	$	24,076	$	(276	)	$	883	$	(9	)	$	24,959	$	(285	)

Unrealized losses have not been recognized into income as management believes the issuers are of sound credit quality, management has no intent to sell the securities, the Company has the ability to hold to maturity and the decline in fair value is largely due to changes in market interest rates. The fair value is expected to recover as the notes and bonds approach their maturity date.

The proceeds from sales of securities and the associated gains are listed below (in thousands):

	2011		2010		2009
Proceeds	$	—	$	7,445	$	26,366
Gross gains		—		206		678

The tax provision related to gross realized gains was $70,000 and $231,000 for 2010 and 2009, respectively.

Gains on calls of securities were $29,000, $1,000 and $4,000 for 2011, 2010 and 2009, respectively.

The amortized cost and fair value of the investment securities portfolio are shown by contractual maturity. Contractual maturities of debt securities at year-end 2011 were as follows (in thousands):

	Amortized Cost		Fair Value
Due in one year or less	$	16,504	$	16,599
Due from one to five years		49,879		50,449
Due from five to ten years		13,278		13,742
Due after ten years		3,821		4,046
Mortgage-backed securities		5,494		5,508
Total	$	88,976	$	90,344

Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately. 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.

Securities with a carrying value of $32,089,000 and $28,344,000, respectively, were pledged as collateral for repurchase accounts and for other purposes at year-end 2011 and 2010.

At December 31, 2011 and 2010, the fair value of securities issued by the State of Michigan and all its political subdivisions totaled $26,314,000 and $19,903,000, respectively. No other securities of any state (including all its political subdivisions) were greater than 10% of shareholders’ equity.

Investments in the Federal Home Loan Bank of Indianapolis stock totaled $1,701,000 and $1,877,000 at December 31, 2011 and 2010, respectively, and are included in other assets because such investments are considered restricted. Such investments are recorded at cost and evaluated for impairment.

At December 31, 2011, the Company had no investment in securities of issuers outside of the United States.