NOTE 2 – Securities

The amortized cost, unrealized gross gains and losses recognized in accumulated other comprehensive income (loss), and fair value of Securities Available-for-Sale were as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
Securities Available-for-Sale:	Cost		Gains		Losses			Value

2011
U.S. Treasury and Agency Securities	$	6,340	$	82	$	—		$	6,422
Corporate Securities		1,003		2		—			1,005
Obligations of State and Political Subdivisions		60,606		4,195		(2	)		64,799
Mortgage-backed Securities - Residential		431,495		12,529		(90	)		443,934
Equity Securities		684		—		—			684
Total	$	500,128	$	16,808	$	(92	)	$	516,844

2010
U.S. Treasury and Agency Securities	$	—	$	—	$	—		$	—
Corporate Securities		—		—		—			—
Obligations of State and Political Subdivisions		31,483		813		(118	)		32,178
Mortgage-backed Securities - Residential		304,935		7,614		(1,483	)		311,066
Equity Securities		2,418		1,085		—			3,503
Total	$	338,836	$	9,512	$	(1,601	)	$	346,747

The carrying amount, unrecognized gains and losses and fair value of Securities Held-to-Maturity were as follows:

			Gross		Gross
Securities Held-to-Maturity:	Carrying		Unrecognized		Unrecognized		Fair
	Amount		Gains		Losses		Value
2011
Obligations of State and Political Subdivisions	$	690	$	7	$	—	$	697

2010
Obligations of State and Political Subdivisions	$	1,604	$	9	$	—	$	1,613

The amortized cost and fair value of Securities at December 31, 2011 by contractual maturity are shown below. Expected maturities may differ from contractual maturities because some issuers have the right to call or prepay certain obligations with or without call or prepayment penalties. Mortgage-backed and Equity Securities are not due at a single maturity date and are shown separately.

	Amortized		Fair
	Cost		Value
Securities Available-for-Sale:
Due in one year or less	$	1,053	$	1,056
Due after one year through five years		14,052		14,464
Due after five years through ten years		13,729		14,746
Due after ten years		39,115		41,960
Mortgage-backed Securities - Residential		431,495		443,934
Equity Securities		684		684
Total	$	500,128	$	516,844

	Carrying		Fair
	Amount		Value
Securities Held-to-Maturity:
Due in one year or less	$	175	$	175
Due after one year through five years		515		522
Due after five years through ten years		—		—
Due after ten years		—		—
Total	$	690	$	697

Proceeds from the Sales of Securities are summarized below:

	2011		2010		2009
	Available-		Available-		Available-
	for-Sale		for-Sale		for-Sale

Proceeds from Sales and Calls	$	20,061	$	—	$	379
Gross Gains on Sales and Calls		2,089		—		—

Income Taxes on Gross Gains		721		—		—

The Company held a minority interest in American Community Bancorp, Inc., prior to the acquisition on January 1, 2011 (see Note 16 for further discussion). For the year ended December 31, 2011, the Company recognized a gain of $1.045 million on the stock held of American Community Bancorp, Inc. as a result of the acquisition. No gains or losses were recognized during the year ended December 31, 2010.

The carrying value of securities pledged to secure repurchase agreements, public and trust deposits, and for other purposes as required by law was $70,718 and $96,718 as of December 31, 2011 and 2010, respectively.

Below is a summary of securities with unrealized losses as of year-end 2011 and 2010, presented by length of time the securities have been in a continuous unrealized loss position:

At December 31, 2011:	Less than 12 Months					12 Months or More				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Loss			Value		Loss		Value		Loss

U.S. Treasury and Agency Securities	$	—	$	—		$	—	$	—	$	—	$	—
Corporate Securities		—		—			—		—		—		—
Obligations of State and Political Subdivisions		203		(2	)		—		—		203		(2	)
Mortgage-backed Securities - Residential		39,947		(90	)		—		—		39,947		(90	)
Equity Securities		—		—			—		—		—		—
Total	$	40,150	$	(92	)	$	—	$	—	$	40,150	$	(92	)

At December 31, 2010:	Less than 12 Months					12 Months or More				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Loss			Value		Loss		Value		Loss

U.S. Treasury and Agency Securities	$	—	$	—		$	—	$	—	$	—	$	—
Corporate Securities		—		—			—		—		—		—
Obligations of State and Political Subdivisions		5,175		(118	)		—		—		5,175		(118	)
Mortgage-backed Securities - Residential		70,123		(1,483	)		—		—		70,123		(1,483	)
Equity Securities		—		—			—		—		—		—
Total	$	75,298	$	(1,601	)	$	—	$	—	$	75,298	$	(1,601	)

Securities are written down to fair value when a decline in fair value is not considered temporary. In estimating other-than-temporary losses, management considers many factors, including: (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) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The Company doesn’t intend to sell or expect to be required to sell these securities, and the decline in fair value is largely due to changes in market interest rates, therefore, the Company does not consider these securities to be other-than-temporarily impaired. All mortgage-backed securities in the Company’s portfolio are guaranteed by government sponsored entities, are investment grade, and are performing as expected.

The Company’s equity securities consist of non-controlling investments in other banking organizations. When a decline in fair value below cost is deemed to be other-than-temporary, the unrealized loss must be recognized as a charge to earnings. At December 31, 2011 and 2010, none of the Company’s equity securities had an unrealized loss.

As a result of an evaluation of the Company’s equity securities portfolio as of December 31, 2011, the Company recognized a $110 pre-tax charge for an other-than-temporary decline in fair value of this portfolio. Accordingly, the other-than-temporary impairment was recognized in the consolidated statement of income and comprehensive income as part of Net Gain (Loss) on Securities during 2011. As a result of valuations of the Company’s equity securities portfolio during 2009, the Company recognized a $423 pre-tax charge for an other-than-temporary decline in fair value of this portfolio. Accordingly, the other-than-temporary impairment was recognized in the consolidated statement of income and comprehensive income as part of Net Gain (Loss) on Securities during 2009.