2. Investment Securities

The portfolio of investment securities consisted of the following (in thousands):

	March 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	84,283	$	461	$	-	$	84,744
Obligations of state and political subdivisions		86,955		5,383		-		92,338
GSE mortgage-backed securities		112,653		4,468		67		117,054
Asset-backed securities		4,436		-		56		4,380
Collateralized mortgage obligations: residential		42,267		526		12		42,781
Collateralized mortgage obligations: commercial		24,077		636		-		24,713
	$	354,671	$	11,474	$	135	$	366,010

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	94,339	$	662	$	2	$	94,999
Obligations of state and political subdivisions		90,284		5,865		-		96,149
GSE mortgage-backed securities		105,409		4,078		-		109,487
Collateralized mortgage obligations: residential		40,855		618		5		41,468
Collateralized mortgage obligations: commercial		24,609		529		-		25,138
	$	355,496	$	11,752	$	7	$	367,241

	March 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	340	$	1	$	-	$	341
GSE mortgage-backed securities		78,902		1,018		-		79,920
Collateralized mortgage obligations: commercial		17,575		197		-		17,772
	$	96,817	$	1,216	$	-	$	98,033

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	340	$	2	$	-	$	342
GSE mortgage-backed securities		82,497		550		-		83,047
Collateralized mortgage obligations: commercial		17,635		107		-		17,742
	$	100,472	$	659	$	-	$	101,131

With the exception of 3 private-label collateralized mortgage obligations ("CMOs") with a combined balance remaining of $126,000 at March 31, 2012, all of the Company's CMOs are government-sponsored enterprise ("GSE") securities.

The amortized cost and fair value of debt securities at March 31, 2012 by contractual maturity are shown in the following table (in thousands) with the exception of mortgage-backed securities and CMOs. Expected maturities may differ from contractual maturities for mortgage-backed securities and CMOs because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	81,221	$	81,800
Due after one year through five years		56,245		58,820
Due after five years through ten years		29,002		31,444
Due after ten years		4,770		5,018
Asset-backed securities		4,436		4,380
Mortgage-backed securities and collateralized mortgage obligations:
Residential		154,920		159,835
Commercial		24,077		24,713
	$	354,671	$	366,010

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	140	$	140
Due after one year through five years		200		201
Mortgage-backed securities and collateralized mortgage obligations:
Residential		78,902		79,920
Commercial		17,575		17,772
	$	96,817	$	98,033

Details concerning investment securities with unrealized losses are as follows (in thousands):

	March 31, 2012
	Securities with losses under 12 months				Securities with losses over 12 months				Total
Available-for-sale:	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
GSE mortgage-backed securities	$	10,206	$	67	$	-	$	-	$	10,206	$	67
Asset-backed securities		4,380		56		-		-		4,380		56
Collateralized mortgage obligations: residential		12,262		8		126		4		12,388		12
	$	26,848	$	131	$	126	$	4	$	26,974	$	135

	December 31, 2011
	Securities with losses under 12 months				Securities with losses over 12 months				Total
Available-for-sale:	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
U.S. Government sponsored enterprises	$	6,204	$	2	$	-	$	-	$	6,204	$	2
Collateralized mortgage obligations: residential		1,849		1		136		4		1,985		5
	$	8,053	$	3	$	136	$	4	$	8,189	$	7

Management evaluates each quarter whether unrealized losses on securities represent impairment that is other than temporary. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities. If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management then reviews for potential other than temporary impairment based upon other qualitative factors. In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market's perception of the issuer's financial health and the security's credit quality. If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined. If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.

The unrealized losses on debt securities at March 31, 2012 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased. Of the 59 GSE mortgage-backed securities classified as available-for-sale, 2 contained unrealized losses at March 31, 2012. Of the 22 residential collateralized mortgage obligations classified as available-for-sale, 5 contained unrealized losses at March 31, 2012. The only asset-backed security held by the Company at March 31, 2012 contained an unrealized loss. Management identified no impairment related to credit quality. At March 31, 2012, management had the intent and ability to hold impaired securities and no impairment was evaluated as other than temporary. As a result, no other than temporary impairment losses were recognized during the three months ended March 31, 2012.

During the three months ended March 31, 2012, the Company did not sell any securities. During the three months ended March 31, 2011, the Company sold three securities classified as available for sale. Two securities were sold with gains totaling $45,000 and one security was sold at a loss of $4,000 for a net gain of $41,000, calculated using the specific identification method. The securities were sold as a result of a review performed on our municipal securities portfolio.

Securities with an aggregate carrying value of approximately $152.4 million and $154.1 million at March 31, 2012 and December 31, 2011, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.