Credit Concentrations

12 Months Ended

Dec. 31, 2012

Credit Concentrations [Abstract]

Credit Concentrations

Note 14 — Credit Concentrations

The Company's principal investments are loans and a portfolio of short- and medium-term debt of the United States Treasury, states and other political subdivisions, U.S. government agencies, corporations, mortgage-backed securities and collateralized mortgage obligations.

Loans secured by real estate comprise 76% of the loan portfolio and 37% of total assets. Commercial real estate loans present greater risk than residential mortgages. The Company has attempted to minimize the risks of these loans by considering several factors, including the creditworthiness of the borrower, location, condition, value and the business prospects for the security property. Commercial and industrial loans, unsecured or secured by collateral other than real estate, comprise 22% of the loan portfolio and 10% of total assets. These loans present significantly greater risk than other types of loans. Average credits are greater in size than consumer loans, and unsecured loans may be more difficult to collect. The Company obtains, whenever possible, both the personal guarantees of the principal(s) and cross-guarantees among the principals' business enterprises. Consumer loans, net of unearned discount, comprised 2% of the Company's loan portfolio and less than one percent of total assets. A majority are indirect dealer-generated loans secured by automobiles. Most of these loans are made to residents of the Company's primary lending area. Each loan is small in amount. Borrowers represent a cross-section of the population and are employed in a variety of industries. The risk presented by any one loan is correspondingly small, and therefore, the risk that this portion of the portfolio presents to the Company depends on the financial stability of the population as a whole, not any one entity or industry.

Municipal obligations constitute 43% of investment securities and 11% of total assets. These obligations present slightly greater risk than U.S. Treasury securities, or those secured by the U.S. government, but significantly less risk than loans because they are backed by the full faith and taxing power of the issuer, most of which are located in the state of New York. Collateralized mortgage obligations represented 22% of investment securities and 6% of total assets. These securities are backed by pools of mortgages; however, they provide more predictable cash flows because payments are assigned to specific "tranches" of securities in the order in which they are received. The Company invests in senior tranches, some of which provide for prioritized receipt of cash flows. Mortgage-backed securities represented 15% of the investment portfolio and 4% of total assets. U.S. Government agency securities represented 16% of the investment portfolio and 4% of total assets. Corporate bonds represented 4% of the investment portfolio and 1% of total assets.