– INVESTMENTS

The amortized cost and aggregate fair values of investments in securities are as follows:



March 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale securities:
Corporate debt securities	$	26,509	$	1,585	$	184	$	27,910
Trust preferred securities	537		—		9		528
Mortgage backed securities	6,539		243		44		6,738
Private label mortgage backed securities	9,018		184		31		9,171
Obligations of states and political subdivisions	16,815		984		22		17,777
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	11,487		433		50		11,870
Total fixed maturities	70,905		3,429		340		73,994
Equity securities	4,931		4,582		542		8,971
Total	$	75,836	$	8,011	$	882	$	82,965
Held-to-maturity securities:
Mortgage backed securities	$	1,831	$	118	$	—	$	1,949
Private label mortgage backed securities	47		1		—		48
Obligations of states and political subdivisions	815		32		—		847
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	213		18		—		231
Total	$	2,906	$	169	$	—	$	3,075



December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale securities:
Corporate debt securities	$	19,907	$	1,340	$	267	$	20,980
Trust preferred securities	537		—		58		479
Mortgage backed securities	7,587		307		23		7,871
Private label mortgage backed securities	9,716		199		62		9,853
Obligations of states and political subdivisions	18,355		1,142		15		19,482
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	13,878		534		3		14,409
Total fixed maturities	69,980		3,522		428		73,074
Equity securities	4,931		4,206		590		8,547
Total	$	74,911	$	7,728	$	1,018	$	81,621
Held-to-maturity securities:
Mortgage backed securities	$	2,026	$	125	$	—	$	2,151
Private label mortgage backed securities	55		1		—		56
Obligations of states and political subdivisions	996		50		—		1,046
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	226		18		—		244
Total	$	3,303	$	194	$	—	$	3,497

The amortized cost and aggregate fair value of debt securities at March 31, 2012, by contractual maturity, are as follows. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	(Dollars in Thousands)
	Amortized Cost		Fair Value
Available-for-sale securities:
Due in one year or less	$	927	$	950
Due after one year through five years	13,127		13,953
Due after five years through ten years	21,857		23,232
Due after ten years	34,994		35,859

Total	$	70,905	$	73,994
Held-to-maturity securities:
Due in one year or less	$	300	$	301
Due after one year through five years	516		547
Due after five years through ten years	578		619
Due after ten years	1,512		1,608

Total	$	2,906	$	3,075

A summary of securities available-for-sale with unrealized losses as of March 31, 2012 and December 31, 2011 along with the related fair value, aggregated by the length of time that investments have been in a continuous unrealized loss position, is as follows:



	Less than 12 months				12 months or longer				Total
March 31, 2012	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Securities in a Loss Position
Fixed maturities
Corporate debt securities	$	8,027	$	127	$	1,743	$	57	$	9,770	$	184	22
Trust preferred securities	—		—		528		9		528		9		1
Mortgage backed securities	1,415		44		—		—		1,415		44		4
Private label mortgage backed securities	1,026		1		1,267		30		2,293		31		6
Obligations of state and political subdivisions	90		15		917		7		1,007		22		4
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	2,569		50		—		—		2,569		50		6
Equity securities	91		8		948		534		1,039		542		5
	$	13,218	$	245	$	5,403	$	637	$	18,621	$	882	48



	Less than 12 months				12 months or longer				Total
December 31, 2011	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Total Securities in a Loss Position
Fixed maturities
Corporate debt securities	$	4,703	$	166	$	899	$	101	$	5,602	$	267	15
Trust preferred securities	479		58		—		—		479		58		1
Mortgage backed securities	883		21		198		2		1,081		23		3
Private label mortgage backed securities	1,860		15		1,094		47		2,954		62		9
Obligations of state and political subdivisions	—		—		1,803		15		1,803		15		5
U.S. Treasury securities and obligations of U.S. Government corporations and agencies	260		3		—		—		260		3		1
Equity securities	391		49		802		541		1,193		590		6
	$	8,576	$	312	$	4,796	$	706	$	13,372	$	1,018	40

There were no securities held-to-maturity with unrealized losses as of March 31, 2012 and December 31, 2011.

The Company conducts periodic reviews to identify and evaluate securities in an unrealized loss position in order to identify other-than-temporary-impairments. For securities in an unrealized loss position, the Company assesses whether the Company has the intent to sell the security or more likely than not will be required to sell the security before the anticipated recovery. If either of these conditions is met, the Company is required to recognize an other-than-temporary impairment with the entire unrealized loss reported in earnings. For securities in an unrealized loss position that do not meet these conditions, the Company assesses whether the impairment of a security is other-than-temporary. If the impairment is determined to be other-than-temporary, the Company is required to separate the other-than-temporary impairments into two components: the amount representing the credit loss and the amount related to all other factors. The credit loss is the portion of the amortized book value in excess of the net present value of the projected future cash flows discounted at the effective interest rate implicit in the debt security prior to impairment. The credit loss component of other-than-temporary impairments is reported in earnings, whereas the amount relating to factors other than credit losses are recorded in other comprehensive income, net of taxes.

Management has evaluated each security in a significant unrealized loss position. The Company has no material exposure to sub-prime mortgage loans and less than 4% of the fixed income investment portfolio is rated below investment grade. In evaluating whether or not the equity loss positions were other-than-temporary impairments, Management evaluated financial information on each company and where available reviewed analyst reports from at least two independent sources. Based on a review of the available financial information, the prospect for future earnings of each company and consideration of the Company’s intent and ability to hold the securities until market values recovered, it was determined that the securities in an accumulated loss position in the portfolio were temporary impairments.

For the quarter ended March 31, 2012, the Company realized no additional other-than-temporary impairments. The single largest accumulated loss was in the equity portfolio and totaled $499,000. The second largest loss position was in the bond portfolio and totaled $33,000. The third largest loss position was in the equity portfolio and totaled $31,000.

For the year ended December 31, 2011, the Company realized $398,000 in other-than-temporary impairments. The single largest accumulated loss was in the equity portfolio and totaled $501,000. The second largest loss position was in the bond portfolio and totaled $70,000. The third largest loss position was in the bond portfolio and totaled $58,000.

An analysis of the net change in unrealized appreciation on available-for-sale securities follows:



	(Dollars in thousands)
	Quarter Ended March 31, 2012			Year Ended December 31, 2011
	(unaudited)
Net change in unrealized appreciation on available-for-sale securities before deferred tax	$	419		$	1,792
Deferred income tax	(142		)	(534		)
Net change in unrealized appreciation on available-for-sale securities	$	277		$	1,258