NOTE 5. SECURITIES

The amortized cost, gross unrealized gains and losses and estimated fair values of available for sale securities at December 31, 2011 and September 30, 2011 are presented below.

December 31, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	40,286	$	8	$	(6,700	)	$	33,594
Obligations of states and political subdivisions		8,438		396		-			8,834
Mortgage-backed securities		751,366		19,177		(165	)		770,378
Total debt securities	$	800,090	$	19,581	$	(6,865	)	$	812,806

September 30, 2011	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	30,582	$	-	$	(8,470	)	$	22,112
Obligations of states and political subdivisions		5,937		281		-			6,218
Mortgage-backed securities		572,467		18,591		(140	)		590,918
Total debt securities	$	608,986	$	18,872	$	(8,610	)	$	619,248

Included in securities available for sale are trust preferred securities as follows:

At December 31, 2011
Issuer(1)	Book Value		Fair Value		Unrealized (Loss)			S&P Credit Rating	Moody Credit Rating
	(Dollars in Thousands)

Key Corp. Capital I	$	4,983	$	3,702	$	(1,281	)	BBB-	Baa3
Huntington Capital Trust II SE		4,973		3,791		(1,182	)	BB+	Baa3
Bank Boston Capital Trust IV (2)		4,965		3,610		(1,355	)	BB+	Ba1
Bank America Capital III		4,954		3,612		(1,342	)	BB+	Ba1
PNC Capital Trust		4,955		3,683		(1,272	)	BBB	Baa2
Total	$	24,830	$	18,398	$	(6,432	)

(1) Trust preferred securities are single-issuance. There are no known deferrals, defaults or excess subordination.

(2) Bank Boston was acquired by Bank of America.

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at December 31, 2011 and September 30, 2011, are as follows:

	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2011	Value		(Losses)			Value		(Losses)			Value		(Losses)
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	8,563	$	(269	)	$	18,398	$	(6,431	)	$	26,961	$	(6,700	)
Obligations of states and political subdivisions		-		-			-		-			-		-
Mortgage-backed securities		82,931		(165	)		-		-			82,931		(165	)
Total debt securities	$	91,494	$	(434	)	$	18,398	$	(6,431	)	$	109,892	$	(6,865	)

	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
September 30, 2011	Value		(Losses)			Value		(Losses)			Value		(Losses)
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	5,713	$	(42	)	$	16,399	$	(8,428	)	$	22,112	$	(8,470	)
Obligations of states and political subdivisions		-		-			-		-			-		-
Mortgage-backed securities		23,886		(140	)		-		-			23,886		(140	)
Total debt securities	$	29,599	$	(182	)	$	16,399	$	(8,428	)	$	45,998	$	(8,610	)

Management has implemented a process to identify securities that could potentially have a credit impairment that is other-than-temporary. This process involves evaluating the length of time and extent to which the fair value has been less than the amortized cost basis, reviewing available information regarding the financial position of the issuer, monitoring the rating of the security and projecting cash flows. Other factors, but not necessarily all, considered are: that the risk of loss is minimized and easier to determine due to the single-issuer, rather than pooled, nature of the individual securities, the financial condition of issuer, and whether there have been any payment deferrals or defaults to-date. Such factors are subject to change over time.

Management also determines if it is more likely than not we will be required to sell the security before the recovery of its amortized cost basis which, in some cases, may extend to maturity. To the extent we determine that a security is deemed to be other-than-temporarily impaired, an impairment loss is recognized in earnings.

For all securities that are considered temporarily impaired, the Company does not intend to sell these securities (has not made a decision to sell) and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may occur at maturity. The Company believes that it will collect all principal and interest due on all investments that have amortized cost in excess of fair value that are considered only temporarily impaired.

At December 31, 2011, the investment portfolio included securities with current unrealized losses which have existed for longer than one year. All of these securities are considered to be acceptable credit risks. Because the declines in fair value were due to changes in market interest rates, not in estimated cash flows, no other-than-temporary impairment was recorded at December 31, 2011. In addition, the Company has the intent and ability to hold these investment securities for a period of time sufficient to allow for an anticipated recovery.