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INVESTMENT SECURITIES
12 Months Ended
Dec. 31, 2012
INVESTMENT SECURITIES [Abstract]  
INVESTMENT SECURITIES
NOTE 4—INVESTMENT SECURITIES
 
The amortized cost, gross unrealized gains and losses, and fair value of the Company's investment securities, are summarized as follows:
 
 
At December 31, 2012
 
 
 
 
 
Gross
 
 
Gross
 
 
 
 
 
Amortized
 
 
unrealized
 
 
unrealized
 
 
Fair
 
 
cost
 
 
gains
 
 
losses
 
 
value
 
 
(in thousands)
 
Available for sale
 
 
 
 
 
 
 
 
 
 
 
 
State and political subdivisions
 
$
55,254
 
 
$
4,360
 
 
$
(4
)
 
$
59,610
 
Residential mortgage-backed securities isued by quasi-governmental agencies
 
 
41,265
 
 
 
1,409
 
 
 
 
 
 
42,674
 
Total investment securities available for sale
 
 
96,519
 
 
 
5,769
 
 
 
(4
)
 
 
102,284
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held to maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed securities issued by quasi-governmental agencies
 
 
1,965
 
 
 
306
 
 
 
 
 
 
2,271
 
Total investment securities
 
$
98,484
 
 
$
6,075
 
 
$
(4
)
 
$
104,555
 
 
 
 
 
 
At December 31, 2011
 
 
 
 
 
 
Gross
 
 
Gross
 
 
 
 
 
 
Amortized
 
 
unrealized
 
 
unrealized
 
 
Fair
 
 
cost
 
 
gains
 
 
losses
 
 
value
 
 
(in thousands)
 
Available for sale
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Government and federal agencies
 
$
2,995
 
 
$
35
 
 
$
 
 
$
3,030
 
State and political subdivisions
 
 
51,287
 
 
 
3,804
 
 
 
 
 
 
55,091
 
Residential mortgage-backed securities issued by quasi-governmental agencies
 
 
45,969
 
 
 
1,525
 
 
 
 
 
 
47,494
 
Residential mortgage-backed securities privately issued
 
 
8,723
 
 
 
195
 
 
 
(30
)
 
 
8,888
 
Total investment securities available for sale
 
 
108,974
 
 
 
5,559
 
 
 
(30
)
 
 
114,503
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Held to maturity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage-backed securities issued by quasi-governmental agencies
 
 
2,588
 
 
 
340
 
 
 
 
 
 
2,928
 
Total investment securities
 
$
111,562
 
 
$
5,899
 
 
$
(30
)
 
$
117,431
 
 
Gross realized gains were $112,000 and $760,000 for the years ended December 31, 2012 and 2011, respectively. These gains resulted from the sale proceeds of investment and mortgage-backed securities available for sale of $2.7 million and $10.7 million for the years ended December 31, 2012 and 2011, respectively. Gross realized losses for the year ended were $27,000, which resulted from the sale proceeds of mortgage-backed securities available for sale of $1.1 million for the year ended December 31, 2012. There were no gross losses resulting from security sales for the year ended December 31, 2011.

The amortized cost and fair value of investment securities by contractual maturity and mortgage-backed securities are shown below.
 
 
At December 31, 2012
 
 
Available for sale
 
 
Held to maturity
 
 
Amortized
 
 
Fair
 
 
Amortized
 
 
Fair
 
 
cost
 
 
value
 
 
cost
 
 
value
 
 
(in thousands)
 
Investment securities
 
 
 
 
 
 
 
 
 
 
 
 
Due in one year or less
 
$
602
 
 
$
608
 
 
$
 
 
$
 
Due after one year through five years
 
 
9,514
 
 
 
10,040
 
 
 
 
 
 
 
Due after five years through ten years
 
 
25,154
 
 
 
26,848
 
 
 
 
 
 
 
Due after ten years
 
 
19,984
 
 
 
22,114
 
 
 
 
 
 
 
 
 
55,254
 
 
 
59,610
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage-backed  securities
 
 
41,265
 
 
 
42,674
 
 
 
1,965
 
 
 
2,271
 
Total investment securities
 
$
96,519
 
 
$
102,284
 
 
$
1,965
 
 
$
2,271
 
 
Investment securities having an aggregate amortized cost of approximately $7.0 million and $7.1 million were pledged to secure public deposits at December 31, 2012 and 2011, respectively.
 
There were no securities held other than U.S. Government and agencies from a single issuer that represented more than 10% of stockholders' equity at year end.
 
The Company also holds stock in the FHLB totaling $5.4 million and $7.7 million as of December 31, 2012 and 2011, respectively. The Company is required to maintain a minimum amount of FHLB stock as determined by its borrowing levels and amount of eligible assets. At December 31, 2012 the Company was required to hold $4.1 million in FHLB stock. FHLB stock can only be repurchased by the FHLB or sold to another member, and all sales must be at par. The Company holds FHLB stock as a long term investment based on the ultimate recoverability of the par value. The Company evaluates potential impairment of its investment in FHLB stock quarterly and considers the following: 1) the magnitude and direction of the change in the net assets of the FHLB as compared to the capital stock amount and the duration of this condition, 2) the ability of the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, 3) the impact of regulatory changes on the FHLB and on its members and 4) the liquidity position of the FHLB. Redemptions of FHLB stock totaled $2.2 million and $1.7 million for the years ended December 31, 2012 and 2011, respectively. After evaluating these factors the Company has concluded that the par value of its investment in FHLB stock is recoverable and no impairment has been recorded during the year ended December 31, 2012 or 2011.

The table below indicates the length of time individual securities, both held to maturity and available for sale, have been in a continuous unrealized loss position at December 31, 2012:
 
 
 
Number
 
 
Less than
12 months
 
 
12 months
or longer
 
 
Total
 
Description of Securities
 
of
Securities
 
 
Fair 
Value
 
 
Unrealized
Loss
 
 
Fair 
Value
 
 
Unrealized
Loss
 
 
Fair  
Value
 
 
Unrealized
Loss
 
 
 
(dollars in thousands)  
 
State and political subdivisions
 
 
1
 
 
$
617
 
 
$
(4
)
 
$
 
 
$
 
 
$
617
 
 
$
(4
)
Total temporarily impaired securities
 
 
1
 
 
$
617
 
 
$
(4
)
 
$
 
 
$
 
 
$
617
 
 
$
(4
)

The table below indicates the length of time individual securities, both held to maturity and available for sale, have been in a continuous unrealized loss position at December 31, 2011:

 
 
Number
 
 
Less than
12 months
 
 
12 months
or longer
 
 
Total
 
Description of Securities
 
of
Securities
 
 
Fair 
Value
 
 
Unrealized
Loss
 
 
Fair 
Value
 
 
Unrealized
Loss
 
 
Fair 
Value
 
 
Unrealized
Loss
 
 
 
(dollars in thousands)
 
Residential mortgage-backed securities privately issued
 
 
2
 
 
$
3,442
 
 
$
(30
)
 
$
 
 
$
 
 
$
3,442
 
 
$
(30
)
Total temporarily impaired securities
 
 
2
 
 
$
3,442
 
 
$
(30
)
 
$
 
 
$
 
 
$
3,442
 
 
$
(30
)

The Company evaluates debt securities on a quarterly basis to determine whether OTTI exists. Unrealized losses primarily relate to interest rate fluctuations and not credit concerns. The Company does not intend to sell these securities and it is not more likely than not that it will be required to sell these securities. Accordingly, unrealized losses at December 31, 2012 and 2011 are not considered other-than-temporary and are therefore reflected in other comprehensive income.