The amortized cost and fair value of securities available for sale as of December 31, 2011 and 2010 (in thousands) are as follows:

	2011
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
Obligations of U.S. Government
sponsored agencies	$	34 475	$	357	$	(9	)	$	34 823
State and municipal obligations		6 450		265		- -			6 715
Equity securities		1 099		- -		(306	)		793
	$	42 024	$	622	$	(315	)	$	42 331

	2010
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		(Losses)			Value
Obligations of U.S. Government
sponsored agencies	$	36 207	$	241	$	(160	)	$	36 288
State and municipal obligations		5 537		71		(84	)		5 524
Equity securities		1 100		- -		(222	)		878
	$	42 844	$	312	$	(466	)	$	42 690

The amortized cost and fair value of the securities available for sale as of December 31, 2011 (in thousands), by contractual maturity, are shown below. The equity securities have no stated maturities.

	Amortized		Fair
	Cost		Value
Due in one year or less	$	3 333	$	3 361
Due after one year through five years		32 095		32 457
Due after five years		5 497		5 720
Equity securities		1 099		793
	$	42 024	$	42 331

There were no sales of securities during 2011 or 2010. The gross realized gain from the sale of one security was $42 thousand as of December 31, 2009.

The primary purpose of the investment portfolio is to generate income and meet liquidity needs of the company through readily saleable financial instruments. The portfolio is made up of fixed rate bonds, whose prices move inversely with rates. At the end of any accounting period, the investment portfolio has unrealized gains and losses. The company monitors the portfolio, which is subject to liquidity needs, market rate changes and credit risk changes, to see if adjustments are needed. The primary concern in a loss situation is the credit quality of the business behind the instrument. The primary cause of impairments is the decline in the prices of the bonds as rates have risen. There are four debt securities accounts in the consolidated portfolio that have losses at December 31, 2011. The primary cause of the temporary impairments in the company’s investments in debt securities was fluctuations in interest rates. Because the company intends to hold these investments in debt securities to maturity and it is more likely than not that the company will not be required to sell these investments before a recovery of unrealized losses, the company does not consider these investments to be other-than-temporarily impaired at December 31, 2011 and no impairment has been recognized.

There are three equity securities accounts in the company’s portfolio with losses at December 31, 2011. The company considers these investments to be temporarily impaired at December 31, 2011 and is recognizing no impairment. These are community bank stock related holdings that the company has the ability and intent to hold until a recovery of fair value.

US Government sponsored agencies include the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation debt securities with a fair value of $25.3 million as of December 31, 2011 and $11.7 million as of December 31, 2010.

The following table summarizes the fair value and gross unrealized losses for securities aggregated by investment category and length of time that individual securities have been in a continuous gross unrealized loss position as of December 31, 2011 and 2010 (in thousands).

	December 31, 2011
	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
Obligations of U.S. Government
sponsored agencies	$	5 023	$	(9	)	$	- -	$	- -		$	5 023	$	(9	)
Equity securities		- -		- -			793		(306	)		793		(306	)
	$	5 023	$	(9	)	$	793	$	(306	)	$	5 816	$	(315	)

	December 31, 2010
	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
Obligations of U.S. Government
sponsored agencies	$	9 899	$	(147	)	$	1 108	$	(13	)	$	11 007	$	(160	)
State and municipal obligations		1 912		(84	)		- -		- -			1 912		(84	)
Equity securities		878		(222	)		- -		- -			878		(222	)
	$	12 689	$	(453	)	$	1 108	$	(13	)	$	13 797	$	(466	)

The company’s investment in Federal Home Loan Bank (FHLB) stock totaled $808 thousand at December 31, 2011. FHLB stock is generally viewed as a long-term investment and as a restricted investment security, which is carried at cost, because there is no market for the stock, other than the FHLBs or member institutions. Therefore, when evaluating FHLB stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Despite the FHLB’s limited repurchase of excess capital stock in 2011, the company does not consider this investment to be other-than-temporarily impaired at December 31, 2011 and no impairment has been recognized. FHLB stock is shown as a separate line item on the consolidated balance sheet and is not a part of the available for sale securities portfolio.

Securities with a carrying value of $12.8 million and $24 million at December 31, 2011 and 2010, respectively were pledged to secure public funds, securities sold under agreement to repurchase, other borrowings, and for other purposes as required or permitted by law.