Investment Securities

9 Months Ended

Sep. 30, 2012

Investment Securities [Abstract]

Investment Securities

4. Investment Securities

The following is a summary of the Company's investment portfolio as of September 30, 2012:

(In 000’s)
	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
Available-for-sale:
Government Sponsored Enterprises residential mortgage-backed securities	$	903	$	56	$	-		$	959
Investments in money market funds		129		-		-			129
	$	1,032	$	56		-		$	1,088
Held-to-maturity:
U.S. government agencies	$	3,355	$	171	$	-		$	3,526
Government Sponsored Enterprises residential mortgage-backed securities		9,044		505		(1	)		9,548
	$	12,399	$	676	$	(1	)	$	13,074

The following is a summary of the Company's investment portfolio as of December 31, 2011:

(In 000’s)
	Amortized Cost		Gross unrealized gains		Gross unrealized losses			Fair Value
Available-for-sale:
Government Sponsored Enterprises residential mortgage-backed securities	$	1,094	$	58	$	-		$	1,152
Investments in money market funds		129		-		-			129
	$	1,223	$	58	$	-		$	1,281
Held-to-maturity:
U.S. government agencies	$	7,531	$	158	$	-		$	7,689
Government Sponsored Enterprises residential mortgage-backed securities		9,678		373		(2	)		10,049
	$	17,209	$	531	$	(2	)	$	17,738

The amortized cost and fair value of debt securities classified as available-for-sale and held-to-maturity, by contractual maturity, as of September 30, 2012, are as follows:

(In 000’s)	Amortized Cost		Fair Value
Available-for-Sale
Due in one year	$	-		$	-
Due after one year through five years		-			-
Due after five years through ten years		-			-
Government Sponsored Enterprises residential mortgage-backed securities		903			959
Total debt securities	$	903		$	959
Investments in money market funds	$	129		$	129
	$	1,032		$	1,088
Held-to-maturity
Due in one year	$	-			-
Due after one year through five years		250			270
Due after five years through ten years		3,105			3,256
Government Sponsored Enterprises residential mortgage-backed securities		9,044			9,548
	$	12,399		$	13,074

Expected maturities will differ from contractual maturities because the issuers of certain debt securities have the right to call or prepay their obligations without any penalties.

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at September 30, 2012:

(in 000’s)	Less Than 12 Months							12 Months or Greater						Total
Description of Securities	Fair Value			Unrealized Losses				Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Held-to-maturity:
Government Sponsored Enterprises residential mortgage-backed securities		$	255		$	(1	)		$	-		$	-		$	255		$	(1	)
Total		$	255		$	(1	)		$	-		$	-		$	255		$	(1	)

The table below indicates the length of time individual securities have been in a continuous unrealized loss position at December 31, 2011:

(in 000’s)	Less Than 12 Months							12 Months or Greater						Total
Description of Securities	Fair Value			Unrealized Losses				Fair Value			Unrealized Losses			Fair Value			Unrealized Losses
Held-to-maturity:
Government Sponsored Enterprises residential mortgage-backed securities		$	1,018		$	(2	)		$	-		$	-		$	1,018		$	(2	)
Total		$	1,018		$	(2	)		$	-		$	-		$	1,018		$	(2	)

Government Sponsored Enterprises residential mortgage-backed securities. Unrealized losses on the Company’s investment in federal agency mortgage-backed securities were caused by interest rate increases. The Company purchased those investments at a discount relative to their face amount, and the contractual cash flows of those investments are guaranteed by an agency of the U.S. government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company’s investments. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired.

The Company has a process in place to identify debt securities that could potentially have a credit impairment that is other than temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues. On a quarterly basis, the Company reviews all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. The Company considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events and (4) for fixed maturity securities, the intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and for equity securities, the Company’s ability and intent to hold the security for a period of time that allows for the recovery in value.