INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2011

(NOTE 6) INVESTMENT SECURITIES

The following table presents investment securities available for sale at September 30, 2011 and December 31, 2010:

	September 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value
	(Dollars in thousands)
Securities Available for Sale
Mortgage Backed Securities	$	554	$	—	$	—		$	554
State/Local Agency Securities	44,328		1,938		(112		)	46,154

Total securities available for sale	$	44,882	$	1,938	$	(112	)	$	46,708

	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss			Fair Value
	(Dollars in thousands)
Securities Available for Sale
Mortgage Backed Securities	$	625	$	28	$	—		$	653
State/Local Agency Securities	43,788		60		(2,277		)	41,571
Government Agency Securities	2,000		2		—			2,002

Total securities available for sale	$	46,413	$	90	$	(2,277	)	$	44,226

In addition, the Corporation maintains a trading account, at fair value, consisting of marketable securities. At September 30, 2011 and December 31, 2010 the account value was $26,000 and $30,000, respectively.

The amortized cost and fair value of debt securities by contractual maturity date at September 30, 2011 are as follows:

	Available for Sale
	Amortized Cost		Fair Value
	(Dollars in thousands)

Due after ten years	$	44,882	$	46,708

Proceeds from calls, maturity, payments and sales of investment securities for the nine months ended September 30, 2011, and 2010 were $9,173,000, and $25,839,000, respectively. Realized gains for the nine months ended September 30, 2011, and 2010 were $256,000, and $936,000, respectively.

At September 30, 2011, mortgage-backed obligations with a carrying value of $554,000 were pledged to secure advances from the FHLB. At December 31, 2010, U.S. Government and mortgage-backed obligations with a carrying value of $2,655,000 were pledged to secure advances from the FHLB.

At September 30, 2011 and December 31, 2010, state/local agency obligations with a carrying value of $9,491,000 and $9,637,000, respectively, were pledged to secure a discount window line with the Federal Reserve Bank.

Information pertaining to securities with gross unrealized losses at September 30, 2011, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
	(Dollars in thousands)
Securities Available for sale:
State/Local Agency Securities	$	302	$	(8	)	$	2,841	$	(104	)	$	3,143	$	(112	)

Information pertaining to securities with gross unrealized losses at December 31, 2010, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Loss			Value		Loss			Value		Loss
	(Dollars in thousands)
Securities Available for Sale:
State/Local Agency Securities	$	27,238	$	(1,367	)	$	5,854	$	(910	)	$	33,092	$	(2,277	)

At a minimum, Management evaluates securities for other-than-temporary impairment on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to: (1) the length of time and the extent to which the fair value has been less than cost; (2) the financial condition and near-term prospects of the issuer; (3) the Bank’s intention not to sell the security; and (4) the lack of any need to sell the security before recovery of its cost basis.

On September 30, 2011, 6 securities had an unrealized loss with aggregate depreciation of 3.58% from the Bank’s amortized cost basis. On December 31, 2010, 75 securities had an unrealized loss with aggregate depreciation of 6.56% from the Bank’s amortized cost basis. The unrealized losses relate to securities issued by state and local government agencies. All such securities are deemed to be investment grade as determined either by Moody or Standard and Poor’s or, for unrated securities, by an independent consultant. Based on this and the factors stated in the previous paragraph, no decline is deemed to be other-than-temporary.

NORTHERN CALIFORNIA BANCORP INC 10-Q