Note 6 - Investment Securities

9 Months Ended

Sep. 30, 2011

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 6 – INVESTMENT SECURITIES

The amortized cost and fair values of securities, with gross unrealized gains and losses, follows:

(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2011:
Available for Sale
U.S. Treasuries	$	509	$	2	$	-	$	511
U.S. agency securities		5,248		32		-		5,280
Total	$	5,757	$	34	$	-	$	5,791
December 31, 2010:
Available for Sale
U.S. Treasuries	$	2,023	$	21	$	-	$	2,044
U.S. agency securities		3,149		32		-		3,181
Total	$	5,172	$	53	$	-	$	5,225

The amortized cost and fair value at September 30, 2011, by contractual maturity, are shown below. Maturities may differ from contractual maturities in mortgage-backed securities because the mortgages underlying the securities may be called or prepaid without penalties. Therefore, stated maturities of mortgage-backed securities are not disclosed.

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

Due within one year	$	3,912	$	3,934
Due after one year through five years		732		744
Due after five years through ten years		1,113		1,113
Due after ten years		-		-
	$	5,757	$	5,791

At September 30, 2011 and December 31, 2010 the Company held no investments with gross unrealized losses.

Management evaluates securities for other-than-temporary impairment at least 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, and (3) the intent and ability to retain and whether it is not more likely than not the Company will be required to sell its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and industry analysts’ reports.

Proceeds from the sale of securities were $3.3 million and $4.0 million for the nine months ended September 30, 2011 and 2010, respectively. Gross realized gains from investment securities were $60,000 and $57,000 for the nine months ended September 30, 2011 and 2010, respectively. There were no gross realized losses from investment securities for the nine months ended September 30, 2011 and 2010, respectively.

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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+ Details

COVENANT BANCSHARES, INC. 10-Q