Workspace Name: Hopfed Bancorp
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Document and Entity Information
6 Months Ended
Jun. 30, 2013
Aug. 12, 2013
Document Document And Entity Information [Abstract]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Jun. 30, 2013  
Document Fiscal Year Focus 2013  
Document Fiscal Period Focus Q2  
Entity Registrant Name HOPFED BANCORP INC  
Entity Central Index Key 0001041550  
Current Fiscal Year End Date --12-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   7,524,371
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Consolidated Condensed Statements of Financial Condition (USD $)
In Thousands, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Assets    
Cash and due from banks $ 20,070 $ 31,563
Interest-earning deposits 9,633 5,613
Cash and cash equivalents 29,703 37,176
Federal Home Loan Bank stock, at cost 4,428 4,428
Securities available for sale 338,936 356,345
Loans receivable, net of allowance for loan losses of $9,399 at June 30, 2013, and $10,648 at December 31, 2012 528,282 524,985
Accrued interest receivable 4,919 5,398
Real estate and other assets owned 1,632 1,548
Bank owned life insurance 9,486 9,323
Premises and equipment, net 21,853 22,557
Deferred tax assets 3,383  
Intangible asset 195 292
Other assets 6,578 5,637
Total assets 949,395 967,689
Deposits:    
Non-interest-bearing 94,426 94,083
Interest-bearing checking 154,444 147,047
Savings and money market accounts 85,735 81,643
Time deposits 408,059 437,092
Total deposits 742,664 759,865
Federal Home Loan Bank Advances 45,768 43,741
Repurchase agreements 47,072 43,508
Subordinated debentures 10,310 10,310
Advances from borrowers for taxes and insurance 697 396
Dividends payable 177 180
Deferred tax liability   568
Accrued expenses and other liabilities 4,634 4,122
Total liabilities 851,322 862,690
Stockholders' equity:    
Preferred stock, par value $0.01 per share; authorized - 500,000 shares; 18,400 shares issued and no shares outstanding at June 30, 2013, and December 31, 2012.
Common stock, par value $.01 per share; authorized 15,000,000 shares; 7,905,955 issued and 7,503,039 outstanding at June 30, 2013, and 7,905,728 issued and 7,502,812 outstanding at December 31, 2012 79 79
Common stock warrant   556
Additional paid-in-capital 76,634 76,288
Retained earnings 43,679 41,829
Accumulated other comprehensive income, net of taxes 1,157 9,723
Total stockholders' equity 98,073 104,999
Total liabilities and stockholders' equity 949,395 967,689
Preferred Stock [Member]
   
Stockholders' equity:    
Treasury stock (18,400) (18,400)
Common Stock [Member]
   
Stockholders' equity:    
Treasury stock (5,076) (5,076)
Total stockholders' equity $ 79 $ 79
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Consolidated Condensed Statements of Financial Condition (Parenthetical) (USD $)
In Thousands, except Share data, unless otherwise specified
Jun. 30, 2013
Dec. 31, 2012
Loans receivable, allowance for loan losses $ 9,399 $ 10,648
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 500,000 500,000
Preferred stock, shares issued 18,400 18,400
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 15,000,000 15,000,000
Common stock, shares issued 7,905,955 7,905,728
Common stock, shares outstanding 7,503,039 7,502,812
Preferred Stock [Member]
   
Treasury stock, shares 18,400 18,400
Common Stock [Member]
   
Treasury stock, shares 402,916 402,916
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Consolidated Condensed Statements of Income (USD $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Interest income:        
Loans receivable $ 6,676 $ 7,413 $ 13,558 $ 15,214
Securities available for sale - taxable 1,764 2,434 3,596 4,809
Securities available for sale - nontaxable 547 547 1,132 1,122
Interest-earning deposits 7 6 13 14
Total interest income 8,994 10,400 18,299 21,159
Interest expense:        
Deposits 1,936 2,755 3,982 5,639
Advances from Federal Home Loan Bank 446 565 890 1,138
Repurchase agreements 230 237 472 485
Subordinated debentures 182 181 364 368
Total interest expense 2,794 3,738 5,708 7,630
Net interest income 6,200 6,662 12,591 13,529
Provision for loan losses 406 400 782 1,269
Net interest income after provision for loan losses 5,794 6,262 11,809 12,260
Non-interest income:        
Service charges 937 973 1,790 1,911
Merchant card income 259 212 482 408
Mortgage origination revenue 212 263 412 466
Gain on sale of securities 789 630 1,416 674
Income from bank owned life insurance 87 79 162 158
Financial services commission 347 271 644 498
Other operating income 197 211 405 441
Total non-interest income 2,828 2,639 5,311 4,556
Non-interest expenses:        
Salaries and benefits 3,714 3,561 7,562 7,068
Occupancy 882 884 1,727 1,739
Data processing 646 627 1,296 1,252
State bank tax 147 162 289 324
Intangible amortization 48 65 97 130
Professional services 549 498 942 886
Deposit insurance and examination 179 434 411 853
Advertising 308 324 641 628
Postage and communications 139 157 278 298
Supplies 93 105 229 216
Loss on disposal of equipment   2   8
Loss on real estate owned 12 72 47 219
Real estate owned expenses 32 25 108 71
Other operating expenses 375 523 771 846
Total non-interest expense 7,124 7,439 14,398 14,538
Income before income tax 1,498 1,462 2,722 2,278
Income tax expense 332 300 572 389
Net income 1,166 1,162 2,150 1,889
Less:        
Dividend on preferred shares   231   460
Accretion dividend on preferred shares   28   56
Net income available to common shareholders $ 1,166 $ 903 $ 2,150 $ 1,373
Net income available to common shareholders        
Per share, basic $ 0.16 $ 0.12 $ 0.29 $ 0.18
Per share, diluted $ 0.16 $ 0.12 $ 0.29 $ 0.18
Dividend per share $ 0.02 $ 0.02 $ 0.04 $ 0.04
Weighted average shares outstanding - basic 7,488,906 7,485,283 7,488,788 7,484,498
Weighted average shares outstanding - diluted 7,488,906 7,485,283 7,488,788 7,484,498
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Consolidated Condensed Statements of Comprehensive Income (Loss) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Statement Of Income And Comprehensive Income [Abstract]        
Net income $ 1,166 $ 1,162 $ 2,150 $ 1,889
Other comprehensive income (loss), net of tax:        
Unrealized gain (loss) on investment securities available for sale, net of tax effect of $3,405 and ($1,023) for the three month periods ended June 30, 2013, and June 30, 2012, respectively; and $4,003 and ($1,096) for the six month periods ended June 30, 2013, and June 30, 2012, respectively; (6,610) 1,985 (7,771) 2,127
Unrealized gain on derivatives, net of tax effect of ($40) and ($3) for the three month periods ended June 30, 2013, and June 30, 2012, respectively; and of ($72) and ($20) for the six month periods ending June 30, 2013, and June 30, 2012, respectively; 77 7 140 40
Reclassification adjustment for gains included in net income, net of tax effect of $268 and $214 for the three month periods ended June 30, 2013, and June 30, 2012, respectively; and $482 and $229 the six month periods ended June 30, 2013, and June 30, 2012, respectively; (521) (416) (935) (445)
Comprehensive income (loss) $ (5,888) $ 2,738 $ (6,416) $ 3,611
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Consolidated Condensed Statements of Comprehensive Income (Loss) (Parenthetical) (USD $)
In Thousands, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Jun. 30, 2013
Jun. 30, 2012
Statement Of Income And Comprehensive Income [Abstract]        
Unrealized gain (loss) on investment securities available for sale, tax effect $ 3,405 $ (1,023) $ 4,003 $ (1,096)
Unrealized gain (loss) on derivatives, tax effect (40) (3) (72) (20)
Reclassification adjustment for gains included in net income, tax effect $ 268 $ 214 $ 482 $ 229
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Consolidated Condensed Statement of Stockholders Equity (USD $)
In Thousands, except Share data
Total
USD ($)
Common Stock [Member]
USD ($)
Preferred Stock [Member]
Common Stock Warrants [Member]
USD ($)
Additional Capital Surplus [Member]
USD ($)
Retained Earnings [Member]
USD ($)
Treasury Stock Preferred [Member]
USD ($)
Treasury Stock Common [Member]
USD ($)
Accumulated Other Comprehensive Income [Member]
USD ($)
Beginning balance at Dec. 31, 2012 $ 104,999 $ 79   $ 556 $ 76,288 $ 41,829 $ (18,400) $ (5,076) $ 9,723
Beginning balance, Shares at Dec. 31, 2012   7,502,812 18,400            
Restricted stock awards, Shares   227              
Consolidated net income 2,150         2,150      
Compensation expense, restricted stock awards 47       47        
Net change in unrealized gain on securities available for sale, net of income tax benefit of $4,485 (8,706)               (8,706)
Net change in unrealized loss on derivatives, net of income taxes of $72 140               140
Repurchase of warrant (257)     (556) 299        
Cash dividend to common stockholders (300)         (300)      
Ending balance at Jun. 30, 2013 $ 98,073 $ 79     $ 76,634 $ 43,679 $ (18,400) $ (5,076) $ 1,157
Ending balance, Shares at Jun. 30, 2013   7,503,039 18,400            
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Consolidated Condensed Statement of Stockholders Equity (Parenthetical) (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Statement Of Stockholders Equity [Abstract]  
Net change in unrealized gain on securities available for sale, net of income taxes $ 4,485
Net change in unrealized loss on derivatives, net of income tax benefit $ 72
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Consolidated Condensed Statements of Cash Flows (USD $)
In Thousands, unless otherwise specified
6 Months Ended
Jun. 30, 2013
Jun. 30, 2012
Cash flows from operating activities:    
Net cash provided by operating activities $ 4,484 $ 5,980
Cash flows from investing activities    
Proceeds from sales, calls and maturities of securities available for sale 73,375 85,553
Purchase of securities available for sale (69,182) (92,013)
Net (increase) decrease in loans (4,672) 13,915
Proceeds from sale of foreclosed assets 462 1,573
Purchase of premises and equipment (74) (301)
Net cash provided by (used in) investing activities (91) 8,727
Cash flows from financing activities:    
Net increase in demand deposits 343 4,388
Net increase (decrease) in time and other deposits (17,544) (18,574)
Increase in advances from borrowers for taxes and insurance 301 394
Advances from Federal Home Loan Bank 8,000 3,000
Repayment of advances from Federal Home Loan Bank (5,973) (1,835)
Net increase (decrease) in repurchase agreements 3,564 (5,348)
Cash used to repurchase warrant (257)  
Dividend paid on preferred stock   (460)
Dividends paid on common stock (300) (299)
Net cash used in financing activities (11,866) (18,734)
Increase (decrease) in cash and cash equivalents (7,473) (4,027)
Cash and cash equivalents, beginning of period 37,176 48,760
Cash and cash equivalents, end of period 29,703 44,733
Supplemental disclosures of Cash Flow Information:    
Interest paid 2,932 3,525
Income taxes paid 495 990
Supplemental disclosures of non-cash investing and financing activities:    
Loans charged off 2,370 2,428
Foreclosures and in substance foreclosures of loans during period 593 873
Net unrealized gains (losses) on investment securities classified as available for sale (13,191) 2,548
Increase (decrease) in deferred tax asset related to unrealized gains on investments 4,485 (866)
Dividends declared and payable 150 150
Issue of unearned restricted stock $ 2 $ 74
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Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2013
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

HopFed Bancorp, Inc. (the “Company”) was formed at the direction of Heritage Bank, formerly Hopkinsville Federal Savings Bank (the “Bank”), to become the holding company of the Bank upon the conversion of the Bank from a federally chartered mutual savings bank to a federally chartered stock savings bank. The conversion was consummated on February 6, 1998.

On June 5, 2013, Heritage Bank changed its legal name to Heritage Bank USA, Inc. and became a Kentucky state chartered commercial bank regulated by the Kentucky Department of Financial Institutions and the Federal Deposit Insurance Corporation. On June 5, 2013, HopFed Bancorp, Inc, become a commercial bank holding company regulated by the Board of Governors of the Federal Reserve System (“the FED”). The Company’s primary assets are the outstanding capital stock of the converted Bank, and its sole business is that of the converted Bank. The Bank owns 100% of the stock of Fall and Fall Insurance Agency (“Fall & Fall”) of Fulton, Kentucky. Fall & Fall sells life and casualty insurance to both individuals and businesses. The majority of Fall & Fall’s customer base is within the geographic footprint of the Bank.

The Bank operates a mortgage division, Heritage Mortgage Services, in Clarksville, Tennessee with agents located in several of its markets. The Bank has a financial services division, Heritage Wealth Management, with offices in Murray, Kentucky, Kingston Springs, Tennessee and Pleasant View, Tennessee. Agents of Heritage Wealth Management travel throughout western Kentucky and middle Tennessee offering fixed and variable annuities, mutual funds and brokerage services.

The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted (“GAAP”) in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) necessary for fair representation have been included. The results of operations and other data for the six month period ended June 30, 2013, are not necessarily indicative of results that may be expected for the entire fiscal year ending December 31, 2013.

The accompanying unaudited financial statements should be read in conjunction with the Consolidated Financial Statements and the Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. The accounting policies followed by the Company are set forth in the Summary of Significant Accounting Policies in the Company’s December 31, 2012, Consolidated Financial Statements.

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Income Per Share
6 Months Ended
Jun. 30, 2013
Earnings Per Share [Abstract]  
Income Per Share
(2) INCOME PER SHARE

The following schedule reconciles the numerators and denominators of the basic and diluted income per share (“IPS”) computations for the three and six month periods ended June 30, 2013, and June 30, 2012. Diluted common shares arise from the potentially dilutive effect of the Company’s stock options and warrant outstanding.

 

     Three Month Periods Ended  
     June 30,  
     2013      2012  

Basic IPS:

     

Net income available to common stockholders

   $ 1,166,000       $ 903,000   

Average common shares outstanding

     7,488,906         7,485,283   
  

 

 

    

 

 

 

Net income per share available to common shareholders, basic

   $ 0.16       $ 0.12   
  

 

 

    

 

 

 

Diluted IPS

     

Net income available to common stockholders

   $ 1,166,000       $ 903,000   

Average common shares outstanding

     7,488,906         7,485,283   

Dilutive effect of stock options

     —           —     
  

 

 

    

 

 

 

Average diluted shares outstanding

     7,488,906         7,485,283   
  

 

 

    

 

 

 

Net income per share available to common shareholders, diluted

   $ 0.16       $ 0.12   
  

 

 

    

 

 

 

 

     Six Month Periods Ended  
     June 30,  
     2013      2012  

Basic IPS:

     

Net income available to common stockholders

   $ 2,150,000       $ 1,373,000   

Average common shares outstanding

     7,488,788         7,484,498   
  

 

 

    

 

 

 

Net income per share available to common shareholders, basic

   $ 0.29       $ 0.18   
  

 

 

    

 

 

 

Diluted IPS

     

Net income available to common stockholders

   $ 2,150,000       $ 1,373,000   

Average common shares outstanding

     7,488,788         7,484,498   

Dilutive effect of stock options

     —           —     
  

 

 

    

 

 

 

Average diluted shares outstanding

     7,488,788         7,484,498   
  

 

 

    

 

 

 

Net income per share available to common shareholders, diluted

   $ 0.29       $ 0.18   
  

 

 

    

 

 

 

 

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Stock Compensation
6 Months Ended
Jun. 30, 2013
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock Compensation
(3) STOCK COMPENSATION

The Company incurred compensation cost related to the HopFed Bancorp, Inc. 2004 Long Term Incentive Plan of $25,000 and $47,000 for the three and six month periods ended June 30, 2013, and $27,000 and $54,000 for the three and six month periods ended June 30, 2012, respectively. The Company issued 227 shares of restricted stock during the three and six month periods ended June 30, 2013, and 8,826 and 10,392 shares of restricted stock for the three and six month periods ended June 30, 2012, respectively. The table below provides a detail of the Company’s future compensation expense related to restricted stock vesting at June 30, 2013:

 

Year Ending December 31,

   Future
Expense
 

2013

   $ 31,156   

2014

     49,481   

2015

     27,062   

2016

     7,791   
  

 

 

 

Total

   $ 115,490   
  

 

 

 

The compensation committee may make additional awards of restricted stock, thereby increasing the future expense related to this plan. In addition, award vesting may be accelerated due to certain events as outlined in the restricted stock award agreement. Any acceleration of vesting will change the timing of, but not the aggregate amount of, compensation expense incurred.

At the 2013 HopFed Bancorp, Inc. Annual Shareholder Meeting, shareholders approved a management recommendation to create the HopFed Bancorp, Inc. 2013 Long Term Incentive Plan (“the 2013 Plan”). The 2013 Plan provides for up to 300,000 shares to be granted to Directors and employees of the Company and the Bank. The details of the plan are discussed in the Company’s Definitive Proxy Statement dated April 5, 2013, and SEC Form S-8 dated June 28, 2013. The 2013 Plan replaces the Company’s 2004 Long Term Incentive Plan. The Company will not issue additional awards under the 2004 Long Term Incentive Plan.

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Securities
6 Months Ended
Jun. 30, 2013
Investments Debt And Equity Securities [Abstract]  
Securities
(4) SECURITIES

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluations. 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 of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At June 30, 2013, the Company has 87 securities with unrealized losses. The carrying amount of securities and their estimated fair values at June 30, 2013, were as follows:

 

     June 30, 2013  
            Gross      Gross     Estimated  
     Amortized      Unrealized      Unrealized     Fair  
     Cost      Gains      Losses     Value  
     (Dollars in Thousands)  

Restricted:

          

FHLB stock

   $ 4,428         —           —          4,428   
  

 

 

    

 

 

    

 

 

   

 

 

 

Unrestricted:

          

U.S. government and agency securities:

          

Agency debt securities

   $ 119,837         3,007         (1,427     121,417   

Corporate bonds

     2,000         —           (16     1,984   

Taxable municipal bonds

     19,395         339         (334     19,400   

Tax free municipal bonds

     65,395         2,550         (772     67,173   

Trust preferred securities

     2,000         —           (511     1,489   

Mortgage-backed securities:

          

GNMA

     20,167         768         (117     20,818   

FNMA

     77,307         927         (1,369     76,865   

FHLMC

     3,441         88         —          3,529   

NON-AGENCY CMOs

     13,931         —           (487     13,444   

AGENCY CMOs

     12,795         189         (167     12,817   
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 336,268         7,868         (5,200     338,936   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

The carrying amount of securities and their estimated fair values at December 31, 2012, was as follows:

 

     December 31, 2012  
            Gross      Gross     Estimated  
     Amortized      Unrealized      Unrealized     Fair  
     Cost      Gains      Losses     Value  
     (Dollars in Thousands)  

Restricted:

          

FHLB stock

   $ 4,428         —           —          4,428   
  

 

 

    

 

 

    

 

 

   

 

 

 

Unrestricted:

          

U.S. government and agency securities:

          

Agency debt securities

   $ 147,659         5,202         (83     152,778   

Taxable municipal bonds

     12,535         1,209         (8     13,736   

Tax free municipal bonds

     68,331         5,756         (40     74,047   

Trust preferred securities

     2,000         —           (511     1,489   

Mortgage-backed securities:

          

GNMA

     19,172         1,244         (19     20,397   

FNMA

     64,805         2,558         (58     67,305   

FHLMC

     4,519         153         —          4,672   

SLMA CMO

     5,412         80         —          5,492   

AGENCY CMOs

     16,055         426         (52     16,429   
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 340,488         16,628         (771     356,345   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

The scheduled maturities of debt securities available for sale at June 30, 2013, were as follows:

 

            Estimated  
     Amortized      Fair  
     Cost      Value  

Due within one year

   $ 951       $ 925   

Due in one to five years

     14,375         14,586   

Due in five to ten years

     35,929         35,566   

Due after ten years

     51,913         52,526   
  

 

 

    

 

 

 
     103,168         103,603   

Amortizing agency bonds

     105,459         107,860   

Mortgage-backed securities

     127,641         127,473   
  

 

 

    

 

 

 

Total unrestricted securities available for sale

   $ 336,268       $ 338,936   
  

 

 

    

 

 

 

The scheduled maturities of debt securities available for sale at December 31, 2012, were as follows:

 

            Estimated  
     Amortized      Fair  
     Cost      Value  

Due within one year

   $ 345       $ 346   

Due in one to five years

     11,499         11,682   

Due in five to ten years

     30,007         32,316   

Due in more than ten years

     53,222         57,290   
  

 

 

    

 

 

 
     95,073         101,634   

Amortizing agency bonds

     135,452         140,416   

Mortgage-backed securities

     109,963         114,295   
  

 

 

    

 

 

 

Total unrestricted securities available for sale

   $ 340,488       $ 356,345   
  

 

 

    

 

 

 

 

The estimated fair value and unrealized loss amounts of temporarily impaired investments as of June 30, 2013, are as follows:

 

     Less than 12 months     12 months or longer     Total  
     Estimated
Fair Value
     Unrealized
Losses
    Estimated
Fair Value
     Unrealized
Losses
    Estimated
Fair Value
     Unrealized
Losses
 
     (Dollars in Thousands)  

Available for sale

               

U.S. government and agency securities:

               

Agency debt securities

   $ 30,007         (1,427     —           —          30,007         (1,427

Corporate bonds

     1,984         (16     —           —          1,984         (16

Taxable municipals

     8,451         (334     —           —          8,451         (334

Tax free municipals

     13,329         (772     —           —          13,329         (772

Trust preferred securities

     —           —          1,489         (511     1,489         (511

Mortgage-backed securities:

               

GNMA

     4,513         (93     1,005         (24     5,518         (117

FNMA

     44,606         (1,369     —           —          44,606         (1,369

FHLMC

     —           —          —           —          —           —     

NON-AGENCY CMOs

     5,304         (459     5,166         (28     10,470         (487

AGENCY CMOs

     1,878         (167     —           —          1,878         (167
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

Total Available for Sale

   $ 110,072         (4,637     7,660         (563     117,732         (5,200
  

 

 

    

 

 

   

 

 

    

 

 

   

 

 

    

 

 

 

The estimated fair value and unrealized loss amounts of temporarily impaired investments as of December 31, 2012, were as follows:

 

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