pab bankshares, inc. - SNL Financial

Investment Portfolio
The book value of investment securities at the indicated dates are presented below. Changes in the mix of our investment
portfolio will vary over time in response to changes in market conditions and liquidity needs of the Bank. During 2009,
we reduced our exposure to mortgage-backed securities and we also reduced state and municipal securities due to a
decrease in our ability to realize the tax benefits which they were originally purchased to provide. Overall, in 2009 we
elected to shrink the size of our investment portfolio for liquidity purposes.
As of December 31, 2009 2008 2007
$ Amount % to Total $ Amount % to Total $ Amount % to Total
(Dollars in Thousands)
U. S. Government agency securities $ 30,468 25.2% $ 35,303 19.0% $ 70,235 36.1%
State and municipal securities 9,721 8.0% 30,361 16.3% 32,332 16.6%
Mortgage-backed securities 67,523 55.8% 103,413 55.7% 77,201 39.6%
Corporate debt securities 3,829 3.2% 6,965 3.8% 6,507 3.3%
Equity securities 9,460 7.8% 9,731 5.2% 8,519 4.4%
Total investments $ 121,001 100.0% $ 185,773 100.0% $ 194,794 100.0%
Total investments as a percentage of total assets 9.8% 13.8% 16.3%
At December 31, 2009, the estimated fair market value of our investment portfolio was approximately $695,000, or 0.6%,
above our amortized cost; however, market values may fluctuate significantly as interest rates change.
Our investment portfolio policy stresses quality and liquidity. The bonds which are purchased as investments carry an “A”
rating or better by either Standard and Poor’s or Moody’s Investors Service, Inc. or have been reviewed for credit and
market risk and deemed appropriate for the Bank’s portfolio by management. The portfolio is monitored to assure there is
no unreasonable concentration of securities in the obligations of a single issuer. We do not carry any “sub-prime”
mortgages, structured investment vehicles, or collateralized debt obligations in our portfolio. We also monitor the insurers
of our state and municipal securities, and the distribution of such securities among the insurers. At December 31, 2009,
four different carriers, with no one carrier insuring more than 25% of the total, insured our state and municipal securities.
The table below shows the distribution by insurer of our state and municipal securities as of December 31, 2009.
As of December 31, 2009 $ Amount % to Total
(Dollars in Thousands)
CIFG Assurance North America $ 774 8.0%
MBIA Corporation 614 6.3%
Financial Security Assurance Inc. 737 7.6%
Assured Guaranty Corporation 2,408 24.8%
Uninsured 5,188 53.3%
Total state and municipal securities $ 9,721 100.00%
The following table shows the maturities of non-equity investment securities at December 31, 2009 and the weightedaverage
yields (on a fully taxable basis assuming a 34% tax rate) on such securities. The maturities presented for
mortgage-backed securities are based on the average lives of those bonds at the then projected prepayment speeds. Actual
maturities usually differ from contractual maturities because certain security issuers have the right to call or prepay
obligations with or without call or prepayment penalties. Of the investments in U.S. Government agency securities
maturing after one year, approximately $17.1 million, or 56%, are potentially callable at par value within one year.
U.S. Government State and Municipal Mortgage-Backed Corporate Debt
Agency Securities Securities Securities Securities
As of December 31, 2009 Amount Yield Amount Yield Amount Yield Amount Yield
(Dollars in Thousands)
Due in one year or less $ - - $ - - $ - - $ - -
Due after one year through five years - - - - - - 857 6.75%
Due after five years through ten years 15,357 4.42% 493 3.86% 776 4.52% - -
Due after ten years 15,111 4.48% 9,228 4.11% 66,747 4.27% 2,972 4.86%
Total $ 30,468 4.45% $ 9,721 4.10% $ 67,523 4.27% $ 3,829 5.28%
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