Securities held to maturity decreased by $109 million to $591 million at March 31, 2012 from $700 million at December 31, 2011, reflecting calls of securities exceeding new purchases. A portion of the proceeds was used to fund planned deposit outflow and a portion was being held temporarily in cash and short-term investments as denoted above. At March 31, 2012, the securities portfolio, which represented 31% of total assets and was comprised almost all of U.S. government agency debt securities, had a weighted-average yield to earliest call date of 1.36% and a weighted-average remaining contractual maturity of 4.8 years. The Bank invests primarily in U.S. government agency debt obligations to emphasize safety and liquidity. In March 2012, the Bank also began purchasing residential mortgage-backed pass through securities issued by GNMA, FNMA and FHLMC in an effort to increase the overall yield on its investment portfolio.

Loans totaled $1.15 billion at March 31, 2012, compared to $1.16 billion at December 31, 2011. The decrease reflected $45 million of payoffs and $12 million of amortization and $1.4 million of chargeoffs, partially offset by $50 million of new loans. Loans paid off during Q1-12 had a weighted-average yield of 6.31%. New loans, nearly all with fixed interest rates, had a weighted-average yield, term and loan-to-value ratio of approximately 5%, 5 years and 60%, respectively.

Nonaccrual loans and REO aggregated to $81 million, or 4.2% of total assets, at March 31, 2012, compared to $86 million, or 4.3%, at December 31, 2011. Nonaccrual loans totaled $53 million at March 31, 2012 and $57 million at December 31, 2011 and included $44 million (12 loans) and $46 million (12 loans) of TDRs that were current at each date, respectively. All the TDRs classified as nonaccrual have performed as agreed under their renegotiated terms and interest income is being recorded on a cash basis. During Q1-12, based on annual updated appraisals received on the underlying collateral properties, a portion of three of the above TDRs (or $1.4 million of aggregate principal) was charged off for financial statement purposes. The borrowers remain obligated to pay all contractual principal due on the TDRs.

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