1-1/2 cups peanut butter morsels, divided
2 cups cake flour
1 teaspoon baking soda
1/2 teaspoon baking powder
1/4 teaspoon salt
1/2 cup butter, softened
1-1/4 cups sugar
2 eggs
1 teaspoon vanilla extract
1-1/2 cups milk
Peanut Butter Cream Frosting (recipe follows)
3/4 cup coconut, toasted

Preheat oven to 350. Melt over hot (not boiling) water: 1/2 cup peanut butter morsels; stir until smooth. Set aside. In small bowl, combine flour, baking soda, baking powder and salt. Set aside. In large bowl, combine butter and sugar; beat until creamy. Blend in melted morsels. Beat in eggs and vanilla extract. Alternately blend in flour and milk. Pour into 2 greased and floured 8 inch round cake pans. Bake until golden brown, about 35-40 minutes. Cool 10 minutes. Remove from pans. Cool cake completely. Fill layers and frost side and top of cake with peanut cream frosting. Garnish with coconut, if desired.

Peanut Butter Cream Frosting:
1 cup peanut butter morsels
1 8-oz. package cream cheese, softened
1 teaspoon vanilla extract
1/8 teaspoon salt
3 cups sifted 10X sugar
2 tablespoons milk

Melt peanut butter morsels over hot (not boiling) water. Stir until smooth. In large bowl, combine melted morsels, cream cheese, vanilla and salt. Beat well. Beat in sugar alternately with milk until mixture is of spreading consistency.