Investment Securities

9 Months Ended

Sep. 30, 2013

Investment Securities

Investment Securities

Note 5 — Investment Securities

The amortized cost and estimated fair value of securities were as follows:

	September 30, 2013
	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
	(in thousands)
Investment securities available for sale:
U.S. Treasury	$	73	$	9	$	—		$	82
Municipal bonds	95,971		709		(1,795		)	94,885
Mortgage-backed securities	191,282		182		(3,585		)	187,879
Total securities available for sale	$	287,326	$	900	$	(5,380	)	$	282,846

	December 31, 2012
	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
	(in thousands)
Investment securities available for sale:
U.S. Treasury	$	147	$	12	$	—		$	159
Municipal bonds	25,401		1,186		(1		)	26,586
Mortgage-backed securities	56,641		1,162		(482		)	57,321
Total securities available for sale	$	82,189	$	2,360	$	(483	)	$	84,066

	September 30, 2012
	Amortized Cost		Unrealized Gain		Unrealized Loss			Estimated Fair Value
	(in thousands)
Investment securities available for sale:
U.S. Treasury	$	147	$	13	$	—		$	160
Municipal bonds	55,445		1,667		(15		)	57,097
Mortgage-backed securities	56,351		1,121		(479		)	56,993
Total securities available for sale	$	111,943	$	2,801	$	(494	)	$	114,250

At September 30, 2013, the Company had a $7.5 million investment in FHLB stock carried at cost.  During the nine months of 2013, the FHLB has repurchased $3.0 million of the Company’s excess FHLB stock through its stock repurchase program.

At September 30, 2013, mortgage-backed securities (“MBS”) with an estimated par value of $34.9 million and a fair value of $36.0 million were pledged as collateral for the Bank’s three reverse repurchase agreements which totaled $28.5 million.

The table below shows the number, fair value and gross unrealized holding losses of the Company’s investment securities by investment category and length of time that the securities have been in a continuous loss position.

	September 30, 2013
	Less than 12 months						12 months or Longer						Total
				Gross						Gross						Gross
				Unrealized						Unrealized						Unrealized
		Fair		Holding				Fair		Holding				Fair		Holding
	Number	Value		Losses			Number	Value		Losses			Number	Value		Losses
	(dollars in thousands)
Municipal bonds	131	$	60,183	$	(1,795	)	—	$	—	$	—		131	$	60,183	$	(1,795	)
Mortgage-backed securities	39	136,513		(2,725		)	1	13,117		(860		)	40	149,630		(3,585		)
Total	170	$	196,696	$	(4,520	)	1	$	13,117	$	(860	)	171	$	209,813	$	(5,380	)

	December 31, 2012
	Less than 12 months						12 months or Longer						Total
				Gross						Gross						Gross
				Unrealized						Unrealized						Unrealized
		Fair		Holding				Fair		Holding				Fair		Holding
	Number	Value		Losses			Number	Value		Losses			Number	Value		Losses
	(dollars in thousands)
Municipal bonds	1	$	292	$	(1	)	—	$	—	$	—		1	$	292	$	(1	)
Mortgage-backed securities	2	15,128		(152		)	31	1,012		(330		)	33	16,140		(482		)
Total	3	$	15,420	$	(153	)	31	$	1,012	$	(330	)	34	$	16,432	$	(483	)

	September 30, 2012
	Less than 12 months						12 months or Longer						Total
				Gross						Gross						Gross
				Unrealized						Unrealized						Unrealized
		Fair		Holding				Fair		Holding				Fair		Holding
	Number	Value		Losses			Number	Value		Losses			Number	Value		Losses
	(dollars in thousands)
Municipal bonds	9	$	2,775	$	(15	)	—	$	—	$	—		9	$	2,775	$	(15	)
Mortgage-backed securities	4	9,025		(33		)	34	1,004		(446		)	38	10,029		(479		)
Total	13	$	11,800	$	(48	)	34	$	1,004	$	(446	)	47	$	12,804	$	(494	)

The amortized cost and estimated fair value of investment securities available for sale at September 30, 2013, by contractual maturity are shown in the table below.

	One Year				More than One				More than Five Years				More than
	or Less				Year to Five Years				to Ten Years				Ten Years				Total
	Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value		Cost		Value		Cost		Value		Cost		Value
	(dollars in thousands)
Investment securities available for sale:
U.S. Treasury	$	—	$	—	$	73	$	82	$	—	$	—	$	—	$	—	$	73	$	82
Municipal bonds	—		—		9,995		9,905		42,734		42,392		43,242		42,588		95,971		94,885
Mortgage-backed securities	—		—		—		—		14,153		14,038		177,129		173,841		191,282		187,879
Total investment securities available for sale	—		—		10,068		9,987		56,887		56,430		220,371		216,429		287,326		282,846

Any temporary impairment is a result of the change in market interest rates and not the underlying issuers’ ability to repay.  The Company has the intent and ability to hold these securities until the temporary impairment is eliminated.  Accordingly, the Company has not recognized the temporary impairment in earnings.

Unrealized gains and losses on investment securities available for sale are recognized in stockholders’ equity as accumulated other comprehensive income or loss.  At September 30, 2013, the Company had accumulated other comprehensive loss of $4.5 million, or $2.6 million net of tax, compared to accumulated other comprehensive income of $1.9 million, or $1.1 million net of tax, at December 31, 2012.