NOTE 3 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of the available-for-sale investment securities portfolio as of September 30, 2015 and December 31, 2014 and the corresponding amounts of unrealized gains and losses recognized in accumulated other comprehensive income (loss):

(dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
September 30, 2015
Available-for-sale:
U.S. government-sponsored entities and agencies	$	6,878	$	146	$	(10	)	$	7,014
State and political subdivisions		5,267		341		-			5,608
Mortgage-backed securities - residential		26,197		874		(34	)		27,037
Collateralized mortgage obligations		25,233		115		(200	)		25,148
Corporate bonds		2,516		52		-			2,568
Total	$	66,091	$	1,528	$	(244	)	$	67,375

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
December 31, 2014
Available-for-sale:
U.S. government-sponsored entities and agencies	$	7,019	$	161	$	(23	)	$	7,157
State and political subdivisions		6,535		525		-			7,060
Mortgage-backed securities - residential		30,454		928		(22	)		31,360
Collateralized mortgage obligations		29,306		94		(438	)		28,962
Corporate bonds		3,025		69		-			3,094
Total	$	76,339	$	1,777	$	(483	)	$	77,633

As of September 30, 2015 and December 31, 2014, the Company’s investment securities portfolio did not include any held-to-maturity securities.

The amortized cost and fair value of the investment securities portfolio are presented below in order of contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities – residential and collateralized mortgage obligations, are shown separately.

(dollars in thousands) September 30, 2015	Amortized Cost		Fair Value
Available-for-sale:
Within one year	$	503	$	509
One to five years		1,988		2,027
Five to ten years		4,253		4,330
Beyond ten years		7,917		8,324
Mortgage-backed securities – residential		26,197		27,037
Collateralized mortgage obligations		25,233		25,148
Total	$	66,091	$	67,375

The following table summarizes the investment securities with unrealized losses as of September 30, 2015 and December 31, 2014 listed by aggregated major security type and length of time in a continuous unrealized loss position:

	Less Than 12 Months					12 Months or Longer					Total
(dollars in thousands) September 30, 2015	Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Available-for-sale:
U.S. government-sponsored entities and agencies	$	595	$	(5	)	$	996	$	(5	)	$	1,591	$	(10	)
State and political subdivisions		-		-			-		-			-		-
Mortgage backed securities – residential		1,424		(22	)		1,172		(12	)		2,596		(34	)
Collateralized mortgage obligations		4,140		(17	)		6,802		(184	)		10,942		(201	)
Corporate bonds		-		-			-		-			-		-
Total available-for-sale securities	$	6,159	$	(44	)	$	8,970	$	(201	)	$	15,129	$	(245	)

	Less Than 12 Months					12 Months or Longer					Total
December 31, 2014	Fair Value		Unrealized losses			Fair Value		Unrealized losses			Fair Value		Unrealized losses
Available-for-sale:
U.S. government-sponsored entities and agencies	$	-	$	-		$	977	$	(23	)	$	977	$	(23	)
State and political subdivisions		-		-			-		-			-		-
Mortgage backed securities – residential		1,849		(1	)		1,192		(21	)		3,041		(22	)
Collateralized mortgage obligations		6,599		(40	)		11,258		(398	)		17,857		(438	)
Corporate bonds		-		-			-		-			-		-
Total available-for-sale securities	$	8,448	$	(41	)	$	13,427	$	(442	)	$	21,875	$	(483	)

As of September 30, 2015 and December 31, 2014, the Company’s security portfolio consisted of $67.4 million and $77.6 million, respectively, in available-for-sale securities, of which $15.1 million and $21.9 million were in an unrealized loss position for the related periods. The unrealized losses as of September 30, 2015 and December 31, 2014 were related to the securities types held by the Company, as discussed below.

U.S. Government-Sponsored Entities and Agency Securities:

All of the U.S. Agency securities held by the Company were issued by U.S. government-sponsored entities and agencies. As of September 30, 2015 and December 31, 2014, the number of U.S. Agency securities with unrealized losses was two and one, respectively. As of September 30, 2015 and December 31, 2014, these securities had depreciated 0.60% and 2.30%, respectively, from the Company’s amortized cost basis.

Mortgage-backed Securities – Residential:

All of the mortgage-backed securities held by the Company were issued by U.S. government-sponsored entities and agencies, primarily Ginnie Mae and Fannie Mae, institutions which have the full faith and credit of the U.S. government. As of September 30, 2015 and December 31, 2014, mortgage-backed securities with unrealized losses were two and three, respectively. As of September 30, 2015 and December 31, 2014, these securities had depreciated 1.30% and 0.71%, respectively, from the Company’s amortized cost basis.

Collateralized Mortgage Obligations:

All of the collateralized mortgage obligation securities held by the Company were issued by U.S. government-sponsored entities and agencies, primarily Ginnie Mae, an institution which has the full faith and credit of the U.S. government. As of September 30, 2015 and December 31, 2014, collateralized mortgage obligations with unrealized losses were twelve and eighteen, respectively. As of September 30, 2015 and December 31, 2014, these securities had depreciated 1.80% and 2.40%, respectively, from the Company’s amortized cost basis.

For the securities with unrealized losses at September 30, 2015 and December 31, 2014, the unrealized losses resulted from market interest rate changes, as opposed to credit losses. The Company does not intend to sell these securities, and it is likely that it will not be required to sell the securities before their anticipated recovery. The Company expects to recover the entire amortized cost basis of the securities. Having reviewed these securities for OTTI, the Company does not consider them to be other-than-temporarily impaired and no impairment loss has been recognized in the Consolidated Statements of Operations.