Securities (Tables)

9 Months Ended

Sep. 30, 2014

Amortized cost and fair value of securities available for sale, with unrealized gains and losses

The amortized cost and fair value of securities available for sale, with unrealized gains and losses follows:

	September 30, 2014
	Amortized		Gross Unrealized		Gross Unrealized
(In thousands)	Cost		Gains		(Losses)			Fair Value
Obligations of U.S. Government corporations and agencies	$	44,515	$	346	$	(311	)	$	44,550
Obligations of states and political subdivisions		6,777		414		-			7,191
Corporate bonds		3,579		28		(507	)		3,100
Mutual funds		360		1		-			361
	$	55,231	$	789	$	(818	)	$	55,202

	December 31, 2013
	Amortized		Gross Unrealized		Gross Unrealized
(In thousands)	Cost		Gains		(Losses)			Fair Value
Obligations of U.S. Government corporations and agencies	$	44,193	$	287	$	(543	)	$	43,937
Obligations of states and political subdivisions		6,781		261		(7	)		7,035
Corporate bonds		3,524		-		(1,274	)		2,250
Mutual funds		354		-		(5	)		349
	$	54,852	$	548	$	(1,829	)	$	53,571

Amortized cost and fair value of securities available for sale, by contractual maturity

The amortized cost and fair value of securities available for sale, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.

	September 30, 2014
(In thousands)	Amortized Cost		Fair Value
Due in one year or less	$	238	$	240
Due after one year through five years		9,361		9,369
Due after five years through ten years		12,080		12,498
Due after ten years		33,192		32,734
Equity securities		360		361
	$	55,231	$	55,202

Securities with continuous unrealized loss position

The following table shows the Company securities with gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2014 and December 31, 2013, respectively.

(In thousands)	Less than 12 Months					12 Months or More					Total
September 30, 2014	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)

Obligations of U.S. Government, corporations and agencies	$	10,318	$	(60	)	$	14,420	$	(251	)	$	24,738	$	(311	)
Obligations of states and political subdivisions		-		-			-		-			-		-
Corporate bonds		-		-			2,988		(507	)		2,988		(507	)
Mutual funds		-		-			-		-			-		-
Total temporary impaired securities	$	10,318	$	(60	)	$	17,408	$	(758	)	$	27,726	$	(818	)
(In thousands)	Less than 12 Months					12 Months or More					Total
December 31, 2013	Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)			Fair Value		Unrealized (Losses)

Obligations of U.S. Government, corporations and agencies	$	27,557	$	(543	)	$	-	$	-		$	27,557	$	(543	)
Obligations of states and political subdivisions		1,001		(7	)		-		-			1,001		(7	)
Corporate bonds		-		-			3,524		(1,274	)		3,524		(1,274	)
Mutual funds		354		(5	)		-		-			354		(5	)
Total temporary impaired securities	$	28,912	$	(555	)	$	3,524	$	(1,274	)	$	32,436	$	(1,829	)

Pooled trust preferred securities

Additional information regarding each of the pooled trust preferred securities as of September 30, 2014 follows:

(Dollars in thousands)

Cost, net of OTTI loss		Fair Value(1)		Percent of Underlying Collateral Performing			Percent of Underlying Collateral in Deferral			Percent of Underlying Collateral in Default			Estimated incremental defaults required to break yield (2)			Cumulative Amount of OTTI Loss		Cumulative Other Comprehensive Loss (Income), net of tax benefit

$	1,629	$	1,240		78.7	%		4.7	%		16.6	%		8	%	$	329		257
	1,359		1,240		72.6	%		16.8	%		10.6	%		6	%		641		78
	591		620		79.2	%		11.1	%		9.7	%		3	%		408		(18	)
$	3,579	$	3,100													$	1,378		317

(1)

Current Moody's Ratings range from C to Caa3.

(2)

A break in yield for a given tranche investment means that defaults and/or deferrals have reached such a level that the specific tranche would not receive all of the contractual principal and interest cash flow by its maturity, resulting in not a temporary shortfall, but an actual loss. This column represents the percentage of additional defaults among the currently performing and deferred collateral that would result in OTTI loss.

The Company monitors these pooled trust preferred securities in its portfolio as to collateral, issuer defaults and deferrals, which as a general rule, indicate that additional impairment may have occurred. Due to the continued stress on banks in general, and the issuer banks in particular, as a result of overall economic conditions, the Company acknowledges that it may have to recognize additional impairment in future periods; however the extent, timing, and probability of any additional impairment cannot be reasonably estimated at this time.

The following roll forward reflects the amount related to credit losses recognized in earnings (in accordance with FASB Accounting Standards Codification ("ASC") 320-10-35-34D):

(In thousands)

Beginning balance as of December 31, 2013	$	1,433
Add: Amount related to the credit loss for which an other-than-temporary impairment was not previously recognized		-
Add: Increases to the amount related to the credit loss for which an other-than temporary impairment was previously recognized		-
Less: Realized losses for securities sold		-
Less: Securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis.		-
Less: Increases in cash flows expected to be collected that are recognized over the remaining life of the security (See FASB ASC 320-10-35-35)		(55	)
Ending balance as of September 30, 2014	$	1,378

- Definition

Tabular disclosure of available-for-sale securities which includes, but is not limited to, changes in the cost basis and fair value, fair value and gross unrealized gain (loss), fair values by type of security, contractual maturity and classification, amortized cost basis, contracts to acquire securities to be accounted for as available-for-sale, debt maturities, transfers to trading, change in net unrealized holding gain (loss) net of tax, continuous unrealized loss position fair value, aggregate losses qualitative disclosures, other than temporary impairment (OTTI) losses or other disclosures related to available for sale securities.

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- Definition

Tabular disclosure of the amount of other than temporary impairment (OTTI) related to credit losses recognized in earnings including: (a) the beginning balance of the amount related to credit losses on debt securities held by the investor at the beginning of the period for which a portion of an OTTI was recognized in other comprehensive income; (b) additions for the amount related to the credit loss for which an OTTI was not previously recognized; (c) reductions for securities sold during the period (realized); (d) reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the investor intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis; (e) additional increases to the amount related to the credit loss for which an OTTI was previously recognized when the investor does not intend to sell the security and it is not more likely than not that the investor will be required to sell the security before recovery of its amortized cost basis; (f) reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security; and (g) the ending balance of the amount related to credit losses on debt securities held by the entity at the end of the period for which a portion of an OTTI was recognized in other comprehensive income.

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