UNITED STATES

SECURITIES AND EXCHANGE COMMISSION      

Washington, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________to______________________

Commission file number: 333-90273

FIDELITY D & D BANCORP, INC.

STATE OF INCORPORATION:  IRS EMPLOYER IDENTIFICATION NO:

PENNSYLVANIA                                     23-3017653

Address of principal executive offices:

BLAKELY & DRINKER ST.

DUNMORE, PENNSYLVANIA 18512

TELEPHONE:

570-342-8281

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subjected to such filing requirements for the past 90 days.  [X] YES [  ] NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] YES [  ] NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer [  ]	Accelerated filer [  ]
Non-accelerated filer   [  ]	Smaller reporting company [X]

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 

[  ] YES [X] NO

The number of outstanding shares of Common Stock of Fidelity D & D Bancorp, Inc. on July 31, 2014, the latest practicable date, was 2,419,587 shares.

FIDELITY D & D BANCORP, INC.

Form 10-Q June 30, 2014

Index

Part I.  Financial Information		Page
Item 1.	Financial Statements (unaudited):
	Consolidated Balance Sheets as of June 30, 2014 and December 31, 2013	3
	Consolidated Statements of Income for the three- and six- months ended June 30, 2014 and 2013	4
	Consolidated Statements of Comprehensive Income for the three- and six- months ended June 30, 2014 and 2013	5
	Consolidated Statements of Changes in Shareholders’ Equity for the six months ended June 30, 2014 and 2013	6
	Consolidated Statements of Cash Flows for the six months ended June 30, 2014 and 2013	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	44
Item 4.	Controls and Procedures	48
Part II.  Other Information
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	49
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	49
Item 3.	Defaults upon Senior Securities	49
Item 4.	Mine Safety Disclosures	49
Item 5.	Other Information	49
Item 6.	Exhibits	49
Signatures		51
Exhibit index		52

2

PART I – Financial Information

Item 1: Financial Statements

Fidelity D & D Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets
(Unaudited)
(dollars in thousands)	June 30, 2014		December 31, 2013
Assets:
Cash and due from banks	$	14,419	$	13,197
Interest-bearing deposits with financial institutions		20		21
Total cash and cash equivalents		14,439		13,218
Available-for-sale securities		102,699		97,246
Held-to-maturity securities (fair value of $0 in 2014, $195 in 2013)		-		177
Federal Home Loan Bank stock		2,954		2,640
Loans and leases, net (allowance for loan losses of
$9,029 in 2014; $8,928 in 2013)		486,471		469,216
Loans held-for-sale (fair value $1,664 in 2014, $937 in 2013)		1,633		917
Foreclosed assets held-for-sale		2,186		2,086
Bank premises and equipment, net		14,341		13,602
Cash surrender value of bank owned life insurance		10,569		10,402
Accrued interest receivable		2,082		2,068
Other assets		12,932		12,253
Total assets	$	650,306	$	623,825
Liabilities:
Deposits:
Interest-bearing	$	412,495	$	406,779
Non-interest-bearing		126,008		122,919
Total deposits		538,503		529,698
Accrued interest payable and other liabilities		4,005		3,425
Short-term borrowings		21,872		8,642
Long-term debt		16,000		16,000
Total liabilities		580,380		557,765
Shareholders' equity:
Preferred stock authorized5,000,000 shares with no par value; none issued		-		-
Capital stock, no par value (10,000,000 shares authorized; shares issued and outstanding;2,419,587 in 2014; and 2,391,617 in 2013)		25,947		25,302
Retained earnings		41,394		39,519
Accumulated other comprehensive income		2,585		1,239
Total shareholders' equity		69,926		66,060
Total liabilities and shareholders' equity	$	650,306	$	623,825
See notes to unaudited consolidated financial statements

3

\ 

Fidelity D & D Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)	Three months ended				Six months ended
(dollars in thousands except per share data)	June 30, 2014		June 30, 2013		June 30, 2014		June 30, 2013
Interest income:
Loans and leases:
Taxable	$	5,393	$	5,335	$	10,669	$	10,705
Nontaxable		131		121		262		220
Interest-bearing deposits with financial institutions		5		2		12		14
Investment securities:
U.S. government agency and corporations		257		137		502		316
States and political subdivisions (nontaxable)		333		299		654		589
Other securities		26		18		48		36
Total interest income		6,145		5,912		12,147		11,880
Interest expense:
Deposits		498		511		987		1,026
Securities sold under repurchase agreements		4		4		12		13
Other short-term borrowings and other		6		4		6		5
Long-term debt		213		213		423		423
Total interest expense		721		732		1,428		1,467
Net interest income		5,424		5,180		10,719		10,413
Provision for loan losses		300		600		600		1,150
Net interest income after provision for loan losses		5,124		4,580		10,119		9,263
Other income:
Service charges on deposit accounts		431		459		854		911
Interchange fees		332		307		637		580
Fees from trust fiduciary activities		172		192		336		340
Fees from financial services		153		140		292		296
Service charges on loans		307		348		424		582
Fees and other revenue		190		119		361		221
Earnings on bank-owned life insurance		84		86		167		166
Gain (loss) on sale, recovery, or disposal of:
Loans		124		390		252		894
Investment securities		94		9		301		128
Premises and equipment		(66)		1		(65)		1
Impairment losses on investment securities:
Other-than-temporary impairment on investment securities		-		-		-		(61)
Non-credit-related losses on investment securities not expected to be sold (recognized in other comprehensive income (loss))		-		-		-		61
Net impairment losses on investment securities		-		-		-		-
Total other income		1,821		2,051		3,559		4,119
Other expenses:
Salaries and employee benefits		2,488		2,422		4,964		4,896
Premises and equipment		875		805		1,792		1,660
Advertising and marketing		274		215		606		467
Professional services		321		328		639		577
FDIC assessment		79		123		178		249
Loan collection		70		168		117		363
Other real estate owned		24		61		89		184
Office supplies and postage		100		114		207		216
Automated transaction processing		154		115		305		240
Other		376		255		649		635
Total other expenses		4,761		4,606		9,546		9,487
Income before income taxes		2,184		2,025		4,132		3,895
Provision for income taxes		557		512		1,049		988
Net income	$	1,627	$	1,513	$	3,083	$	2,907
Per share data:
Net income - basic	$	0.67	$	0.64	$	1.28	$	1.24
Net income - diluted	$	0.67	$	0.64	$	1.28	$	1.24
Dividends	$	0.25	$	0.25	$	0.50	$	0.50
See notes to unaudited consolidated financial statements

4

Fidelity D & D Bancorp, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income	Three months ended				Six months ended
(Unaudited)	June 30,				June 30,
(dollars in thousands)	2014		2013		2014		2013
Net income	$	1,627	$	1,513	$	3,083	$	2,907
Other comprehensive income, before tax:
Unrealized holding gain (loss) on available-for-sale securities		1,325		(1,810)		2,340		(2,227)
Reclassification adjustment for net gains realized in income		(94)		(9)		(301)		(128)
Net unrealized gain (loss)		1,231		(1,819)		2,039		(2,355)
Tax effect		(419)		619		(693)		801
Unrealized gain (loss), net of tax		812		(1,200)		1,346		(1,554)
Non-credit-related impairment gain on investment securities not expected to be sold		-		92		-		53
Reclassification adjustment for net gains realized in income		-		-		-		-
Net non-credit-related impairment gain on investment securities		-		92		-		53
Tax effect		-		(31)		-		(18)
Non-credit-related impairment gain on investment securities, net of tax		-		61		-		35
Other comprehensive income (loss), net of tax		812		(1,139)		1,346		(1,519)
Total comprehensive income, net of tax	$	2,439	$	374	$	4,429	$	1,388
See notes to unaudited consolidated financial statements

5

Fidelity D & D Bancorp, Inc. and Subsidiary
Consolidated Statements of Changes in Shareholders' Equity
For the six months ended June 30, 2014 and 2013
(Unaudited)							Accumulated
							other
	Capital stock				Retained		comprehensive
(dollars in thousands)	Shares		Amount		earnings		income (loss)		Total
Balance, December 31, 2012		2,323,248	$	23,711	$	34,999	$	236	$	58,946
Net income						2,907				2,907
Other comprehensive loss								(1,519)		(1,519)
Issuance of common stock through Employee Stock Purchase Plan		4,256		78						78
Issuance of common stock through Dividend Reinvestment Plan		29,191		606						606
Issuance of common stock from vested restricted share grants through stock compensation plans		134
Stock-based compensation expense				59						59
Cash dividends declared						(1,174)				(1,174)
Balance, June 30, 2013		2,356,829	$	24,454	$	36,732	$	(1,283)	$	59,903
Balance, December 31, 2013		2,391,617	$	25,302	$	39,519	$	1,239	$	66,060
Net income						3,083				3,083
Other comprehensive income								1,346		1,346
Issuance of common stock through Employee Stock Purchase Plan		4,373		80						80
Issuance of common stock through Dividend Reinvestment Plan		18,347		448						448
Issuance of common stock from vested restricted share grants through stock compensation plans		5,250
Stock-based compensation expense				117						117
Cash dividends declared						(1,208)				(1,208)
Balance, June 30, 2014		2,419,587	$	25,947	$	41,394	$	2,585	$	69,926
See notes to unaudited consolidated financial statements

6

Fidelity D & D Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)	Six months ended June 30,
(dollars in thousands)	2014		2013
Cash flows from operating activities:
Net income	$	3,083	$	2,907
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, amortization and accretion		1,542		1,722
Provision for loan losses		600		1,150
Deferred income tax expense		47		406
Stock-based compensation expense		117		59
Proceeds from sale of loans held-for-sale		14,523		50,623
Originations of loans held-for-sale		(15,165)		(42,730)
Earnings on bank-owned life insurance		(167)		(166)
Net gain from sales of loans		(252)		(894)
Net gain from sales of investment securities		(301)		(111)
Net (gain) loss on sale and write-down of foreclosed assets held-for-sale		(57)		87
Net loss (gain) on disposal of equipment		66		(1)
Change in:
Accrued interest receivable		(14)		(94)
Other assets		(1,011)		(338)
Accrued interest payable and other liabilities		580		(271)
Net cash provided by operating activities		3,591		12,349
Cash flows from investing activities:
Held-to-maturity securities:
Proceeds from sales		187		-
Proceeds from maturities, calls and principal pay-downs		3		82
Available-for-sale securities:
Proceeds from sales		4,877		756
Proceeds from maturities, calls and principal pay-downs		6,319		15,838
Purchases		(14,944)		(15,374)
Increase in FHLB stock		(314)		(590)
Net increase in loans and leases		(19,949)		(32,000)
Acquisition of bank premises and equipment		(955)		(467)
Proceeds from sale of foreclosed assets held-for-sale		1,051		310
Net cash used by investing activities		(23,725)		(31,445)
Cash flows from financing activities:
Net increase in deposits		8,805		4,863
Net increase in short-term borrowings		13,230		8,143
Proceeds from employee stock purchase plan participants		80		78
Dividends paid, net of dividends reinvested		(864)		(727)
Proceeds from dividend reinvestment plan participants		104		159
Net cash provided by financing  activities		21,355		12,516
Net increase (decrease) in cash and cash equivalents		1,221		(6,580)
Cash and cash equivalents, beginning		13,218		21,846
Cash and cash equivalents, ending	$	14,439	$	15,266
See notes to unaudited consolidated financial statements

7

FIDELITY D & D BANCORP, INC.

Notesto  Consolidated Financial Statements

(Unaudited)

1.   Nature of operations and critical accounting policies

Nature of operations

Fidelity Deposit and Discount Bank (the Bank) is a commercial bank chartered in the Commonwealth of Pennsylvania and a wholly-owned subsidiary of Fidelity D & D Bancorp, Inc. (the Company or collectively, the Company).  Having commenced operations in 1903, the Bank is committed to provide superior customer service, while offering a full range of banking products and financial and trust services to both our consumer and commercial customers from our main office located in Dunmore and other branches located throughout Lackawanna and Luzerne Counties.

Principles of consolidation

The accompanying unaudited consolidated financial statements of the Company and the Bank have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and with the instructions to this Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, they do not include all of the information and footnote disclosures required by GAAP for complete financial statements.  In the opinion of management, all normal recurring adjustments necessary for a fair presentation of the financial condition and results of operations for the periods have been included.  All significant inter-company balances and transactions have been eliminated in consolidation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods.  Actual results could differ from those estimates.  For additional information and disclosures required under GAAP, refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.

Management is responsible for the fairness, integrity and objectivity of the unaudited financial statements included in this report.  Management prepared the unaudited financial statements in accordance with GAAP.  In meeting its responsibility for the financial statements, management depends on the Company's accounting systems and related internal controls.  These systems and controls are designed to provide reasonable but not absolute assurance that the financial records accurately reflect the transactions of the Company, the Company’s assets are safeguarded and that the financial statements present fairly the financial condition and results of operations of the Company.

In the opinion of management, the consolidated balance sheets as of June 30, 2014 and December 31, 2013 and the related consolidated statements of income and consolidated statements of comprehensive income for the three- and six- months ended June 30, 2014 and 2013, and consolidated statements of changes in shareholders’ equity and consolidated statements of cash flows for the six months ended June 30, 2014 and 2013 present fairly the financial condition and results of operations of the Company.  All material adjustments required for a fair presentation have been made.  These adjustments are of a normal recurring nature.  Certain reclassifications have been made to the 2013 financial statements to conform to the 2014 presentation. 

In preparing these consolidated financial statements, the Company evaluated the events and transactions that occurred after June 30, 2014 through the date these consolidated financial statements were issued.

This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2013, and the notes included therein, included within the Company’s Annual Report filed on Form 10-K.

Critical accounting policies

The presentation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect many of the reported amounts and disclosures.  Actual results could differ from these estimates.

A material estimate that is particularly susceptible to significant change relates to the determination of the allowance for loan losses.  Management believes that the allowance for loan losses at June 30, 2014 is adequate and reasonable.  Given the subjective nature of identifying and valuing loan losses, it is likely that well-informed individuals could make different assumptions and could, therefore, calculate a materially different allowance value.  While management uses available information to recognize losses on loans, changes in economic conditions may necessitate revisions in the future.  In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses.  Such agencies may require the Company to recognize adjustments to the allowance based on their judgment of information available to them at the time of their examination.

Another material estimate is the calculation of fair values of the Company’s investment securities.  Fair values of investment securities are determined by pricing provided by a third-party vendor, who is a provider of financial market data, analytics and related services to financial institutions.  Based on experience, management is aware that estimated fair values of investment securities tend to vary among valuation services.  Accordingly, when selling investment securities, price quotes may be obtained from more than one source. 

8

The majority of the Company’s investment securities are classified as available-for-sale (AFS).  AFS securities are carried at fair value on the consolidated balance sheets, with unrealized gains and losses, net of income tax, reported separately within shareholders’ equity as a component of accumulated other comprehensive income (loss) (OCI).

The fair value of residential mortgage loans, classified as held-for-sale (HFS), is obtained from the Federal National Mortgage Association (FNMA) or the Federal Home Loan Bank (FHLB).  Generally, the market to which the Company sells residential mortgages it originates for sale is restricted and price quotes from other sources are not typically obtained.  On occasion, the Company may transfer loans from the loan portfolio to loans HFS.  Under these circumstances, pricing may be obtained from other entities and the loans are transferred at the lower of cost or market value and simultaneously sold.  As of June 30, 2014 and December 31, 2013, loans classified as HFS consisted of residential mortgage loans. 

Financing of automobiles, provided to customers under lease arrangements of varying terms, are accounted for as direct finance leases.  Interest income on automobile direct finance leasing is determined using the interest method.  Generally, the interest method is used to arrive at a level effective yield over the life of the lease.

Foreclosed assets held-for-sale includes other real estate acquired through foreclosure (ORE) and may, from time-to-time, include repossessed assets such as automobiles.  ORE is carried at the lower of cost (principal balance at date of foreclosure) or fair value less estimated cost to sell.  Any write-downs at the date of foreclosure or within a reasonable period of time after foreclosure are charged to the allowance for loan losses.  Expenses incurred to maintain ORE properties, subsequent write downs to the asset’s fair value, any rental income received and gains or losses on disposal are included as components of other real estate owned expense in the consolidated statements of income.   

For purposes of the consolidated statements of cash flows, cash and cash equivalents includes cash on hand, amounts due from banks and interest-bearing deposits with financial institutions.  For the six months ended June 30, 2014 and 2013, the Company paid interest of $1.4 million and $1.5 million, respectively.   The Company was required to pay income taxes of $0.4 million and $0.9 million during the first six months of 2014 and 2013.  Transfers from loans to foreclosed assets held-for-sale amounted to $1.2 million and $1.4 million during the six months ended June 30, 2014 and 2013, respectively.  During the same respective periods, transfers from loans to loans HFS amounted to $0 and $2.7 million and from loans to bank premises and equipment amounted to $1.0 million and $0.  Expenditures for construction in process, a component of other assets in the consolidated balance sheets, are included in acquisition of bank premises and equipment.

2.  New accounting pronouncements

In January 2014, the Financial Accounting Standards Board (FASB) issued an accounting standard update (ASU 2014-04) related to; Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40) Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure.  The update applies to all creditors who obtain physical possession of residential real estate property collateralizing a consumer mortgage loan in satisfaction of a receivable.  The amendments in this update clarify when an in-substance repossession or foreclosure occurs and requires disclosure of both (1) the amount of foreclosed residential real estate property held by a creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction.  The amendments in the update are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2014.  Early adoption is permitted.  The Company is currently analyzing the impact of the updated guidance on its financial statements. 

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services.  ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP: identify the contract(s) with a customer; identify the performance obligations in the contract; determine the transaction price; allocate the transaction price to the performance obligations in the contract; recognize revenue when (or as) the entity satisfies a performance obligation.  The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures).  The Company is evaluating the impact of the adoption of ASU 2014-09 on its consolidated financial statements and has not yet determined the method by which it will adopt the standard in 2017.

3.  Accumulated other comprehensive income (loss)

The following tables illustrate the changes in accumulated other comprehensive income (loss) by component and the details about the components of accumulated other comprehensive income (loss) as of and for the periods indicated:

9

As of  and for the six months ended June 30, 2014
			Non-credit-related
	Unrealized gains		impairment losses
	on available-for-		on investment
(dollars in thousands)	sale securities		securities		Total
Beginning balance	$	1,239	$	-	$	1,239
Other comprehensive income before reclassifications		1,545		-		1,545
Amounts reclassified from accumulated other comprehensive income		(199)		-		(199)
Net current-period other comprehensive income		1,346		-		1,346
Ending balance	$	2,585	$	-	$	2,585

As of and for the three months ended June 30, 2014
			Non-credit-related
	Unrealized gains		impairment losses
	on available-for-		on investment
(dollars in thousands)	sale securities		securities		Total
Beginning balance	$	1,773	$	-	$	1,773
Other comprehensive income before reclassifications		874		-		874
Amounts reclassified from accumulated other comprehensive income		(62)		-		(62)
Net current-period other comprehensive income		812		-		812
Ending balance	$	2,585	$	-	$	2,585

As of and for the six months ended June 30, 2013
			Non-credit-related
	Unrealized gains		impairment losses
	on available-for-		on investment
(dollars in thousands)	sale securities		securities		Total
Beginning balance	$	1,905	$	(1,669)	$	236
Other comprehensive (loss) income before reclassifications		(1,469)		35		(1,434)
Amounts reclassified from accumulated other comprehensive income		(85)		-		(85)
Net current-period other comprehensive (loss) income		(1,554)		35		(1,519)
Ending balance	$	351	$	(1,634)	$	(1,283)

As of and for the three months ended June 30, 2013
			Non-credit-related
	Unrealized gains		impairment losses
	on available-for-		on investment
(dollars in thousands)	sale securities		securities		Total
Beginning balance	$	1,551	$	(1,695)	$	(144)
Other comprehensive (loss) income before reclassifications		(1,194)		61		(1,133)
Amounts reclassified from accumulated other comprehensive income		(6)		-		(6)
Net current-period other comprehensive (loss) income		(1,200)		61		(1,139)
Ending balance	$	351	$	(1,634)	$	(1,283)

In the tables above, all amounts are net of tax at 34%. Amounts in parentheses indicate debits.

10

Details about accumulated other
comprehensive income components	Amount reclassified from accumulated								Affected line item in the statement
(dollars in thousands)	other comprehensive income								where net income is presented
	Three months ended				Six months ended
	June 30,				June 30,
	2014		2013		2014		2013
Unrealized gains on AFS securities	$	94	$	9	$	301	$	128	Gain on sale, recovery, or disposal of investment securities
		(32)		(3)		(102)		(43)	Provision for income taxes
Total reclassifications for the period	$	62	$	6	$	199	$	85	Net income

4. Investment securities

The amortized cost and fair value of investment securities at June 30, 2014 and December 31, 2013 are summarized as follows:

			Gross		Gross
	Amortized		unrealized		unrealized		Fair
(dollars in thousands)	cost		gains		losses		value
June 30, 2014
Held-to-maturity securities:
MBS - GSE residential	$	-	$	-	$	-	$	-
Available-for-sale securities:
Agency - GSE	$	15,591	$	113	$	4	$	15,700
Obligations of states and political subdivisions		33,257		1,888		39		35,106
MBS - GSE residential		49,639		1,674		10		51,303