Investment Securities

Amortized cost, carrying value, gross unrealized gains and losses, and the fair value by security type are as follows:



(Dollars in thousands)
June 30, 2016	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	$	5,519	$	39	$	—		$	5,558
Residential collateralized mortgage obligations- GSE	17,685		181		(34		)	17,832
Residential mortgage backed securities – GSE	34,912		888		(21		)	35,779
Obligations of state and political subdivisions	20,966		706		—			21,672
Trust preferred debt securities – single issuer	2,476		—		(388		)	2,088
Corporate debt securities	27,334		288		(179		)	27,443
Other debt securities	975		—		(20		)	955
	$	109,867	$	2,102	$	(642	)	$	111,327



June 30, 2016	Amortized Cost		Other-Than- Temporary Impairment Recognized In Accumulated Other Comprehensive Loss			Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

Held to maturity-
U. S. Treasury securities and obligations of U.S. Government sponsored corporations (“GSE”) and agencies	4,082		—			4,082		31		—			4,113
Residential collateralized mortgage obligations – GSE	14,254		—			14,254		509		—			14,763
Residential mortgage backed securities – GSE	45,118		—			45,118		1,750		—			46,868
Obligations of state and political subdivisions	58,485		—			58,485		2,707		(1		)	61,191
Trust preferred debt securities-pooled	656		(501		)	155		272		—			427
Other debt securities	541		—			541		—		(4		)	537
	$	123,136	$	(501	)	$	122,635	$	5,269	$	(5	)	$	127,899



December 31, 2015	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
(Dollars in thousands)
Available for sale-
U. S. Treasury securities and obligations of U.S. Government sponsored corporations ("GSE") and agencies	$	5,523	$	—	$	(42	)	$	5,481
Residential collateralized mortgage obligations- GSE	8,255		68		(36		)	8,287
Residential mortgage backed securities - GSE	32,279		541		(185		)	32,635
Obligations of state and political subdivisions	21,125		365		(54		)	21,436
Trust preferred debt securities-single issuer	2,474		—		(338		)	2,136
Corporate debt securities	20,510		65		(153		)	20,422
Other debt securities	1,053		—		(28		)	1,025
	$	91,219	$	1,039	$	(836	)	$	91,422



December 31, 2015	Amortized Cost		Other-Than- Temporary Impairment Recognized In Accumulated Other Comprehensive Loss			Carrying Value		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Held to maturity-
Residential collateralized mortgage obligations-GSE	13,630		—			13,630		404		—			14,034
Residential mortgage backed securities - GSE	47,718		—			47,718		928		(46		)	48,600
Obligations of state and political subdivisions	61,135		—			61,135		2,294		(14		)	63,415
Trust preferred debt securities - pooled	657		(501		)	156		341		—			497
Other debt securities	622		—			622		—		(11		)	611
	$	123,762	$	(501	)	$	123,261	$	3,967	$	(71	)	$	127,157

Restricted stock is included in other assets at June 30, 2016 and December 31, 2015 and totaled $6.0 million and $3.3 million, respectively, and consisted of $5.9 million of Federal Home Loan Bank of New York stock and $65,000 of Atlantic Community Bankers Bank stock at June 30, 2016 and $3.2 million of Federal Home Loan Bank of New York stock and $65,000 of Atlantic Community Bankers Bank stock at December 31, 2015.

Gross unrealized losses on available for sale and held to maturity securities and the fair value of the related securities aggregated by security category and length of time that individual securities have been in a continuous unrealized loss position at June 30, 2016 and December 31, 2015 were as follows:



June 30, 2016		Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government sponsored corporations (GSE) and agencies	—	$	—	$	—		$	—	$	—		$	—	$	—
Residential collateralized mortgage obligations –GSE	2	5,407		(34		)	—		—			5,407		(34		)
Residential mortgage backed securities-GSE	3	—		—			3,593		(21		)	3,593		(21		)
Obligations of state and political subdivisions	4	1,396		(1		)	—		—			1,396		(1		)
Trust preferred debt securities- single issuer	4	—		—			2,088		(388		)	2,088		(388		)
Corporate debt securities	5	5,178		(87		)	6,967		(92		)	12,145		(179		)
Other debt securities	3	—		—			1,468		(24		)	1,468		(24		)
Total temporarily impaired securities	21	$	11,981	$	(122	)	$	14,116	$	(525	)	$	26,097	$	(647	)



December 31, 2015		Less than 12 months					12 months or longer					Total
(Dollars in thousands)	Number of Securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. Treasury securities and obligations of U.S. Government sponsored corporations (GSE) and agencies	3	$	5,481	$	(42	)	$	—	$	—		$	5,481	$	(42	)
Residential collateralized mortgage obligations –GSE	2	5,894		(36		)	—		—			5,894		(36		)
Residential mortgage backed securities - GSE	19	20,911		(175		)	3,980		(56		)	24,891		(231		)
Obligations of state and political subdivisions	32	2,760		(19		)	6,465		(49		)	9,225		(68		)
Trust preferred debt securities- single issuer	4	—		—			2,136		(338		)	2,136		(338		)
Corporate debt securities	4	9,214		(153		)	—		—			9,214		(153		)
Other debt securities	3	586		(11		)	1,025		(28		)	1,611		(39		)
Total temporarily impaired securities	67	$	44,846	$	(436	)	$	13,606	$	(471	)	$	58,452	$	(907	)

The following table sets forth certain information regarding the amortized cost, carrying value, fair value, weighted average yields and contractual maturities of the Company’s investment portfolio as of June 30, 2016. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



(Dollars in thousands)	June 30, 2016
	Amortized Cost		Fair Value		Yield
Available for sale
Due in one year or less	$	8,817	$	8,855	2.57%
Due after one year through five years	16,106		16,239		1.75%
Due after five years through ten years	43,248		44,307		2.61%
Due after ten years	41,696		41,926		2.64%
Total	$	109,867	$	111,327	2.48%

	Carrying Value		Fair Value		Yield
Held to maturity
Due in one year or less	$	15,974	$	15,991	1.16%
Due after one year through five years	16,076		16,806		4.15%
Due after five years through ten years	27,633		29,203		3.58%
Due after ten years	62,952		65,899		3.29%
Total	$	122,635	$	127,899	3.21%

U.S. Treasury securities and obligations of U.S. Government sponsored corporations and agencies: The unrealized losses on investments in these securities were caused by increases in market interest rates. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investment. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity. Therefore, these investments are not considered other-than-temporarily impaired.

Residential collateralized mortgage obligations and residential mortgage backed securities: The unrealized losses on investments in residential collateralized mortgage obligations and mortgage backed securities were caused by increases in market interest rates. The contractual cash flows of these securities are guaranteed by the issuers, which are primarily government or government sponsored agencies. It is expected that the securities would not be settled at a price less than the amortized cost of the investment. The decline in fair value is attributable to changes in interest rates and not credit quality. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity. Therefore, these investments are not considered other-than-temporarily impaired.

Obligations of state and political subdivisions: The unrealized losses on investments in these securities were caused by increases in market interest rates. It is expected that the securities would not be settled at a price less than the amortized cost of the investment. None of the issuers have defaulted on interest payments. These investments are not considered to be other than temporarily impaired because the decline in fair value is attributable to changes in interest rates and not credit quality. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity. Therefore, these investments are not considered other-than-temporarily impaired.

Corporate debt securities: The unrealized losses on investments in corporate debt securities were caused by increases in market interest rates. None of the corporate issuers have defaulted on interest payments. The decline in fair value is attributable to changes in interest rates and not a decline in credit quality. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity. Therefore, these investments are not considered other-than-temporarily impaired.

Trust preferred debt securities – single issuer: The investments in these securities with unrealized losses are comprised of four corporate trust preferred securities issued by two large financial institutions that mature in 2027. The contractual terms of the trust preferred securities do not allow the issuer to settle the securities at a price less than the face value of the trust preferred securities, which is greater than the amortized cost of the trust preferred securities. One of the issuers continues to maintain an investment grade credit rating and neither has defaulted on interest payments. The decline in fair value is attributable to the widening of interest rate spreads and the lack of an active trading market for these securities and market concerns about the issuers’ credit quality. The Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before a market price recovery or maturity. Therefore, these investments are not considered other-than-temporarily impaired.

Trust preferred debt securities – pooled: This trust preferred debt security was issued by a two issuer pool (Preferred Term Securities XXV, Ltd. co-issued by Keefe, Bruyette and Woods, Inc. and First Tennessee (“PRETSL XXV”)) consisting primarily of trust preferred debt securities issued by financial institution holding companies. During 2009, the Company recognized an other-than-temporary impairment of $865,000, of which $364,000 was determined to be a credit loss and charged to operations and $501,000 was recognized in the other comprehensive income (loss) component of shareholders’ equity.

The primary factor used to determine the credit portion of the impairment loss recognized in the income statement for this security was the discounted present value of projected cash flow where that present value of cash flow was less than the amortized cost basis of the security. The present value of cash flow was developed using an EITF 99-20 model that considered performing collateral ratios, the level of subordination to senior tranches of the security, and credit ratings of and projected credit defaults in the underlying collateral.

On a quarterly basis, management evaluates the security to determine if any additional other-than-temporary impairment is required. As of June 30, 2016, management concluded that no additional other-than-temporary impairment had occurred.