NOTE C - INVESTMENT SECURITIES

The amortized cost and fair value of available for sale investments (“AFS”), with gross unrealized gains and losses, follow:

	December 31, 2013
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	cost		gains		losses		value
	(dollars in thousands)
Securities available for sale:
U.S. government agencies – GSE’s (“Government Sponsored Entities”)	$	35,240	$	53	$	(628)	$	34,665
Mortgage-backed securities – GSE’s		40,801		666		(402)		41,065
Municipal bonds		7,968		281		(143)		8,106

	$	84,009	$	1,000	$	(1,173)	$	83,836

As of December 31, 2013, accumulated other comprehensive loss included net unrealized losses totaling $173,000, Deferred tax assets resulting from these unrealized losses totaled $65,000.

	December 31, 2012
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	cost		gains		losses		value
	(dollars in thousands)
Securities available for sale:
U.S. government agencies – GSE’s (“Government Sponsored Entities”)	$	36,951	$	248	$	(45)	$	37,154
Mortgage-backed securities – GSE’s		34,794		1,189		(29)		35,954
Municipal bonds		7,970		414		(1)		8,383

	$	79,715	$	1,851	$	(75)	$	81,491

As of December 31, 2012, accumulated other comprehensive income included net unrealized gains of $1.8 million, Deferred tax liabilities resulting from these unrealized gains totaled $699,000.

Securities with a carrying value of $35.2 million and $39.5 million at December 31, 2013 and 2012, respectively, were pledged to secure public monies on deposit as required by law, customer repurchase agreements, and access to the Federal Reserve Discount Window.

The following tables show gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position as of December 31, 2013 and 2012.

	2013
	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
	(dollars in thousands)
Securities available for sale:
U.S. government agencies – GSE’s	$	11,908	$	(239)	$	3,611	$	(389)	$	15,519	$	(628)
Mortgage-backed securities- GSE’s		21,762		(312)		1,777		(90)		23,539		(402)
Municipal bonds		2,719		(143)		-		-		2,719		(143)
Total temporarily impaired securities	$	36,389	$	(694)	$	5,388	$	(479)	$	41,777	$	(1,173)

At December 31, 2013, the Company had three AFS securities with an unrealized loss for twelve or more consecutive months. Two U.S. government agency GSE’s and one mortgage-backed GSE had unrealized losses for more than twelve months totaling $479,000 at December 31, 2013. Eight U.S. government agency GSE’s, nineteen mortgage-backed GSE’s, and three municipal bonds had unrealized losses for less than twelve months totaling $694,000 at December 31, 2013. All unrealized losses are attributable to the general trend of interest rates and the abnormal spreads of all debt instruments to U.S. Treasury securities.

	2012
	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
	(dollars in thousands)
Securities available for sale:
U.S. government agencies – GSE’s	$	5,959	$	45	$	-	$	-	$	5,959	$	45
Mortgage-backed securities- GSE’s		10,286		29		-		-		10,286		29
Municipal bonds		677		1		-		-		677		1
Total temporarily impaired securities	$	16,922	$	75	$	-	$	-	$	16,922	$	75

At December 31, 2012, the Company had no AFS securities with an unrealized loss for twelve or more consecutive months. Ten U.S. government agency GSE’s and one municipal bond had unrealized losses for less than twelve months totaling $75,000 at December 31, 2012. All unrealized losses are attributable to the general trend of interest rates and the abnormal spreads of all debt instruments to U.S. Treasury securities.

Since none of the unrealized losses relate to the liquidity of the securities or the issuer’s ability to honor redemption obligations and the Company has the intent and ability to hold these securities to recovery, no other than temporary impairments were identified for these investments having unrealized losses for the periods ended December 31, 2013 and December 31, 2012.

The following table sets forth certain information regarding the amortized costs, carrying values and contractual maturities of the Company’s investment portfolio at December 31, 2013.

	Amortized		Fair
	Cost		Value
	(dollars in thousands)
Securities available for sale:
U.S. government agencies – GSE’s
Due within one year	$	10,520	$	10,545
Due after one but within five years		8,820		8,827
Due after five but within ten years		7,376		6,827
Due after ten years		8,524		8,466
		35,240		34,665
Mortgage-backed securities – GSE’s
Due within one year		133		140
Due after one but within five years		35,352		35,856
Due after five but within ten years		5,316		5,069
Due after ten years		-		-
		40,801		41,065
Municipal bonds
Due within one year		100		101
Due after one but within five years		3,036		3,232
Due after five but within ten years		3,306		3,224
Due after ten years		1,526		1,549
		7,968		8,106
Total securities available for sale
Due within one year		10,753		10,786
Due after one but within five years		47,208		47,915
Due after five but within ten years		15,998		15,120
Due after ten years		10,050		10,015

	$	84,009	$	83,836

For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on the weighted-average contractual maturities of underlying collateral. The mortgage-backed securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.