NOTE D - INVESTMENT SECURITIES

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

	December 31, 2014
			Gross		Gross
	Amortized		unrealized		unrealized		Fair
	cost		gains		losses		value
	(dollars in thousands)
Securities available for sale:
U.S. government agencies – GSE’s	$	28,180	$	61	$	(320)	$	27,921
Mortgage-backed securities – GSE’s		52,278		1,115		(89)		53,304
Municipal bonds		20,496		516		(2)		21,010

	$	100,954	$	1,692	$	(411)	$	102,235

As of December 31, 2014, accumulated other comprehensive gains included net unrealized gains totaling $1.3 million. Deferred tax liabilities resulting from these net unrealized gains totaled $481,000.

	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	$	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.

Securities with a carrying value of $85.1 million and $35.2 million at December 31, 2014 and 2013, 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, 2014 and 2013.

	2014
	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	$	2,926	$	(24)	$	12,731	$	(296)	$	15,657	$	(320)
Mortgage-backed securities- GSE’s		1,965		(28)		4,590		(61)		6,555		(89)
Municipal bonds		-		-		112		(2)		112		(2)
Total temporarily impaired securities	$	4,891	$	(52)	$	17,433	$	(359)	$	22,324	$	(411)

At December 31, 2014, the Company had thirteen AFS securities with an unrealized loss for twelve or more consecutive months. Eight U.S. government agency GSE’s, one municipal and four mortgage-backed GSE had unrealized losses for more than twelve months totaling $359,000 at December 31, 2014. Two U.S. government agency GSE’s and one mortgage-backed GSE bonds had unrealized losses for less than twelve months totaling $52,000 at December 31, 2014. 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. The Company incurred a $46,000 loss on one municipal security during 2014.

	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. There were no securities sold at loss in 2013.

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, 2014 and December 31, 2013. In 2014 the Company incurred a loss on the disposal of one security and did not realize any losses related to securities in 2013.

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, 2014.

	Amortized		Fair
	Cost		Value
	(dollars in thousands)
Securities available for sale:
U.S. government agencies – GSE’s
Due within one year	$	6,352	$	6,360
Due after one but within five years		6,018		6,015
Due after five but within ten years		10,032		9,837
Due after ten years		5,778		5,709
		28,180		27,921
Mortgage-backed securities – GSE’s
Due within one year		21		22
Due after one but within five years		35,114		36,049
Due after five but within ten years		17,143		17,233
Due after ten years		-		-
		52,278		53,304
Municipal bonds
Due within one year		576		579
Due after one but within five years		3,806		3,950
Due after five but within ten years		6,351		6,465
Due after ten years		9,763		10,016
		20,496		21,010
Total securities available for sale
Due within one year		6,949		6,961
Due after one but within five years		44,938		46,014
Due after five but within ten years		33,526		33,535
Due after ten years		15,541		15,725

	$	100,954	$	102,235

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.