INVESTMENT SECURITIES

Investment securities at December 31, 2013 and December 31, 2012 are summarized as follows:



	December 31, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(Amounts in thousands)
Available-for-sale securities:
Securities of U.S. government agencies due:
Within 1 year	$	1,560	$	—	$	8	$	1,552
After 1 but within 5 years	15,039		—		199		14,840
	16,599		—		207		16,392
Government sponsored agencies:
Residential mortgage-backed securities due:
Within 1 year	—		—		—		—
After 1 but within 5 years	632		42		—		674
After 5 but within 10 years	17,829		284		—		18,113
After 10 years	85,277		624		1,247		84,654
	103,738		950		1,247		103,441
Collateralized mortgage obligations due:
After 1 but within 5 years	3,139		—		7		3,132
After 5 but within 10 years	5,093		140		—		5,233
After 10 years	43,813		660		95		44,378
	52,045		800		102		52,743
Private label collateralized mortgage obligations due:
After 5 but within 10 years	143		—		1		142
After 10 years	14,530		13		194		14,349
	14,673		13		195		14,491
State and municipal securities due:
Within 1 year	910		10		—		920
After 1 but within 5 years	7,069		311		—		7,380
After 5 but within 10 years	44,590		1,064		827		44,827
After 10 years	47,422		282		2,127		45,577
	99,991		1,667		2,954		98,704
Common and preferred stocks:	1,868		1,283		—		3,151
Total available-for-sale securities	$	288,914	$	4,713	$	4,705	$	288,922



	December 31, 2012
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
	(Amounts in thousands)
Available-for-sale securities:
Securities of U.S. government agencies due:
Within 1 year	$	10,005	$	15	$	—	$	10,020
After 1 but within 5 years	17,479		29		1		17,507
	27,484		44		1		27,527
Government sponsored agencies:
Residential mortgage-backed securities due:
Within 1 year	119		2		—		121
After 1 but within 5 years	315		26		—		341
After 5 but within 10 years	10,371		341		—		10,712
After 10 years	94,319		2,089		325		96,083
	105,124		2,458		325		107,257
Collateralized mortgage obligations due:
After 1 but within 5 years	648		2		—		650
After 5 but within 10 years	9,975		206		3		10,178
After 10 years	111,155		902		292		111,765
	121,778		1,110		295		122,593
Private label collateralized mortgage obligations due:
After 5 but within 10 years	178		—		—		178
After 10 years	848		19		—		867
	1,026		19		—		1,045
State and municipal securities due:
Within 1 year	620		6		—		626
After 1 but within 5 years	5,734		321		—		6,055
After 5 but within 10 years	24,464		1,698		12		26,150
After 10 years	50,031		2,064		361		51,734
	80,849		4,089		373		84,565
Common and preferred stocks:	88		46		1		133
Total available-for-sale securities	$	336,349	$	7,766	$	995	$	343,120

Mortgage-backed securities are included in maturity groups based upon stated maturity date. At December 31, 2013, $103.4 million of the Bank's mortgage-backed securities were pass-through securities and $67.2 million were collateralized mortgage obligations. At December 31, 2012, $107.3 million of the Bank's mortgage-backed securities were pass-through securities and $123.6 million were collateralized mortgage obligations. Actual maturity will vary based on repayment of the underlying mortgage loans.

Gross realized gains on the sale of securities for the year ended December 31, 2013 was $576,169. Gross realized gains on the sale of securities for the years ended December 31, 2012 were $1.7 million. Gross realized losses on the sale of securities for the year ended December 31, 2013 was $2.9 million. There were no losses on the sale of securities available-for-sale for the years ended December 31, 2012 or 2011. Gross realized gains on sales of available-for-sale securities in 2011 were $2.8 million.

Investment securities with carrying values of approximately $107.4 million and $88.7 million at December 31, 2013 and December 31, 2012, respectively, were pledged as collateral for public deposits and for borrowing from Federal Reserve or other purposes as required or permitted by law.

If management determines that an investment has experienced an other than temporary impairment ("OTTI"), the loss is recognized in the income statement. There were no OTTI charges recorded for securities available-for-sale for the year ended December 31, 2013. The Company's investment in a financial institution classified as available-for-sale was considered to be OTTI and approximately $50,000 was charged off in 2012. Management believed that the market prices of these equity securities would not recover in the immediate future due to the economic environment at such time. All OTTI losses were deemed to be credit related losses. There were no OTTI charges recorded for securities available-for-sale for the year ended December 31, 2011.

The following table presents the gross unrealized losses and fair value of investment securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2013 and December 31, 2012. Securities that have been in a loss position for twelve months or more at December 31, 2013 include one U.S. government agency, one collateralized mortgage obligation, one private label collateralized mortgage obligation and nine state and municipal securities. The key factors considered in evaluating the collateralized mortgage obligations, private label collateralized mortgage obligations, and municipal securities were cash flows of the investment and the assessment of other relative economic factors. Securities that have been in a loss position for twelve months or more at December 31, 2012 include three collateralized mortgage obligations, one private label collateralized mortgage obligation and two other securities. The unrealized losses relate to securities that have incurred fair value reductions due to a shift in demand from non-governmental securities and municipals to U.S. Treasury bonds and governmental agencies due to credit market concerns. The unrealized losses are not likely to reverse until market interest rates decline to the levels that existed when the securities were purchased. None of the unrealized losses relate to the marketability of the securities or the issuer's ability to honor redemption obligations. It is not more likely than not that the Company will have to sell the investments before recovery of their amortized cost bases.



	Less Than 12 Months				12 Months or More				Total
December 31, 2013	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(Amounts in thousands)
Securities available-for-sale:
U.S. government agencies	$	14,840	$	199	$	1,552	$	8	$	16,392	$	207
Government sponsored agencies:
Residential mortgage-backed securities	49,954		1,247		—		—		49,954		1,247
Collateralized mortgage obligations	11,372		64		2,121		38		13,493		102
Private label collateralized mortgage obligations	9,941		194		142		1		10,083		195
State and municipal securities	31,218		1,950		14,280		1,004		45,498		2,954
Common and preferred stocks	—		—		—		—		—		—
Total temporarily impaired securities	$	117,325	$	3,654	$	18,095	$	1,051	$	135,420	$	4,705



	Less Than 12 Months				12 Months or More				Total
December 31, 2012	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(Amounts in thousands)
Securities available-for-sale:
U.S. government agencies	$	2,429	$	1	$	—	$	—	$	2,429	$	1
Government sponsored agencies:
Residential mortgage-backed securities	12,021		325		$	—	—		12,021		325
Collateralized mortgage obligation	27,417		127		7,626		168		35,043		295
Private label collateralized mortgage obligations	—		—		178		—		178		—
State and municipal securities	22,899		373		—		—		22,899		373
Common and preferred stocks, and other	—		—		60		1		60		1
Total temporarily impaired securities	$	64,766	$	826	$	7,864	$	169	$	72,630	$	995