Investment Securities

Investment securities at March 31, 2014 and December 31, 2013 are summarized as follows:



	March 31, 2014
	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	$	1,464	$	—	$	5	$	1,459
After 1 but within 5 years	15,036		—		171		14,865
	16,500		—		176		16,324
Government sponsored agencies:
Residential mortgage-backed securities due:
After 1 but within 5 years	566		37		—		603
After 5 but within 10 years	20,445		328		41		20,732
After 10 years	82,367		640		1,157		81,850
	103,378		1,005		1,198		103,185
Collateralized mortgage obligations due:
After 1 but within 5 years	2,860		—		6		2,854
After 5 but within 10 years	4,917		143		—		5,060
After 10 years	40,194		647		15		40,826
	47,971		790		21		48,740
Private label collateralized mortgage obligations due:
After 5 but within 10 years	132		10		—		142
After 10 years	13,561		14		123		13,452
	13,693		24		123		13,594
State and municipal securities due:
Within 1 year	910		4		—		914
After 1 but within 5 years	8,966		352		4		9,314
After 5 but within 10 years	36,501		850		549		36,802
After 10 years	36,054		229		1,135		35,148
	82,431		1,435		1,688		82,178
Common and preferred stocks:	1,869		1,203		—		3,072
Total available-for-sale securities	$	265,842	$	4,457	$	3,206	$	267,093



	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:
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

Mortgage-backed securities are included in maturity groups based upon stated maturity date. At March 31, 2014, $103.2 million of the Bank's mortgage-backed securities were pass-through securities and $62.3 million were collateralized mortgage obligations. 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. Actual maturity will vary based on repayment of the underlying mortgage loans.

Gross realized gains on the sale of securities for the three months ended March 31, 2014 were $1.1 million. There were no gross losses on the sale for the three months ended March 31, 2014. There were $4,000 in gross gains for the three months ended March 31, 2013. There were no gross losses on the sale of available-for-sale securities for the three months ended March 31, 2013.

Investment securities with carrying values of approximately $103.2 million and $107.4 million at March 31, 2014 and December 31, 2013, respectively, were pledged as collateral for public deposits and for other purposes as required or permitted by law.

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 March 31, 2014 and December 31, 2013. Securities that have been in a loss position for twelve months or more at March 31, 2014 include one U.S. government agency, two mortgage-backed securities, one private label collateralized mortgage obligation, and 13 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, such as credit risk. 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 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 market concerns. The unrealized losses are not likely to reverse unless 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. For the three months ended March 31, 2014, there were no securities available-for-sale deemed to be other than temporarily impaired (“OTTI”).

If management determines that an investment has experienced an other than temporary impairment, the loss is recognized in the income statement.



	Less Than 12 Months				12 Months or More				Total
March 31, 2014	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(Amounts in thousands)
Securities available-for-sale:
U.S. government agencies	$	14,865	$	171	$	1,459	$	5	$	16,324	$	176
Government sponsored agencies:
Residential mortgage-backed securities	36,232		789		7,964		409		44,196		1,198
Collateralized mortgage obligations	7,054		21		—		—		7,054		21
Private label collateralized mortgage obligations	5,851		21		3,521		102		9,372		123
State and municipal securities	21,613		737		19,526		951		41,139		1,688
Common and preferred stocks	—		—		—		—		—		—
Total temporarily impaired securities	$	85,615	$	1,739	$	32,470	$	1,467	$	118,085	$	3,206



	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 obligation	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, and other	—		—		—		—		—		—
Total temporarily impaired securities	$	117,325	$	3,654	$	18,095	$	1,051	$	135,420	$	4,705