Note 2:

Securities

The amortized cost and fair values, together with gross unrealized gains and losses of securities are as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Available-for-sale Securities:
September 30, 2015
U.S. government agencies	$	27,000	$	25	$	(2)	$	27,023
State and political subdivisions		3,587		36		––		3,623

	$	30,587	$	61	$	(2)	$	30,646

Available-for-sale Securities:
December 31, 2014:
U.S. government agencies	$	14,443	$	4	$	(67)	$	14,380
State and political subdivisions		4,841		105		––		4,946
Equity securities		4		18		––		22

	$	19,288	$	127	$	(67)	$	19,348

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
	(In thousands)
Held-to-maturity Securities:
September 30, 2015:
State and political subdivisions	$	235	$	1	$	––	$	236

December 31, 2014:
State and political subdivisions	$	450	$	1	$	––	$	451

The amortized cost and fair value of available-for-sale securities and held-to-maturity securities at September 30, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Available-for-sale				Held-to-maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value

	(In thousands)

Within one year	$	830	$	833	$	235	$	236
One to five years		28,264		28,308		—		—
Five to ten years		1,493		1,505		––		––
After ten years		—		—		––		––

Totals	$	30,587	$	30,646	$	235	$	236

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $25.9 and $19.5 million at September 30, 2015 and December 31, 2014, respectively.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. The total fair value of these investments at September 30, 2015 and December 31, 2014, was $5.0 million and $7.1 million, which represented approximately 16.18% and 35.7%, respectively, of the Company’s available-for-sale and held-to-maturity investment portfolio.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary and are a result on an general increase in longer term interest rates.

Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The following tables show the Company’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2015 and December 31, 2014:

September 30, 2015

Less than 12 Months

12 Months or More

Total

Description of

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Securities

Value

Losses

Value

Losses

Value

Losses

(In thousands)

U.S. Government agencies

4,998

(2)

—

4,998

(2)

December 31, 2014

Less than 12 Months

12 Months or More

Total

Description of

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Securities

Value

Losses

Value

Losses

Value

Losses

(In thousands)

U.S. Government agencies

1,141

(2)

5,935

(65)

7,076

(67)

The unrealized losses on the Company’s investments in U.S. Government agency were caused primarily by interest rate changes. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not likely the Company will be required or need to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2015 and December 31, 2014.

For the nine months ended September 30, 2015, proceeds from the sale of investment securities available-for-sale were $383,000, with gross realized gains of $31,000, and gross realized losses of zero. The gain is included in realized gains on sales of available-for-sale securities, net in the noninterest income section of the statement of income. There were no investment sales for the three months ended September 30, 2015.

For the three and nine month periods ended September 30, 2014, proceeds from the sale of investment securities available-for-sale were $535,000, with gross realized gains of $27,000, and gross losses of zero. The gain is included in realized gains on sales of available-for-sale securities, net in the noninterest income section of the statement of income.