Note 2. Securities

Amortized costs and fair values of securities held-to-maturity as of the dates indicated are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2014
Obligations of U.S. Government agencies	$	400	$	0	$	(3	)	$	397
Obligations of state and political subdivisions		29,826		326		(78	)		30,074
Mortgage-backed securities		63,764		2,856		0			66,620
Total	$	93,990	$	3,182	$	(81	)	$	97,091

December 31, 2013
Obligations of U.S. Government agencies	$	400	$	1	$	(5	)	$	396
Obligations of state and political subdivisions		30,120		29		(715	)		29,434
Mortgage-backed securities		66,327		1,296		0			67,623
Total	$	96,847	$	1,326	$	(720	)	$	97,453

Amortized costs and fair values of securities available-for-sale as of the dates indicated are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(in thousands)
June 30, 2014
Obligations of U.S. Government agencies	$	14,956	$	260	$	(285	)	$	14,931
Obligations of state and political subdivisions		50,601		291		(1,397	)		49,495
Mortgage-backed securities		78,249		3		(1,627	)		76,625
Money market investments		614		0		0			614
Corporate bonds		2,298		4		(11	)		2,291
Other marketable equity securities		100		0		(16	)		84
Total	$	146,818	$	558	$	(3,336	)	$	144,040

December 31, 2013
Obligations of U.S. Government agencies	$	15,189	$	263	$	(428	)	$	15,024
Obligations of state and political subdivisions		51,032		86		(4,018	)		47,100
Mortgage-backed securities		94,685		0		(3,935	)		90,750
Money market investments		691		0		0			691
Corporate bonds		2,098		1		(25	)		2,074
Total	$	163,695	$	350	$	(8,406	)	$	155,639

OTHER-THAN-TEMPORARILY IMPAIRED SECURITIES

Management assesses whether the Company intends to sell or it is more-likely-than-not that the Company will be required to sell a security before recovery of its amortized cost basis less any current-period credit losses. For debt securities that are considered other-than-temporarily impaired and that the Company does not intend to sell and will not be required to sell prior to recovery of the amortized cost basis, the Company separates the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is the difference between the security's amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security's fair value and the present value of expected future cash flows is due to factors that are not credit related, which are recognized in other comprehensive income.

The present value of expected future cash flows is determined using the best-estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best-estimate cash flows vary depending on the type of security. The asset-backed securities cash flow estimates are based on bond specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds, and structural support, including subordination and guarantees.

The Company has a process in place to identify debt securities that could potentially have a credit or interest-rate related impairment that is other-than-temporary. This process involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts, and cash flow projections as indicators of credit issues. On a quarterly basis, management reviews all securities to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. Management considers relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other-than-temporary. Relevant facts and circumstances considered include: (a) the extent and length of time the fair value has been below cost; (b) the reasons for the decline in value; (c) the financial position and access to capital of the issuer, including the current and future impact of any specific events; and (d) for fixed maturity securities, the Company's intent to sell a security or whether it is more-likely-than-not the Company will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity, and for equity securities, the Company's ability and intent to hold the security for a period of time that allows for the recovery in value.

The Company has not recorded impairment charges through income on securities for the three or six months ended June 30, 2014 or the year ended December 31, 2013.

TEMPORARILY IMPAIRED SECURITIES

The following table shows the number of securities with unrealized losses, and the gross unrealized losses and fair value of the Company's investments with unrealized losses that are deemed to be temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of the dates indicated.

	June 30, 2014
	Less Than Twelve Months				More Than Twelve Months				Total
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Number of Securities
	(dollars in thousands)
Securities Available-for-Sale
Debt securities:
Obligations of U.S. Government agencies	$	0	$	0	$	285	$	4,320	$	285	$	4,320		1
Obligations of state and political subdivisions		29		4,983		1,368		27,004		1,397		31,987		55
Mortgage-backed securities		0		0		1,627		63,446		1,627		63,446		8
Corporate bonds		2		398		9		791		11		1,189		10
Total debt securities		31		5,381		3,289		95,561		3,320		100,942		74
Other marketable equity securities		16		84		0		0		16		84		1
Total securities available-for-sale	$	47	$	5,465	$	3,289	$	95,561	$	3,336	$	101,026		75

Securities Held-to-Maturity
Obligations of U.S. Government agencies	$	0	$	0	$	3	$	97	$	3	$	97		1
Obligations of state and political subdivisions		14		3,625		64		3,213		78		6,838		14
Total securities held-to-maturity	$	14	$	3,625	$	67	$	3,310	$	81	$	6,935		15

Total securities	$	61	$	9,090	$	3,356	$	98,871	$	3,417	$	107,961		90

	December 31, 2013
	Less Than Twelve Months				More Than Twelve Months				Total
	Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Number of Securities
	(dollars in thousands)
Securities Available-for-Sale
Debt securities:
Obligations of U.S. Government agencies	$	0	$	0	$	428	$	4,403	$	428	$	4,403		1
Obligations of state and political subdivisions		3,246		36,235		772		6,450		4,018		42,685		82
Mortgage-backed securities		3,321		81,664		614		9,086		3,935		90,750		12
Corporate bonds		19		1,279		6		295		25		1,574		12
Total securities available-for-sale	$	6,586	$	119,178	$	1,820	$	20,234	$	8,406	$	139,412		107

Securities Held-to-Maturity
Obligations of U.S. Government agencies	$	0	$	0	$	5	$	95	$	5	$	95		1
Obligations of state and political subdivisions		715		23,765		0		0		715		23,765		50
Total securities held-to-maturity	$	715	$	23,765	$	5	$	95	$	720	$	23,860		51

Total securities	$	7,301	$	142,943	$	1,825	$	20,329	$	9,126	$	163,272		158

Certain investments within the Company's portfolio had unrealized losses at June 30, 2014 and December 31, 2013, as shown in the tables above. The unrealized losses were caused by increases in market interest rates. Because the Company does not intend to sell the investments and management believes it is unlikely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider the investments to be other-than-temporarily impaired at June 30, 2014 or December 31, 2013.

Restricted Securities

The restricted security category is comprised of stock in the Federal Home Loan Bank of Atlanta (FHLB) and the Federal Reserve Bank (FRB). These stocks are classified as restricted securities because their ownership is restricted to certain types of entities and the securities lack a market. Therefore, FHLB and FRB stock is carried at cost and evaluated for impairment. When evaluating these stocks for impairment, their value is determined based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Restricted stock is viewed as a long-term investment and management believes that the Company has the ability and the intent to hold this stock until its value is recovered.