2.	Investment Securities

The portfolio of investment securities consisted of the following (in thousands):

	March 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
Obligations of state and political subdivisions	$	41,336	$	1,476	$	35	$	42,777
GSE mortgage-backed securities		101,185		3,669		66		104,788
Collateralized mortgage obligations: residential		131,373		614		820		131,167
Collateralized mortgage obligations: commercial		17,459		93		69		17,483
Collateralized debt obligation		256		1,096		-		1,352
Mutual funds		2,100		23		-		2,123
	$	293,709	$	6,971	$	990	$	299,690

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	10,339	$	-	$	112	$	10,227
Obligations of state and political subdivisions		43,079		1,555		29		44,605
GSE mortgage-backed securities		106,208		3,183		288		109,103
Collateralized mortgage obligations: residential		62,093		266		1,520		60,839
Collateralized mortgage obligations: commercial		24,462		190		107		24,545
Other asset-backed securities		24,041		321		19		24,343
Collateralized debt obligation		266		952		-		1,218
Mutual funds		2,100		4		-		2,104
	$	272,588	$	6,471	$	2,075	$	276,984

	March 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	45,343	$	621	$	56	$	45,908
GSE mortgage-backed securities		64,710		1,552		85		66,177
Collateralized mortgage obligations: residential		12,339		-		270		12,069
Collateralized mortgage obligations: commercial		15,200		108		-		15,308
	$	137,592	$	2,281	$	411	$	139,462

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	45,914	$	267	$	192	$	45,989
GSE mortgage-backed securities		67,268		1,080		164		68,184
Collateralized mortgage obligations: residential		12,709		-		479		12,230
Collateralized mortgage obligations: commercial		15,310		53		173		15,190
	$	141,201	$	1,400	$	1,008	$	141,593

With the exception of three private-label collateralized mortgage obligations (“CMOs”) with a combined balance remaining of $41,000 at March 31, 2015, all of the Company’s CMOs are government-sponsored enterprise (“GSE”) securities.

The amortized cost and fair value of debt securities at March 31, 2015 by contractual maturity are shown in the following table (in thousands) with the exception of other asset-backed securities, mortgage-backed securities, CMOs, and the collateralized debt obligation. Expected maturities may differ from contractual maturities for mortgage-backed securities and CMOs because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	6,916	$	6,998
Due after one year through five years		18,900		19,694
Due after five years through ten years		12,422		12,972
Due after ten years		3,098		3,113
Mortgage-backed securities and collateralized mortgage obligations:
Residential		232,558		235,955
Commercial		17,459		17,483
Collateralized debt obligation		256		1,352
Mutual funds		2,100		2,123
	$	293,709	$	299,690

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	595	$	600
Due after one year through five years		2,819		2,857
Due after five years through ten years		12,205		12,346
Due after ten years		29,724		30,105
Mortgage-backed securities and collateralized mortgage obligations:
Residential		77,049		78,246
Commercial		15,200		15,308
	$	137,592	$	139,462

Details concerning investment securities with unrealized losses are as follows (in thousands):

	March 31, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
Obligations of state and political subdivisions	$	3,241	$	35	$	-	$	-	$	3,241	$	35
GSE mortgage-backed securities		12,876		33		8,249		33		21,125		66
Collateralized mortgage obligations: residential		24,659		103		35,097		717		59,756		820
Collateralized mortgage obligations: commercial		-		-		3,617		69		3,617		69
	$	40,776	$	171	$	46,963	$	819	$	87,739	$	990

	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
U.S. Government sponsored enterprises	$	4,973	$	32	$	5,254	$	80	$	10,227	$	112
Obligations of state and political subdivisions		2,029		29		-		-		2,029		29
GSE mortgage-backed securities		6,668		25		21,538		263		28,206		288
Collateralized mortgage obligations: residential		9,366		53		37,997		1,467		47,363		1,520
Collateralized mortgage obligations: commercial		-		-		3,747		107		3,747		107
Other asset-backed securities		6,401		19		-		-		6,401		19
	$	29,437	$	158	$	68,536	$	1,917	$	97,973	$	2,075

	March 31, 2015
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	4,271	$	19	$	2,740	$	37	$	7,011	$	56
GSE mortgage-backed securities		-		-		7,957		85		7,957		85
Collateralized mortgage obligations: residential		-		-		12,068		270		12,068		270
	$	4,271	$	19	$	22,765	$	392	$	27,036	$	411

	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	11,761	$	35	$	13,263	$	157	$	25,024	$	192
GSE mortgage-backed securities		-		-		8,142		164		8,142		164
Collateralized mortgage obligations: residential		-		-		12,230		479		12,230		479
Collateralized mortgage obligations: commercial		7,599		173		-		-		7,599		173
	$	19,360	$	208	$	33,635	$	800	$	52,995	$	1,008

Management evaluates each quarter whether unrealized losses on securities represent impairment that is other than temporary. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities. If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management then reviews for potential other than temporary impairment based upon other qualitative factors. In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market’s perception of the issuer’s financial health and the security’s credit quality. If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined. If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.

As of March 31, 2015, 37 securities had unrealized losses totaling 1.21% of the individual securities’ amortized cost basis and 0.33% of the Company’s total amortized cost basis. Of the 37 securities, 20 had been in an unrealized loss position for over twelve months at March 31, 2015. These 20 securities had an amortized cost basis and unrealized loss of $70.9 million and $1.2 million, respectively. The unrealized losses on debt securities at March 31, 2015 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased. Management identified no impairment related to credit quality. At March 31, 2015, management had the intent and ability to hold impaired securities and no impairment was evaluated as other than temporary. As a result, no other than temporary impairment losses were recognized during the three months ended March 31, 2015.

During the three months ended March 31, 2015, the Company sold 18 securities classified as available-for-sale at a net gain of $115,000. Of the 18 securities sold, 8 were sold with gains totaling $250,000 and 10 securities were sold at a loss of $135,000. During the three months ended March 31, 2014, the Company did not sell any securities.

Securities with an aggregate carrying value of approximately $294.4 million and $279.8 million at March 31, 2015 and December 31, 2014, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.