Securities

6 Months Ended

Jun. 30, 2014

Securities

Securities

Note 6 – Securities

The book values and approximate fair values of investment securities at June 30, 2014 and December 31, 2013 are summarized as follows:

	June 30, 2014									December 31, 2013
	Amortized		Fair		Unrealized					Amortized		Fair		Unrealized
($ in thousands)	Cost		Value		Gains		(Losses)			Cost		Value		Gains		(Losses)
Securities available for sale:
Government-sponsored enterprise securities	$	12,555		12,459		—		(96	)		18,432		18,245		32		(219	)
Mortgage-backed securities		106,173		104,699		436		(1,910	)		148,646		147,187		1,415		(2,874	)
Corporate bonds		1,000		790		—		(210	)		3,999		3,598		44		(445	)
Equity securities		6,105		6,130		39		(14	)		3,984		4,011		40		(13	)
Total available for sale	$	125,833		124,078		475		(2,230	)		175,061		173,041		1,531		(3,551	)
Securities held to maturity:
State and local governments	$	53,879		57,612		3,733		—			53,995		56,700		2,709		(4	)

Included in mortgage-backed securities at June 30, 2014 were collateralized mortgage obligations with an amortized cost of $145,000 and a fair value of $149,000. Included in mortgage-backed securities at December 31, 2013 were collateralized mortgage obligations with an amortized cost of $192,000 and a fair value of $200,000. All of the Company’s mortgage-backed securities, including collateralized mortgage obligations, were issued by government-sponsored corporations.

The Company owned Federal Home Loan Bank (FHLB) stock with a cost and fair value of $6,016,000 at June 30, 2014 and $3,894,000 at December 31, 2013, which is included in equity securities above and serves as part of the collateral for the Company’s line of credit with the FHLB. The investment in this stock is a requirement for membership in the FHLB system. Periodically the FHLB recalculates the Company’s required level of holdings, and the Company either buys more stock or the FHLB redeems a portion of the stock at cost.

The following table presents information regarding securities with unrealized losses at June 30, 2014:

($ in thousands)	Securities in an Unrealized Loss Position for Less than 12 Months				Securities in an Unrealized Loss Position for More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government-sponsored enterprise securities	$	6,539		16		5,920		80		12,459		96
Mortgage-backed securities		17,563		30		55,476		1,880		73,039		1,910
Corporate bonds		—		—		790		210		790		210
Equity securities		2		—		20		14		22		14
State and local governments		—		—		—		—		—		—
Total temporarily impaired securities	$	24,104		46		62,206		2,184		86,310		2,230

The following table presents information regarding securities with unrealized losses at December 31, 2013:

($ in thousands)	Securities in an Unrealized Loss Position for Less than 12 Months				Securities in an Unrealized Loss Position for More than 12 Months				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Government-sponsored enterprise securities	$	12,212		219		—		—		12,212		219
Mortgage-backed securities		64,937		1,675		17,979		1,199		82,916		2,874
Corporate bonds		—		—		555		445		555		445
Equity securities		—		—		22		13		22		13
State and local governments		992		4		—		—		992		4
Total temporarily impaired securities	$	78,141		1,898		18,556		1,657		96,697		3,555

In the above tables, all of the non-equity securities that were in an unrealized loss position at June 30, 2014 and December 31, 2013 are bonds that the Company has determined are in a loss position due to interest rate factors, the overall economic downturn in the financial sector, and the broader economy in general. The Company has evaluated the collectability of each of these bonds and has concluded that there is no other-than-temporary impairment. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost. The Company has also concluded that each of the equity securities in an unrealized loss position at June 30, 2014 and December 31, 2013 was in such a position due to temporary fluctuations in the market prices of the securities. The Company’s policy is to record an impairment charge for any of these equity securities that remains in an unrealized loss position for twelve consecutive months unless the amount is insignificant.

The aggregate carrying amount of cost-method investments was $6,016,000 and $3,894,000 at June 30, 2014 and December 31, 2013, respectively, which was the FHLB stock discussed above. The Company determined that none of its cost-method investments were impaired at either period end.

The book values and approximate fair values of investment securities at June 30, 2014, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Securities Available for Sale				Securities Held to Maturity
	Amortized		Fair		Amortized		Fair
($ in thousands)	Cost		Value		Cost		Value
Debt securities
Due within one year	$	—		—		—		—
Due after one year but within five years		12,555		12,459		8,853		9,481
Due after five years but within ten years		—		—		40,237		43,104
Due after ten years		1,000		790		4,789		5,027
Mortgage-backed securities		106,173		104,699		—		—
Total debt securities		119,728		117,948		53,879		57,612
Equity securities		6,105		6,130		—		—
Total securities	$	125,833		124,078		53,879		57,612

At June 30, 2014 and December 31, 2013 investment securities with carrying values of $63,670,000 and $79,838,000, respectively, were pledged as collateral for public deposits.

During the second quarter of 2014, the Company sold approximately $47,473,000 in securities and recorded a net gain of $786,000 related to the sale. During the six months ended June 30, 2013, the Company recorded a net gain of $7,000 related to the call of several municipal and bond securities.