Investment Securities

Investment securities at March 31, 2014 and December 31, 2013 consisted of the following (dollars in thousands):



	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
March 31, 2014
Available-for-sale
U.S. Agency mortgage-backed securities (MBS) *	$	167,104	$	3,212	$	(3,022	)	$	167,294
Non-agency MBS	12,921		47		(381		)	12,587
U.S. Agency asset-backed securities	8,544		863		(45		)	9,362
Mutual fund	505		4		—			509
	$	189,074	$	4,126	$	(3,448	)	$	189,752
Held-to-maturity
Tax credit investments	$	614	$	—	$	—		$	614
Obligations of state and political subdivisions	706		16		—			722
	$	1,320	$	16	$	—		$	1,336

December 31, 2013
Available-for-sale
U.S. Agency MBS *	$	171,853	$	3,125	$	(3,646	)	$	171,332
Non-agency MBS	13,500		11		(414		)	13,097
U.S. Agency asset-backed securities	8,683		887		(21		)	9,549
Mutual fund	502		1		—			503
	$	194,538	$	4,024	$	(4,081	)	$	194,481
Held-to-maturity
Tax credit investments	$	614	$	—	$	—		$	614
Obligations of state and political subdivisions	706		22		—			728
	$	1,320	$	22	$	—		$	1,342

* U.S. Agency MBS include private label MBS of approximately $10.9 million and $11.3 million at March 31, 2014 and December 31, 2013, respectively, which are supported by FHA/VA collateral.

The following table presents the contractual maturities of investment securities at March 31, 2014 (dollars in thousands):



	Available-for-sale				Held-to-maturity
	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
Due in one year or less	$	—	$	—	$	510	$	516
Due after one year through five years	62		64		196		206
Due after five years through ten years	47,731		45,294		—		—
Due after ten years	140,776		143,885		—		—
Mutual fund	505		509		—		—
Tax credit investments	—		—		614		614
	$	189,074	$	189,752	$	1,320	$	1,336

The following table presents the fair value and gross unrealized losses of the Bank’s 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 (dollars in thousands):



	Less than 12 months					12 months or more					Total
	Estimated fair value		Unrealized losses			Estimated fair value		Unrealized losses			Estimated fair value		Unrealized losses
March 31, 2014
U.S. Agency MBS	$	36,691	$	(780	)	$	31,300	$	(2,242	)	$	67,991	$	(3,022	)
Non-Agency MBS	9,710		(381		)	6		—			9,716		(381		)
U.S. Agency asset-backed securities	770		(1		)	1,691		(44		)	2,461		(45		)
	$	47,171	$	(1,162	)	$	32,997	$	(2,286	)	$	80,168	$	(3,448	)

December 31, 2013
U.S. Agency MBS	$	35,440	$	(810	)	$	30,779	$	(2,836	)	$	66,219	$	(3,646	)
Non-Agency MBS	9,569		(412		)	179		(2		)	9,748		(414		)
U.S. Agency asset-backed securities	703		(4		)	1,775		(17		)	2,478		(21		)
	$	45,712	$	(1,226	)	$	32,733	$	(2,855	)	$	78,445	$	(4,081	)

The unrealized losses on investments in U.S. Agency and non-agency MBS and U.S Agency asset-backed securities are primarily due to changes in market yield/rate spreads at March 31, 2014 and December 31, 2013 as compared to yield/rate spread relationships prevailing at the time specific investment securities were purchased. Management expects the fair value of these investment securities to recover as securities approach their maturity dates. Management does not believe that the above gross unrealized losses on investment securities are other-than-temporary. Accordingly, no impairment adjustments have been recorded.

Management intends to hold the investment securities classified as held-to-maturity until they mature, at which time the Company will receive full amortized cost value for such investment securities. Furthermore, as of March 31, 2014, management did not have the intent to sell any of the securities classified as available-for-sale in the table above and believes that it is more likely than not that the Company will not have to sell any such securities before a recovery of cost.