NOTE 3: Securities

Debt and equity securities, all of which are classified as available for sale are summarized as follows:


	March 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	20,710	$	5	$	(175)	$	20,540
Mortgage-backed securities		67,173		1,362		(52)		68,483
Obligations of states and political subdivisions		124,968		6,979		(136)		131,811
	$	212,851	$	8,346	$	(363)	$	220,834


	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized		Estimated
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	23,409	$	1	$	(476)	$	22,934
Mortgage-backed securities		66,716		935		(32)		67,619
Obligations of states and political subdivisions		124,312		7,158		(126)		131,344
	$	214,437	$	8,094	$	(634)	$	221,897

The amortized cost and estimated fair value of securities at March 31, 2015, by the earlier of contractual maturity or expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.


	March 31, 2015
	Amortized		Estimated
(Dollars in thousands)	Cost		Fair Value
Due in one year or less	$	30,585	$	30,716
Due after one year through five years		124,147		128,952
Due after five years through ten years		38,058		39,601
Due after ten years		20,061		21,565
	$	212,851	$	220,834

Proceeds from the maturities, calls and sales of securities available for sale for the three months ended March 31, 2015 were $8.55 million, resulting in gross realized gains of $1,000. Proceeds from the maturities, calls and sales of securities available for sale for the three months ended March 31, 2014 were $16.59 million, resulting in gross realized gains of less than $1,000.

The Corporation pledges securities primarily as collateral for public deposits and repurchase agreements. Securities with an aggregate amortized cost of $103.49 million and an aggregate fair value of $107.65 million were pledged at March 31, 2015. Securities with an aggregate amortized cost of $106.31 million and an aggregate fair value of $110.37 million were pledged at December 31, 2014.

Securities in an unrealized loss position at March 31, 2015, by duration of the period of the unrealized loss, are shown below.


	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. government agencies and corporations	$	1,581	$	19	$	12,003	$	156	$	13,584	$	175
Mortgage-backed securities		2,894		37		2,429		15		5,323		52
Obligations of states and political subdivisions		8,578		88		3,727		48		12,305		136
Total temporarily impaired securities	$	13,053	$	144	$	18,159	$	219	$	31,212	$	363

There were 57 debt securities totaling $31.21 million considered temporarily impaired at March 31, 2015. The primary cause of the temporary impairments in the Corporation's investments in debt securities was fluctuations in interest rates. Interest rates generally declined during the first quarter of 2015, primarily in the middle and long-end of the United States Treasury yield curve, thereby reducing unrealized losses on the Corporation's debt securities from December 31, 2014. Demand for United States debt securities increased, thereby reducing interest rates, as the Federal Reserve lowered both its economic and interest-rate projections as severe winter weather, a west coast port strike, the impact of a strong dollar and lower capital expenditures by the oil industry hindered economic activity in the United States. Interest rates in the municipal bond sector, which includes the Corporation's obligations of states and political subdivisions, were essentially unchanged to slightly lower during the first quarter of 2015 primarily due to heavy new issue supply, driven by refunding volume, as issuers continued to take advantage of the low interest rate environment. At March 31, 2015, approximately 97 percent of the Corporation's obligations of states and political subdivisions, as measured by market value, were rated “A” or better by Standard & Poor's or Moody's Investors Service. Of those in a net unrealized loss position, approximately 95 percent were rated “A” or better, as measured by market value, at March 31, 2015. For the approximately five percent not rated "A" or better, as measured by market value at March 31, 2015, the Corporation considers these to meet regulatory credit quality standards, such that the securities have low risk of default by the obligor, and the full and timely repayment of principal and interest is expected over the expected life of the investment. Because the Corporation intends to hold these investments in debt securities to maturity and it is more likely than not that the Corporation will not be required to sell these investments before a recovery of unrealized losses, the Corporation does not consider these investments to be other-than-temporarily impaired at March 31, 2015 and no other-than-temporary impairment has been recognized.

Securities in an unrealized loss position at December 31, 2014, by duration of the period of the unrealized loss, are shown below.


	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. government agencies and corporations	$	1,966	$	2	$	21,234	$	474	$	23,200	$	476
Mortgage-backed securities		—		—		4,518		32		4,518		32
Obligations of states and political subdivisions		6,279		51		6,049		75		12,328		126
Total temporarily impaired securities	$	8,245	$	53	$	31,801	$	581	$	40,046	$	634

The Corporation’s investment in restricted stocks totaled $3.35 million at March 31, 2015, and consisted of $3.20 million of Federal Home Loan Bank (FHLB) stock and $145,000 of Community Bankers Bank (CBB) stock. Restricted stock is generally viewed as a long-term investment and as restricted investment securities, which are carried at cost, because there is no market for the stock, other than the FHLBs or member institutions. Therefore, when evaluating restricted stock for impairment, their respective values are based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Corporation does not consider its investment in restricted stocks to be other-than-temporarily impaired at March 31, 2015 and no impairment has been recognized. Total restricted stocks is shown as a separate line item on the balance sheet and is not a part of the available-for-sale securities portfolio. At December 31, 2014, the Corporation’s restricted stocks included $3.30 millon of FHLB stock and $145,000 of CBB stock.