INVESTMENT SECURITIES

The Bank utilizes mortgage-backed and other investment securities in its asset/liability management strategy. In making investment decisions, the Bank considers, among other things, its yield and interest rate objectives, its interest rate and credit risk position, and its liquidity and cash flow.

Generally, the investment policy of the Bank is to invest funds among categories of investments and maturities based upon the Bank’s asset/liability management policies, investment quality, loan and deposit volume and collateral requirements, liquidity needs and performance objectives. ASC Subtopic 320-10-25 requires that securities be classified into three categories: trading, held-to-maturity, and available-for-sale. At December 31, 2014, $100.4 million, or 89.1%, of the Bank’s mortgage-backed and other investment securities were classified as available-for-sale, and the remaining $12.3 million, or 10.9%, were classified as held-to-maturity. The Bank had no securities classified as trading at December 31, 2014 and March 31, 2014.

The following table sets forth the amortized cost and estimated fair value of securities available-for-sale and held-to-maturity at December 31, 2014:



	Amortized		Gross Unrealized
$ in thousands	Cost		Gains		Losses			Fair-Value
Available-for-Sale:
Mortgage-backed securities:
Government National Mortgage Association	$	5,637	$	—	$	(102	)	$	5,535
Federal Home Loan Mortgage Corporation	11,244		—		(220		)	11,024
Federal National Mortgage Association	11,226		9		(152		)	11,083
Other	47		—		—			47
Total mortgage-backed securities	28,154		9		(474		)	27,689
U.S. Government Agency Securities	57,743		30		(1,238		)	56,535
Other investments	16,513		—		(289		)	16,224
Total available-for-sale	102,410		39		(2,001		)	100,448
Held-to-Maturity^*:
Mortgage-backed securities:
Government National Mortgage Association	3,234		215		—			3,449
Federal National Mortgage Association	9,019		1		(36		)	8,984
Total held-to-maturity mortgage-backed securities	12,253		216		(36		)	12,433
Total securities	$	114,663	$	255	$	(2,037	)	$	112,881

^* The carrying amount and amortized cost are the same for all held-to-maturity securities, as no OTTI has been recorded.

The following table sets forth the amortized cost and estimated fair value of securities available-for-sale and held-to-maturity at March 31, 2014:



	Amortized		Gross Unrealized					Estimated
$ in thousands	Cost		Gains		Losses			Fair Value
Available-for-Sale:
Mortgage-backed securities:
Government National Mortgage Association	$	5,972	$	—	$	(307	)	$	5,665
Federal Home Loan Mortgage Corporation	12,160		—		(564		)	11,596
Federal National Mortgage Association	10,897		—		(466		)	10,431
Other	49		—		—			49
Total mortgage-backed securities	29,078		—		(1,337		)	27,741
U.S. Government Agency Securities	55,155		—		(2,966		)	52,189
Other investments	10,000		—		(469		)	9,531
Total available-for-sale	94,233		—		(4,772		)	89,461
Held-to-Maturity^*:
Mortgage-backed securities:
Government National Mortgage Association	3,743		225		—			3,968
Federal National Mortgage Association	5,079		—		(283		)	4,796
Total held-to-maturity mortgage-backed securities	8,822		225		(283		)	8,764
Other	207		—		—			207
Total held-to-maturity	9,029		225		(283		)	8,971
Total securities	$	103,262	$	225	$	(5,055	)	$	98,432

^* The carrying amount and amortized cost are the same for all held-to-maturity securities, as no OTTI has been recorded.

The following table sets forth the unrealized losses and fair value of securities in an unrealized loss position at December 31, 2014 for less than 12 months and 12 months or longer:



	Less than 12 months					12 months or longer					Total
$ in thousands	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value
Available-for-Sale:
Mortgage-backed securities	$	(7	)	$	2,813	$	(467	)	$	22,974	$	(474	)	$	25,787
U.S. Government Agency Securities	(28		)	4,930		(1,210		)	42,599		(1,238		)	47,529
Other investments ⁽¹⁾	—			—		(289		)	9,711		(289		)	9,711
Total available-for-sale securities	(35		)	7,743		(1,966		)	75,284		(2,001		)	83,027

Held-to-Maturity:
Mortgage-backed securities	—			—		(36		)	4,971		(36		)	4,971
Total held-to-maturity securities	—			—		(36		)	4,971		(36		)	4,971
Total securities	$	(35	)	$	7,743	$	(2,002	)	$	80,255	$	(2,037	)	$	87,998

⁽¹⁾ CRA fund comprised of over 95% agency securities.

The following table sets forth the unrealized losses and fair value of securities in an unrealized loss position at March 31, 2014 for less than 12 months and 12 months or longer:



	Less than 12 months					12 months or longer					Total
$ in thousands	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value
Available-for-Sale:
Mortgage-backed securities	$	(322	)	$	7,569	$	(1,015	)	$	20,123	$	(1,337	)	$	27,692
U.S. Government Agency Securities	(1,646		)	34,074		(1,320		)	18,115		(2,966		)	52,189
Other investments ⁽¹⁾	(469		)	9,531		—			—		(469		)	9,531
Total available-for-sale securities	(2,437		)	51,174		(2,335		)	38,238		(4,772		)	89,412

Held-to-Maturity:
Mortgage-backed securities	(283		)	4,796		—			—		(283		)	4,796
Total held-to-maturity securities	(283		)	4,796		—			—		(283		)	4,796
Total securities	$	(2,720	)	$	55,970	$	(2,335	)	$	38,238	$	(5,055	)	$	94,208

⁽¹⁾ CRA fund comprised of over 95% agency securities.

A total of 31 securities had an unrealized loss at December 31, 2014 compared to 35 at March 31, 2014. The majority of the securities in an unrealized loss position were U.S. Government Agency securities and mortgage-backed securities, representing 68.9% and 31.1%, respectively, of total available-for-sale securities in an unrealized loss position at December 31, 2014. There were fifteen mortgage-backed securities and eight U.S. Government Agency securities in an unrealized loss position that had an unrealized loss for more than 12 months at December 31, 2014. Given the high credit quality of the securities which are backed by the U.S. government's guarantees, the risk of credit loss is minimal. Management believes that these unrealized losses are a direct result of the current rate environment and has the ability and intent to hold the securities until maturity or the valuation recovers.

The amount of an other-than-temporary impairment when there are credit and non-credit losses on a debt security which management does not intend to sell, and for which it is more likely than not that the Company will not be required to sell the security prior to the recovery of the non-credit impairment, the portion of the total impairment that is attributable to the credit loss would be recognized in earnings. The remaining difference between the debt security’s amortized cost basis and its fair value would be included in other comprehensive income (loss). At December 31, 2014, the Bank does not have any securities that are classified as having other-than-temporary impairment in its investment portfolio.

The following is a summary of the carrying value (amortized cost) and fair value of securities at December 31, 2014, by remaining period to contractual maturity (ignoring earlier call dates, if any). Actual maturities may differ from contractual maturities because certain security issuers have the right to call or prepay their obligations. The table below does not consider the effects of possible prepayments or unscheduled repayments.



$ in thousands	Amortized Cost		Fair Value		Weighted Average Yield
Available-for-Sale:
Less than one year	$	5,533	$	5,533	0.25	%
One through five years	16,480		16,404		1.34	%
Five through ten years	24,349		23,616		1.83	%
After ten years	56,048		54,895		1.74	%
Total	$	102,410	$	100,448	1.61	%

Held-to-maturity:
Five through ten years	$	5,007	$	4,971	2.38	%
After ten years	7,246		7,462		2.89	%
Total	$	12,253	$	12,433	2.68	%