Investment Securities

Debt and equity securities have been classified in the consolidated balance sheets according to management’s intent. Investment securities at March 31, 2016 and December 31, 2015 are summarized as follows:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value

March 31, 2016
Securities available for sale:
Agency mortgage-backed securities	$	65,507	$	309	$	106	$	65,710
Agency CMO		11,427		46		82		11,391
Other debt securities:
Agency notes and bonds		79,377		97		120		79,354
Municipal obligations		52,285		1,725		50		53,960
Subtotal - debt securities		208,596		2,177		358		210,415

Mutual Funds		249		0		0		249

Total Securities available for sale	$	208,845	$	2,177	$	358	$	210,664

Securities held to maturity:
Agency mortgage-backed securities	$	4	$	0	$	0	$	4

Total securities held to maturity	$	4	$	0	$	0	$	4

December 31, 2015
Securities available for sale:
Agency mortgage-backed securities	$	42,158	$	123	$	271	$	42,010
Agency CMO		9,391		41		101		9,331
Other debt securities:
Agency notes and bonds		84,797		11		355		84,453
Municipal obligations		49,527		1,372		60		50,839
Subtotal - debt securities		185,873		1,547		787		186,633

Mutual Funds		118		0		0		118

Total Securities available for sale	$	185,991	$	1,547	$	787	$	186,751

Securities held to maturity:
Agency mortgage-backed securities	$	4	$	0	$	0	$	4

Total securities held to maturity	$	4	$	0	$	0	$	4

Agency notes and bonds, agency mortgage-backed securities and agency collateralized mortgage obligations (CMO) include securities issued by the Government National Mortgage Association (GNMA), a U.S. government agency, and the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC) and the Federal Home Loan Bank (FHLB), which are government-sponsored enterprises.

The amortized cost and fair value of debt securities as of March 31, 2016, by contractual maturity, are shown below. Expected maturities of mortgage-backed securities may differ from contractual maturities because the mortgages underlying the obligations may be prepaid without penalty.

	Securities Available for Sale				Securities Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
(In thousands)

Due in one year or less	$	1,948	$	1,959	$	0	$	0
Due after one year through five years		75,360		75,502		0		0
Due after five years through ten years		24,823		25,251
Due after ten years		29,531		30,602		0		0
		131,662		133,314		0		0
Mortgage-backed securities and CMO		76,934		77,101		4		4

	$	208,596	$	210,415	$	4	$	4

Information pertaining to investment securities available for sale with gross unrealized losses at March 31, 2016, aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows. At March 31, 2016, the Company did not have any securities held to maturity with an unrealized loss.

	Number of				Gross
	Investment		Fair		Unrealized
	Positions		Value		Losses
(Dollars in thousands)

Continuous loss position less than twelve months:
Agency notes and bonds		17	$	43,556	$	120
Agency CMO		5		3,109		38
Agency mortgage-backed securities		17		21,262		89
Muncipal obligations		4		4,229		50

Total less than twelve months		43		72,156		297

Continuous loss position more than twelve months:
Agency CMO		7		4,273		44
Agency mortgage-backed securities		3		2,190		17

Total more than twelve months		10		6,463		61

Total securities available for sale		53	$	78,619	$	358

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recover in fair value.

At March 31, 2016, the U.S. government agency debt securities, including agency notes and bonds, mortgage-backed securities and CMO, and municipal obligations in a loss position had depreciated approximately 0.5% from the amortized cost basis. All of the U.S. government agency securities and municipal obligations are issued by U.S. government agencies, government-sponsored enterprises and municipal governments, or are secured by first mortgage loans and municipal project revenues. These unrealized losses related principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As the Company has the ability to hold the debt securities until maturity, or the foreseeable future if classified as available for sale, no declines are deemed to be other-than-temporary.

While management does not anticipate any credit-related impairment losses at March 31, 2016, additional deterioration in market and economic conditions may have an adverse impact on credit quality in the future.

The Company did not sell any securities during the three months ended March 31, 2016 or March 31, 2015.

In June 2014, the Company acquired an additional 31,750 shares of common stock in another financial institution, in addition to the 100,000 shares acquired in December 2013, representing approximately 9% of the outstanding common stock of the entity, for a total investment of $711,000. The investment is accounted for using the cost method of accounting and is included in other assets in the consolidated balance sheet.