Investment Securities

6 Months Ended

Jun. 30, 2015

Investment Securities [Abstract]

Investment Securities

NOTE 3 – Investment Securities

The amortized costs and fair value of investment securities are as follows:

	June 30, 2015
	Amortized		Gross Unrealized		Fair
(dollars in thousands)	Cost		Gains	Losses	Value
Available for sale
US government agencies	$	9,133	18	307	8,844
SBA securities		5,072	-	169	4,903
State and political subdivisions		16,148	325	127	16,346
Mortgage-backed securities		21,281	250	159	21,372
Total investment securities available for sale	$	51,634	593	762	51,465
	December 31, 2014
	Amortized		Gross Unrealized		Fair
	Cost		Gains	Losses	Value
Available for sale
US government agencies	$	8,763	9	215	8,557
SBA securities		5,336	-	182	5,154
State and political subdivisions		16,253	598	51	16,800
Mortgage-backed securities		24,214	341	42	24,513
Total investment securities available for sale	$	54,566	948	490	55,024

During the first quarter of 2015, the Company developed a need for additional liquidity as it experienced increased loan demand and, as a result, sold $5.8 million of its mortgage-backed securities and state and municipal obligations and recorded a net gain on sale of investment securities of $259,000. During the second quarter of 2015, we sold and subsequently reinvested $4.3 million of investment securities, recording a gain of $36,000 from the transaction.

Contractual maturities and yields on the Company’s investment securities at June 30, 2015 and December 31, 2014 are shown in the following table. 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.

	June 30, 2015
	Less than one year				One to five years		Five to ten years		Over ten years			Total
(dollars in thousands)		Amount		Yield	Amount	Yield	Amount	Yield	Amount	Yield	Amount	Yield
Available for sale
US government agencies		$	-	-	-	-	1,316	2.19%	7,528	2.42%	8,844	2.39%
SBA securities			-	-	-	-	-	-	4,903	1.88%	4,903	1.88%
State and political subdivisions			2,063	0.84%	-	-	7,529	3.07%	6,754	2.92%	16,346	2.72%
Mortgage-backed securities			-	-	-	-	1,155	1.77%	20,217	2.12%	21,372	2.10%
Total		$	2,063	0.84%	-	-	10,000	2.79%	39,402	2.28%	51,465	2.32%

	December 31, 2014
	Less than one year			One to five years		Five to ten years		Over ten years		Total
	Amount		Yield	Amount	Yield	Amount	Yield	Amount	Yield	Amount	Yield
Available for sale
US government agencies	$	-	-	988	2.12%	-	-	7,569	2.43%	8,557	2.39%
SBA securities		-	-	-	-	-	-	5,154	1.88%	5,154	1.88%
State and political subdivisions		2,082	0.68%	399	3.14%	8,465	3.23%	5,854	3.00%	16,800	2.82%
Mortgage-backed securities		-	-	-	-	2,118	1.66%	22,395	2.62%	24,513	2.54%
Total	$	2,082	0.68%	1,387	2.41%	10,583	2.91%	40,972	2.54%	55,024	2.54%

The tables below summarize gross unrealized losses on investment securities and the fair market value of the related securities at June 30, 2015 and December 31, 2014, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.

	June 30, 2015
	Less than 12 months					12 months or longer					Total
		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(dollars in thousands)	#	value		losses		#	value		losses		#	value		losses
Available for sale
US government agencies	3	$	8,826	$	307	-	$	-	$	-	3	$	8,826	$	307
SBA securities	-		-		-	2		4,903		169	2		4,903		169
State and political subdivisions	6		2,422		69	4		2,226		58	10		4,648		127
Mortgage-backed securities	8		11,592		159	-		-		-	8		11,592		159
Total	17	$	22,840	$	535	6	$	7,129	$	227	23	$	29,969	$	762
	December 31, 2014
	Less than 12 months						12 months or longer					Total
		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	#	value		losses		#	value		losses		#	value		losses
Available for sale
US government agencies	-	$	-	$	-	2	$	7,569	$	215	2	$	7,569	$	215
SBA securities	-		-		-	2		5,154		182	2		5,154		182
State and political subdivisions	-		-		-	7		3,488		51	7		3,488		51
Mortgage-backed securities	3		4,407		11	2		4,756		31	5		9,163		42
Total	3	$	4,407	$	11	13	$	20,967	$	479	16	$	25,374	$	490

At June 30, 2015, the Company had 17 individual investments with a fair market value of $22.8 million that were in an unrealized loss position for less than 12 months and six individual investments with a fair market value of $7.1 million that were in an unrealized loss position for 12 months or longer. The unrealized losses were primarily attributable to changes in interest rates, rather than deterioration in credit quality. The individual securities are each investment grade securities. The Company considers the length of time and extent to which the fair value of available-for-sale debt securities have been less than cost to conclude that such securities are not other-than-temporarily impaired. We also consider other factors such as the financial condition of the issuer including credit ratings and specific events affecting the operations of the issuer, volatility of the security, underlying assets that collateralize the debt security, and other industry and macroeconomic conditions. As the Company has no intent to sell securities with unrealized losses and it is not more-likely-than-not that the Company will be required to sell these securities before recovery of amortized cost, we have concluded that these securities are not impaired on an other-than-temporary basis.

Other investments are comprised of the following and are recorded at cost which approximates fair value.

(dollars in thousands)	June 30, 2015		December 31, 2014
Federal Home Loan Bank stock	$	5,005	6,020
Investment in Trust Preferred securities		403	403
Other investments		124	99
Total other investments	$	5,532	6,522

The Company has evaluated the Federal Home Loan Bank (“FHLB”) stock for impairment and determined that the investment in the FHLB stock is not other than temporarily impaired as of June 30, 2015 and ultimate recoverability of the par value of this investment is probable. All of the FHLB stock is used to collateralize advances with the FHLB.

At June 30, 2015, $21.3 million of securities were pledged as collateral for repurchase agreements from brokers, and approximately $12.2 million of securities were pledged to secure client deposits. At December 31, 2014, $21.8 million of securities were pledged as collateral for repurchase agreements from brokers, and approximately $12.9 million of securities were pledged to secure client deposits.