NOTE 3: SECURITIES

The following table provides a summary of the Company’s securities AFS portfolio as of:

	Amortized		Gross Unrealized					Estimated
(dollars in thousands)	Cost		Gains		Losses			Fair Value
September 30, 2014:
US Treasury securities	$	300	$	-	$	-		$	300
FNMA and FHLB Agency notes		10,496		-		(323	)		10,173
Agency mortgage-backed securities		124,383		580		(676	)		124,287
Total	$	135,179	$	580	$	(999	)	$	134,760

December 31, 2013:
US Treasury securities	$	300	$	-	$	-		$	300
FNMA and FHLB Agency notes		10,496		-		(716	)		9,780
Agency mortgage-backed securities		50,983		30		(1,982	)		49,031
Total	$	61,779	$	30	$	(2,698	)	$	59,111

The US Treasury securities are pledged as collateral to the State of California to meet regulatory requirements related to the Bank’s trust operations.

The table below indicates, as of September 30, 2014, the gross unrealized losses and fair values of our investments, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Securities with Unrealized Loss at September 30, 2014
	Less than 12 months					12 months or more					Total
(dollars in thousands)	Fair Value			Unrealized Loss		Fair Value			Unrealized Loss		Fair Value		Unrealized Loss
FNMA and FHLB Agency notes	$	-	$	-		$	10,173	$	(323	)	$	10,173	$	(323)
Agency mortgage backed securities		19,805		(21	)		27,536		(655	)		47,341		(676)
Total temporarily impaired securities	$	19,805	$	(21	)	$	37,709	$	(978	)		57,514		(999)

Unrealized losses on FNMA and FHLB agency notes and agency mortgage-backed securities have not been recognized into income because the issuer bonds are of high credit quality, management does not intend to sell and it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, and the decline in fair value is largely due to changes in interest rates. The fair value is expected to recover as the bonds approach maturity.

The scheduled maturities of securities AFS and the related weighted average yields were as follows as of September 30, 2014:

(dollars in thousands)	Less than 1 Year			1 Through 5 years			5 Through 10 Years			After 10 Years			Total
Amortized Cost:
US Treasury securities	$	-		$	300		$	-		$	-		$	300
FNMA and FHLB Agency notes		-			-			10,496			-			10,496
Total	$	-		$	300		$	10,496		$	-		$	10,796
Weighted average yield		0.00	%		0.45	%		1.78	%		0.00	%		1.74	%

Estimated Fair Value:
US Treasury securities	$	-		$	300		$	-		$	-		$	300
FNMA and FHLB Agency notes		-			-			10,173			-			10,173
Total	$	-		$	300		$	10,173		$	-		$	10,473

Agency mortgage backed securities are excluded from the above table because such securities are not due at a single maturity date. The weighted average yield of the agency mortgage backed securities as of September 30, 2014 was 2.46%.