2.	INVESTMENT SECURITIES

The portfolio of securities consisted of the following (in thousands):

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	10,339	$	-	$	112	$	10,227
Obligations of state and political subdivisions		43,079		1,555		29		44,605
GSE mortgage-backed securities		106,208		3,183		288		109,103
Collateralized mortgage obligations: residential		62,093		266		1,520		60,839
Collateralized mortgage obligations: commercial		24,462		190		107		24,545
Other asset-backed securities		24,041		321		19		24,343
Collateralized debt obligation		266		952		-		1,218
Mutual funds		2,100		4		-		2,104
	$	272,588	$	6,471	$	2,075	$	276,984

	December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Available-for-sale:
U.S. Government sponsored enterprises	$	11,455	$	1	$	191	$	11,265
Obligations of state and political subdivisions		57,925		2,296		243		59,978
GSE mortgage-backed securities		146,129		2,029		2,193		145,965
Collateralized mortgage obligations: residential		73,569		212		2,894		70,887
Collateralized mortgage obligations: commercial		27,082		416		152		27,346
Other asset-backed securities		25,204		351		66		25,489
Collateralized debt obligation		464		271		-		735
	$	341,828	$	5,576	$	5,739	$	341,665

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	45,914	$	267	$	192	$	45,989
GSE mortgage-backed securities		67,268		1,080		164		68,184
Collateralized mortgage obligations: residential		12,709		-		479		12,230
Collateralized mortgage obligations: commercial		15,310		53		173		15,190
	$	141,201	$	1,400	$	1,008	$	141,593

	December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held-to-maturity:
Obligations of state and political subdivisions	$	47,377	$	38	$	2,586	$	44,829
GSE mortgage-backed securities		78,272		148		1,079		77,341
Collateralized mortgage obligations: residential		14,189		-		979		13,210
Collateralized mortgage obligations: commercial		15,685		103		-		15,788
	$	155,523	$	289	$	4,644	$	151,168

With the exception of three private-label collateralized mortgage obligations (“CMOs”) with a combined balance remaining of $44,000 and $59,000 at December 31, 2014 and 2013, respectively, all of the Company’s CMOs are government-sponsored enterprise securities.

The amortized cost and fair value of debt securities at December 31, 2014 by contractual maturity are shown below (in thousands). Except for mortgage backed securities, collateralized mortgage obligations, other assets backed securities, and collateralized debt obligations, expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
Available-for-sale:
Due in one year or less	$	8,218	$	8,312
Due after one year through five years		30,199		30,939
Due after five years through ten years		13,122		13,658
Due after ten years		1,879		1,923
Mortgage-backed securities and collateralized mortgage obligations:
Residential		168,301		169,942
Commercial		24,462		24,545
Other asset-backed securities		24,041		24,343
Collateralized debt obligation		266		1,218
Mutual funds		2,100		2,104
	$	272,588	$	276,984

	Amortized Cost		Fair Value
Held-to-maturity:
Due in one year or less	$	105	$	105
Due after one year through five years		3,097		3,110
Due after five years through ten years		11,308		11,291
Due after ten years		31,404		31,483
Mortgage-backed securities and collateralized mortgage obligations:
Residential		79,977		80,414
Commercial		15,310		15,190
	$	141,201	$	141,593

Details concerning investment securities with unrealized losses are as follows (in thousands):

	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
U.S. Government sponsored enterprises	$	4,973	$	32	$	5,254	$	80	$	10,227	$	112
Obligations of state and political subdivisions		2,029		29		-		-		2,029		29
GSE mortgage-backed securities		6,668		25		21,538		263		28,206		288
Collateralized mortgage obligations: residential		9,366		53		37,997		1,467		47,363		1,520
Collateralized mortgage obligations: commercial		-		-		3,747		107		3,747		107
Other asset-backed securities		6,401		19		-		-		6,401		19
	$	29,437	$	158	$	68,536	$	1,917	$	97,973	$	2,075

	December 31, 2013
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Available-for-sale:
U.S. Government sponsored enterprises	$	10,463	$	191	$	-	$	-	$	10,463	$	191
Obligations of state and political subdivisions		4,256		243		-		-		4,256		243
GSE mortgage-backed securities		68,028		2,193		-		-		68,028		2,193
Collateralized mortgage obligations: residential		56,975		2,563		4,371		331		61,346		2,894
Collateralized mortgage obligations: commercial		4,282		152		-		-		4,282		152
Other asset-backed securities		13,099		66		-		-		13,099		66
	$	157,103	$	5,408	$	4,371	$	331	$	161,474	$	5,739

	December 31, 2014
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	11,761	$	35	$	13,263	$	157	$	25,024	$	192
GSE mortgage-backed securities		-		-		8,142		164		8,142		164
Collateralized mortgage obligations: residential		-		-		12,230		479		12,230		479
Collateralized mortgage obligations: commercial		7,599		173		-		-		7,599		173
	$	19,360	$	208	$	33,635	$	800	$	52,995	$	1,008

	December 31, 2013
	Securities with losses under 12 months				Securities with losses over 12 months				Total
	Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss		Fair Value		Gross Unrealized Loss
Held-to-maturity:
Obligations of state and political subdivisions	$	42,246	$	2,569	$	685	$	17	$	42,931	$	2,586
GSE mortgage-backed securities		31,042		1,079		-		-		31,042		1,079
Collateralized mortgage obligations: residential		13,210		979		-		-		13,210		979
	$	86,498	$	4,627	$	685	$	17	$	87,183	$	4,644

Management evaluates whether unrealized losses on securities represent impairment that is other than temporary on a quarterly basis. For debt securities, the Company considers its intent to sell the securities or if it is more likely than not the Company will be required to sell the securities. If such impairment is identified, based upon the intent to sell or the more likely than not threshold, the carrying amount of the security is reduced to fair value with a charge to earnings. Upon the result of the aforementioned review, management then reviews for potential other than temporary impairment based upon other qualitative factors. In making this evaluation, management considers changes in market rates relative to those available when the security was acquired, changes in market expectations about the timing of cash flows from securities that can be prepaid, performance of the debt security, and changes in the market’s perception of the issuer’s financial health and the security’s credit quality. If determined that a debt security has incurred other than temporary impairment, then the amount of the credit related impairment is determined. If a credit loss is evident, the amount of the credit loss is charged to earnings and the non-credit related impairment is recognized through other comprehensive income.

As of December 31, 2014, 68 securities had unrealized losses totaling 2.00% of the individual securities’ amortized cost basis and 0.75% of the Company’s total amortized cost basis. 44 of the 68 securities had been in an unrealized loss position for over twelve months at December 31, 2014. These 44 securities had an amortized cost basis and unrealized loss of $104.9 million and $2.7 million, respectively. The unrealized losses on debt securities at December 31, 2014 and 2013 resulted from changing market interest rates over the yields available at the time the underlying securities were purchased. Management identified no impairment related to credit quality. At December 31, 2014 and 2013, management had both the intent and ability to hold impaired securities, and no impairment was evaluated as other than temporary. As a result, no impairment losses were recognized on debt securities during the years ended December 31, 2014, 2013, or 2012.

During the year ended December 31, 2014, the Company sold four securities classified as available-for-sale at a gross gain of $128,000. During the year ended December 31, 2013, the Company sold 35 securities classified as available-for-sale at a net gain of $234,000. Of the 35 securities sold, 31 securities were sold with gains totaling $247,000 and four securities were sold at a loss of $13,000.

Securities with an aggregate carrying value of approximately $279.8 million and $259.9 million at December 31, 2014 and 2013, respectively, were pledged to secure public funds on deposit and for other purposes required or permitted by law.