INVESTMENTS

3 Months Ended

Mar. 31, 2014

Investments, Debt and Equity Securities [Abstract]

INVESTMENTS

2. INVESTMENTS

Investment securities available for sale are summarized as follows (in thousands):

At March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	33,536	$	1,349	$	—	$	34,885
Mortgage-backed securities		95,431		405		2,327		93,509
Corporate securities		9,821		183		9		9,995
Totals	$	138,788	$	1,937	$	2,336	$	138,389

At December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	33,735	$	1,097	$	30	$	34,802
Mortgage-backed securities		99,143		347		3,223		96,267
Corporate securities		9,806		180		10		9,976
Totals	$	142,684	$	1,624	$	3,263	$	141,045

Investment securities held to maturity are summarized as follows (in thousands):

At March 31, 2014	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	240	$	—	$	—	$	240

At December 31, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
State, county, and municipal securities	$	240	$	—	$	—	$	240

The amortized costs and fair values of investment securities at March 31, 2014, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with and without call or prepayment penalties (in thousands).

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years		13,297		13,647		240		240
Due after five years through ten years		29,620		30,429		—		—
Due after ten years		95,871		94,313		—		—
	$	138,788	$	138,389	$	240	$	240

Securities with carrying values of $103,762,000 and $102,728,000 as of March 31, 2014 and December 31, 2013, respectively, were pledged to secure public deposits, FHLB advances and a $18,903,000 line of credit at the Federal Reserve Bank discount window and for other purposes as required by law.

For the three months ended March 31, 2013, proceeds from the sale of securities was $1,082,000. There were no sale of securities during the three months ended March 31, 2014. Gross realized gains on the sale of securities for the three months ended March 31, 2013 was $141,000. There were no gross realized losses on sales of securities for the three month period ended March 31, 2014 and 2013, respectively.

The Company’s investment portfolio consists principally of obligations of the United States, its agencies, or its corporations, general obligation and revenue municipals and corporate securities. In the opinion of management, there is no concentration of credit risk in its investment portfolio. The company places its deposits and correspondent accounts with and sells its federal funds to high quality institutions. Management believes credit risk associated with correspondent accounts is not significant.

The following tables show investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at March 31, 2014 and December 31, 2013. Except as explicitly identified below, all unrealized losses on investment securities are considered by management to be temporarily impaired given the credit ratings on these investment securities and the short duration of the unrealized loss (in thousands).

At March 31, 2014

Securities Available for Sale

	Securities in a loss position  for less than twelve months					Securities in a loss position  for twelve months or more					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Mortgage-backed securities	$	65,808	$	(2,098	)	$	5,047	$	(229	)	$	70,855	$	(2,327	)
Corporate		1,991		(9	)		—		—			1,991		(9	)
Total	$	67,799	$	(2,107	)	$	5,047	$	(229	)	$	72,846	$	(2,336	)

Securities Held to Maturity

There were no securities classified as held to maturity in an unrealized loss position at March 31, 2014.

At December 31, 2013

Securities Available for Sale

	Securities in a loss position  for less than twelve months					Securities in a loss position  for twelve months or more					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
Municipal securities	$	2,775	$	(30	)	$	—	$	—		$	2,775	$	(30	)
Mortgage-backed securities		68,420		(2,907	)		5,136		(316	)		73,556		(3,223	)
Corporate		1,990		(10	)		—		—			1,990		(10	)
Total	$	73,185	$	(2,947	)	$	5,136	$	(316	)	$	78,321	$	(3,263	)

Securities Held to Maturity

There were no securities classified as held to maturity in an unrealized loss position at December 31, 2013.

The Company’s available for sale portfolio had three investment securities at March 31, 2014 that were in an unrealized loss position for longer than twelve months. At December 31, 2013, the Company had two investment securities that were in an unrealized loss position for longer than twelve months. The Company reviews these securities for other-than-temporary impairment on a quarterly basis by monitoring their credit support and coverage, constant payment of the contractual principal and interest, loan to value and delinquencies ratios.

We use prices from third party pricing services and, to a lesser extent, indicative (non-binding) quotes from third party brokers, to measure fair value of our investment securities. Fair values of the investment securities portfolio could decline in the future if the underlying performance of the collateral for collateralized mortgage obligations or other securities deteriorates and the levels do not provide sufficient protection for contractual principal and interest. As a result, there is risk that an other-than-temporary impairment may occur in the future particularly in light of the current economic environment.

As of the date of its evaluation, the Company did not intend to sell and has the ability to hold these securities and it is more likely than not that the Company will not be required to sell those securities before recovery of its amortized cost or the security matures. The Company believes, based on industry analyst reports and credit ratings, that it will continue to receive scheduled interest payments as well as the entire principal balance, and the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary.