NOTE 2 – SECURITIES

Securities consist of the following at June 30, 2014 and December 31, 2013:


(Dollars in thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
June 30, 2014
Available-for-sale securities
U.S. Treasury security	$	1,004	$	—	$	5	$	999
U.S. government agencies		20,000		7		285		19,722
Mortgage-backed securities of government agencies		48,059		678		199		48,538
Other mortgage-backed securities		184		3		—		187
Asset-backed securities of government agencies		2,674		17		—		2,691
State and political subdivisions		16,167		460		64		16,563
Corporate bonds		4,502		62		—		4,564
Equity securities		106		19		—		125

Total available-for-sale securities		92,696		1,246		553		93,389

Held-to-maturity securities
U.S. government agencies		15,224		78		110		15,192
Mortgage-backed securities of government agencies		23,722		220		273		23,669

Total held-to-maturity securities		38,946		298		383		38,861

Restricted stock		4,613		—		—		4,613

Total securities	$	136,255	$	1,544	$	936	$	136,863

December 31, 2013
Available-for-sale securities
U.S. Treasury security	$	1,005	$	—	$	8	$	997
U.S. government agencies		22,999		8		706		22,301
Mortgage-backed securities of government agencies		54,455		536		691		54,300
Other mortgage-backed securities		230		5		—		235
Asset-backed securities of government agencies		2,739		36		—		2,775
State and political subdivisions		16,219		371		143		16,447
Corporate bonds		4,500		44		5		4,539
Equity securities		106		23		1		128

Total available-for-sale securities		102,253		1,023		1,554		101,722

Held-to-maturity securities
U.S. government agencies		19,186		—		828		18,358
Mortgage-backed securities of government agencies		25,164		—		879		24,285

Total held-to-maturity securities		44,350		—		1,707		42,643

Restricted stock		5,463		—		—		5,463

Total securities	$	152,066	$	1,023	$	3,261	$	149,828

The amortized cost and fair value of debt securities at June 30, 2014, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


(Dollars in thousands)	Amortized cost		Fair value
Available-for-sale:
Due in one year or less	$	3,307	$	3,326
Due after one through five years		13,561		13,749
Due after five through ten years		19,901		19,889
Due after ten years		55,821		56,300

Total debt securities available-for-sale	$	92,590	$	93,264

Held-to-maturity:
Due after five through ten years	$	3,735	$	3,788
Due after ten years		35,211		35,073

Total debt securities held-to-maturity	$	38,946	$	38,861

Securities with a carrying value of approximately $83.6 million and $87.9 million were pledged at June 30, 2014 and December 31, 2013, respectively, to secure public deposits, as well as other deposits and borrowings as required or permitted by law.

Restricted stock primarily consists of investments in Federal Home Loan Bank (FHLB) and Federal Reserve Bank stock. The Bank’s investment in FHLB stock amounted to approximately $4.1 million at June 30, 2014 and $5.0 million at December 31, 2013. The FHLB of Cincinnati mandatorily redeemed members’ stock during the first quarter of 2014. Federal Reserve Bank stock was $471 thousand at June 30, 2014 and December 31, 2013.

The following table presents gross unrealized losses and fair value of securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2014 and December 31, 2013:


	Securities in a continuous unrealized loss position
	Less than 12 months				12 months or more				Total
(Dollars in thousands)	Gross unrealized losses		Fair value		Gross unrealized losses		Fair value		Gross unrealized losses		Fair value
June 30, 2014
Available-for-sale
U.S. Treasury securities	$	—	$	—	$	5	$	999	$	5	$	999
U.S. Government agencies		3		1,997		282		13,718		285		15,715
Mortgage-backed securities of government agencies		150		10,091		49		1,713		199		11,804
State and political subdivisions		1		618		63		2,260		64		2,878
Held-to-maturity
U.S. Government agencies		—		—		110		9,465		110		9,465
Mortgage-backed securities of government agencies		105		5,531		168		10,574		273		16,105

Total temporarily impaired securities	$	259	$	18,237	$	677	$	38,729	$	936	$	56,966

December 31, 2013
Available-for-sale
U.S. Treasury securities	$	8	$	997	$	—	$	—	$	8	$	997
U.S. Government agencies		590		15,409		116		1,884		706		17,293
Mortgage-backed securities of government agencies		691		29,938		—		—		691		29,938
State and political subdivisions		122		3,522		21		233		143		3,755
Corporate bonds		4		1,163		1		499		5		1,662
Equity securities		—		—		1		1		1		1
Held-to-maturity
U.S. Government agencies		771		14,559		57		1,799		828		16,358
Mortgage-backed securities of government agencies		879		20,149		—		—		879		20,149

Total temporarily impaired securities	$	3,065	$	85,737	$	196	$	4,416	$	3,261	$	90,153

There were forty-four (44) securities in an unrealized loss position at June 30, 2014, thirty-four (34) of which were in a continuous loss position for twelve months or more. At least quarterly, the Company conducts a comprehensive security-level impairment assessment. The assessments are based on the nature of the securities, the extent and duration of the securities in an unrealized loss position, the extent and duration of the loss and management’s intent to sell or if it is more likely than not that management will be required to sell a security before recovery of its amortized cost basis, which may be maturity. Management believes the Company will fully recover the cost of these securities. It does not intend to sell these securities and likely will not be required to sell them before the anticipated recovery of the remaining amortized cost basis, which may be maturity. As a result, management concluded that these securities were not other-than-temporarily impaired at June 30, 2014.