Securities

Amortized costs and fair values of securities held to maturity are summarized as follows.



	June 30, 2016
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Held to Maturity
Obligations of states and political subdivisions	$	6,477	$	253	$	—	$	6,730
Corporate securities	4,250		100		—		4,350
Total	$	10,727	$	353	$	—	$	11,080



	December 31, 2015
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Held to Maturity
Obligations of states and political subdivisions	$	1,457	$	—	$	(38	)	$	1,419
Corporate securities	2,750		24		(30		)	2,744
Total	$	4,207	$	24	$	(68	)	$	4,163

The amortized cost and fair value of securities held to maturity as of June 30, 2016, by contractual maturity are shown below.



	June 30, 2016
(Dollars in thousands)	Amortized Cost		Fair Value
Held to Maturity
Due after five years through ten years	$	4,250	$	4,350
Due after ten years	6,477		6,730
Total	$	10,727	$	11,080

Amortized costs and fair values of securities available for sale are summarized as follows:



	June 30, 2016
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
U.S. government agencies	$	65,442	$	1,216	$	(127	)	$	66,531
Obligations of states and political subdivisions	67,664		2,420		(89		)	69,995
Mortgage-backed securities:
Agency	123,514		3,826		(550		)	126,790
Non-agency	13,306		131		(40		)	13,397
Other asset backed securities	54,725		525		(744		)	54,506
Corporate securities	16,606		59		(701		)	15,964
Total	$	341,257	$	8,177	$	(2,251	)	$	347,183



	December 31, 2015
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale
U.S. government agencies	$	79,005	$	315	$	(380	)	$	78,940
Obligations of states and political subdivisions	74,071		1,956		(434		)	75,593
Mortgage-backed securities:
Agency	129,360		3,046		(745		)	131,661
Non-agency	12,782		33		(38		)	12,777
Other asset backed securities	58,958		426		(603		)	58,781
Corporate securities	17,557		22		(760		)	16,819
Total	$	371,733	$	5,798	$	(2,960	)	$	374,571

The amortized cost and fair value of securities available for sale as of June 30, 2016, by contractual maturity are shown below. Maturities may differ from contractual maturities in corporate and mortgage-backed securities because the securities and mortgages underlying the securities may be called or repaid without any penalties. Therefore, these securities are not included in the maturity categories in the following maturity summary.



	June 30, 2016
(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	487	$	487
Due after one year through five years	9,421		9,675
Due after five years through ten years	24,463		24,403
Due after ten years	115,341		117,925
Mortgage-backed securities	136,820		140,187
Other asset backed securities	54,725		54,506
Total	$	341,257	$	347,183

Proceeds from calls, principal repayments and sales of securities available for sale during the six months ended June 30, 2016, and 2015 were $72.8 million and $62.6 million, respectively. For the six months ended June 30, 2016 and 2015, gross gains of $396,000 and $175,000 and gross losses of $23,000 and $37,000, respectively, were realized. The tax expense applicable to these net realized gains amounted to $127,000 and $47,000 for the six months ended June 31, 2016 and 2015, respectively.

The carrying value of securities pledged to qualify for fiduciary powers, to secure public monies and for other purposes as required by law amounted to $119.9 million and $113.1 million at June 30, 2016 and December 31, 2015, respectively.

Investments in an unrealized loss position that are temporarily impaired are as follows:



(Dollars in thousands)	Less than Twelve Months					Twelve Months or Greater					Total
June 30, 2016	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Available for Sale
U.S. government agencies	$	11,883	$	(112	)	$	1,633	$	(15	)	$	13,516	$	(127	)
Obligations of states and political subdivisions	205		—			7,779		(89		)	7,984		(89		)
Mortgage-backed securities:
Agency	12,138		(130		)	11,448		(420		)	23,586		(550		)
Non-agency	326		—			1,910		(40		)	2,236		(40		)
Other asset backed securities	19,390		(427		)	18,049		(317		)	37,439		(744		)
Corporate securities	1,954		(46		)	11,654		(655		)	13,608		(701		)
Total	$	45,896	$	(715	)	$	52,473	$	(1,536	)	$	98,369	$	(2,251	)



(Dollars in thousands)	Less than Twelve Months					Twelve Months or Greater					Total
December 31, 2015	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
Held to Maturity
Obligations of states and political subdivisions	$	1,419	$	(38	)	$	—	$	—		$	1,419	$	(38	)
Corporate securities	1,970		(30		)	—		—			1,970		(30		)
Total	$	3,389	$	(68	)	$	—	$	—		$	3,389	$	(68	)

Available for Sale
U.S. government agencies	$	46,000	$	(304	)	$	4,223	$	(76	)	$	50,223	$	(380	)
Obligations of states and political subdivisions	16,559		(324		)	1,082		(110		)	17,641		(434		)
Mortgage-backed securities:
Agency	27,627		(402		)	9,911		(343		)	37,538		(745		)
Non-agency	7,842		(37		)	671		(1		)	8,513		(38		)
Other asset backed securities	25,399		(276		)	12,037		(327		)	37,436		(603		)
Corporate securities	10,740		(378		)	4,866		(382		)	15,606		(760		)
Total	$	134,167	$	(1,721	)	$	32,790	$	(1,239	)	$	166,957	$	(2,960	)

A total of 118 securities have been identified by the Company as temporarily impaired at June 30, 2016. Of the 118 securities, 113 are investment grade and five are speculative grade. Mortgage-backed securities, other asset backed securities and corporate securities make up the majority of the gross unrealized losses for temporarily impaired securities at June 30, 2016. Market prices change daily and are affected by conditions beyond the control of the Company. Although the Company has the ability to hold these securities until the temporary loss is recovered, decisions by management may necessitate a sale before the loss is fully recovered. No such sales were anticipated or required as of June 30, 2016. Investment decisions reflect the strategic asset/liability objectives of the Company. The investment portfolio is analyzed frequently by the Company and managed to provide an overall positive impact to the Company’s consolidated income statement and balance sheet.

At June 30, 2016, the Company evaluated the investment portfolio for possible other-than-temporary impairment losses and concluded that no adverse change in cash flows occurred and did not consider any portfolio securities to be other-than-temporarily impaired. Based on this analysis and because the Company does not intend to sell securities prior to maturity and it is more likely than not the Company will not be required to sell any securities before recovery of amortized cost basis, which may be at maturity. For debt securities related to corporate securities, the Company determined that there was no other adverse change in the cash flows as viewed by a market participant; therefore, the Company does not consider the investments in these assets to be other-than-temporarily impaired at June 30, 2016. However, there is a risk that the Company’s continuing reviews could result in recognition of other-than-temporary impairment charges in the future. For the three and six months ended June 30, 2016 and the year ended December 31, 2015, no credit related impairment losses were recognized by the Company.

Restricted securities

The Company’s investment in FHLB stock totaled $4.5 million and $4.7 million at June 30, 2016 and December 31, 2015, respectively. FHLB stock is generally viewed as a long-term investment and as a restricted security which is carried at cost because there is no market for the stock other than the FHLB or member institutions. Therefore, when evaluating FHLB stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Company does not consider this investment to be other-than-temporarily impaired at June 30, 2016, and no impairment has been recognized. FHLB stock is shown in restricted securities on the consolidated balance sheets.

The Company also has an investment in Federal Reserve Bank (“FRB”) stock which totaled $1.7 million at June 30, 2016 and December 31, 2015, respectively. The investment in FRB stock is a required investment and is carried at cost since there is no ready market. The Company does not consider this investment to be other-than-temporarily impaired at June 30, 2016, and no impairment has been recognized. FRB stock is shown in restricted securities on the consolidated balance sheets.