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Securities
 3 Months Ended
Mar. 31, 2014
Securities  
Securities

Note 6 – Securities

 

The book values and approximate fair values of investment securities at March 31, 2014 and December 31, 2013 are summarized as follows:

 

    March 31, 2014     December 31, 2013  
    Amortized     Fair     Unrealized     Amortized     Fair     Unrealized  
($ in thousands)   Cost     Value     Gains     (Losses)     Cost     Value     Gains     (Losses)  
                                                 
Securities available for sale:                                                                
  Government-sponsored enterprise securities   $ 22,435       22,296       34       (173 )     18,432       18,245       32       (219 )
  Mortgage-backed securities     149,366       148,081       1,277       (2,562 )     148,646       147,187       1,415       (2,874 )
  Corporate bonds     3,999       3,675       36       (360 )     3,999       3,598       44       (445 )
  Equity securities     6,107       6,138       43       (12 )     3,984       4,011       40       (13 )
Total available for sale   $ 181,907       180,190       1,390       (3,107 )     175,061       173,041       1,531       (3,551 )
                                                                 
Securities held to maturity:                                                                
  State and local governments   $ 53,937       57,192       3,255       —       53,995       56,700       2,709       (4 )

 

Included in mortgage-backed securities at March 31, 2014 were collateralized mortgage obligations with an amortized cost of $174,000 and a fair value of $180,000. Included in mortgage-backed securities at December 31, 2013 were collateralized mortgage obligations with an amortized cost of $192,000 and a fair value of $200,000. All of the Company’s mortgage-backed securities, including collateralized mortgage obligations, were issued by government-sponsored corporations.

 

The Company owned Federal Home Loan Bank (FHLB) stock with a cost and fair value of $6,016,000 at March 31, 2014 and $3,894,000 at December 31, 2013, which is included in equity securities above and serves as part of the collateral for the Company’s line of credit with the FHLB. The investment in this stock is a requirement for membership in the FHLB system. Periodically the FHLB recalculates the Company’s required level of holdings, and the Company either buys more stock or the FHLB redeems a portion of the stock at cost.

 

The following table presents information regarding securities with unrealized losses at March 31, 2014:

 

 

($ in thousands)

 

   Securities in an Unrealized
Loss Position for
Less than 12 Months		     Securities in an Unrealized
Loss Position for
More than 12 Months		     Total  
    Fair Value     Unrealized
Losses		     Fair Value     Unrealized
Losses		     Fair Value     Unrealized
Losses		  
Government-sponsored enterprise securities   $ 12,262       173       —       —       12,262       173  
Mortgage-backed securities     62,049       1,175       24,496       1,387       86,545       2,562  
Corporate bonds     —       —       640       360       640       360  
Equity securities     —       —       22       12       22       12  
State and local governments     —       —       —       —       —       —  
      Total temporarily impaired securities   $ 74,311       1,348       25,158       1,759       99,469       3,107  

 

The following table presents information regarding securities with unrealized losses at December 31, 2013:

 

 

($ in thousands)

 

   Securities in an Unrealized
Loss Position for
Less than 12 Months		     Securities in an Unrealized
Loss Position for
More than 12 Months		     Total  
    Fair Value     Unrealized
Losses		     Fair Value     Unrealized
Losses		     Fair Value     Unrealized
Losses		  
Government-sponsored enterprise securities   $ 12,212       219       —       —       12,212       219  
Mortgage-backed securities     64,937       1,675       17,979       1,199       82,916       2,874  
Corporate bonds     —       —       555       445       555       445  
Equity securities     —       —       22       13       22       13  
State and local governments     992       4       —       —       992       4  
      Total temporarily impaired securities   $ 78,141       1,898       18,556       1,657       96,697       3,555  

 

 

In the above tables, all of the non-equity securities that were in an unrealized loss position at March 31, 2014 and December 31, 2013 are bonds that the Company has determined are in a loss position due to interest rate factors, the overall economic downturn in the financial sector, and the broader economy in general. The Company has evaluated the collectability of each of these bonds and has concluded that there is no other-than-temporary impairment. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost. The Company has also concluded that each of the equity securities in an unrealized loss position at March 31, 2014 and December 31, 2013 was in such a position due to temporary fluctuations in the market prices of the securities. The Company’s policy is to record an impairment charge for any of these equity securities that remains in an unrealized loss position for twelve consecutive months unless the amount is insignificant.

 

The aggregate carrying amount of cost-method investments was $6,016,000 and $3,894,000 at March 31, 2014 and December 31, 2013, respectively, which was the FHLB stock discussed above. The Company determined that none of its cost-method investments were impaired at either period end.

 

The book values and approximate fair values of investment securities at March 31, 2014, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

    Securities Available for Sale     Securities Held to Maturity  
    Amortized     Fair     Amortized     Fair  
($ in thousands)   Cost     Value     Cost     Value  
                         
Debt securities                                
Due within one year   $ —       —       —       —  
Due after one year but within five years     21,499       21,413       7,481       8,074  
Due after five years but within ten years     3,935       3,918       37,579       39,791  
Due after ten years     1,000       640       8,877       9,327  
Mortgage-backed securities     149,366       148,081       —       —  
Total debt securities     175,800       174,052       53,937       57,192  
                                 
Equity securities     6,107       6,138       —       —  
Total securities   $ 181,907       180,190       53,937       57,192  

 

At March 31, 2014 and December 31, 2013 investment securities with carrying values of $82,120,000 and $79,838,000, respectively, were pledged as collateral for public deposits.

 

The Company recorded no gains or losses on securities during the three month periods ended March 31, 2014 or 2013.