Note 6 – Securities

The book values and approximate fair values of investment securities at September 30, 2014 and December 31, 2013 are summarized as follows:

	September 30, 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	$	18,546		18,465		−		(81	)		18,432		18,245		32		(219	)
Mortgage-backed securities		135,406		133,769		402		(2,039	)		148,646		147,187		1,415		(2,874	)
Corporate bonds		1,000		890		−		(110	)		3,999		3,598		44		(445	)
Equity securities		6,105		6,130		39		(14	)		3,984		4,011		40		(13	)
Total available for sale	$	161,057		159,254		441		(2,244	)		175,061		173,041		1,531		(3,551	)

Securities held to maturity:
State and local governments	$	53,821		57,601		3,780		−			53,995		56,700		2,709		(4	)

Included in mortgage-backed securities at September 30, 2014 were collateralized mortgage obligations with an amortized cost of $124,000 and a fair value of $127,000. 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 September 30, 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 September 30, 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	$	9,541		4		5,923		77		15,464		81
Mortgage-backed securities		46,924		304		45,606		1,735		92,530		2,039
Corporate bonds		−		−		890		110		890		110
Equity securities		−		−		16		14		16		14
State and local governments		−		−		−		−		−		−
Total temporarily impaired securities	$	56,465		308		52,435		1,936		108,900		2,244

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 September 30, 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 September 30, 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 September 30, 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 September 30, 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		18,546		18,465		10,948		11,743
Due after five years but within ten years		−		−		38,417		41,151
Due after ten years		1,000		890		4,456		4,707
Mortgage-backed securities		135,406		133,769		−		−
Total debt securities		154,952		153,124		53,821		57,601

Equity securities		6,105		6,130		−		−
Total securities	$	161,057		159,254		53,821		57,601

At September 30, 2014 and December 31, 2013 investment securities with carrying values of $76,263,000 and $79,838,000, respectively, were pledged as collateral for public deposits.

During the nine months ended September 2014 and 2013, the Company sold approximately $47,473,000 and $12,935,000, respectively, in securities and recorded net gains of $786,000 and $553,000, respectively, related to these sales. During the nine months ended September 30, 2013, the Company recorded a net gain of $7,000 related to the call of several municipal and bond securities.