Note 2.

Investment Securities

The following tables present the amortized cost and aggregate fair value of available-for-sale securities, including gross unrealized gains and losses, as of the dates indicated:


	June 30, 2015
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
(Amounts in thousands)
U.S. Agency securities	$	33,082	$	26	$	(981	)	$	32,127
Municipal securities		131,139		3,340		(1,480	)		132,999
Single issue trust preferred securities		55,852		—		(7,507	)		48,345
Corporate securities		60,832		12		(136	)		60,708
Certificates of deposit		5,000		—		—			5,000
Mortgage-backed Agency securities		97,902		329		(1,438	)		96,793
Equity securities		222		6		(9	)		219

Total	$	384,029	$	3,713	$	(11,551	)	$	376,191


	December 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
(Amounts in thousands)
U.S. Agency securities	$	34,604	$	11	$	(1,017	)	$	33,598
Municipal securities		134,784		4,823		(692	)		138,915
Single issue trust preferred securities		55,822		—		(9,685	)		46,137
Corporate securities		5,000		109		—			5,109
Mortgage-backed Agency securities		102,506		470		(857	)		102,119
Equity securities		226		19		(6	)		239

Total	$	332,942	$	5,432	$	(12,257	)	$	326,117

The following tables present the amortized cost and aggregate fair value of held-to-maturity securities, including gross unrealized gains and losses, as of the dates indicated:


	June 30, 2015
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
(Amounts in thousands)
U.S. Agency securities	$	61,928	$	217	$	(3	)	$	62,142
Municipal securities		189		4		—			193
Corporate securities		10,535		18		(9	)		10,544

Total	$	72,652	$	239	$	(12	)	$	72,879


	December 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
(Amounts in thousands)
U.S. Agency securities	$	46,987	$	22	$	(54	)	$	46,955
Municipal securities		379		7		—			386
Corporate securities		10,582		—		(34	)		10,548

Total	$	57,948	$	29	$	(88	)	$	57,889

The following table presents the amortized cost and aggregate fair value of available-for-sale securities and held-to-maturity securities, by contractual maturity, as of June 30, 2015. Actual maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.


(Amounts in thousands)	Amortized Cost		Fair Value
Available-for-sale securities
Due within one year	$	6,154	$	6,148
Due after one year but within five years		61,263		61,253
Due after five years but within ten years		66,872		68,976
Due after ten years		146,616		137,802

		280,905		274,179
Mortgage-backed securities		97,902		96,793
Certificates of deposit		5,000		5,000
Equity securities		222		219

Total	$	384,029	$	376,191


Held-to-maturity securities
Due within one year	$	190	$	194
Due after one year but within five years		72,462		72,685
Due after five years but within ten years		—		—
Due after ten years		—		—

Total	$	72,652	$	72,879

The following table presents the proceeds from sales of available-for-sale securities and the gross realized gains and losses on those sales in the periods indicated:


	Three Months Ended June 30,						Six Months Ended June 30,
	2015			2014			2015			2014
(Amounts in thousands)
Gross realized gains	$	251		$	1,288		$	266		$	1,511
Gross realized losses		(38	)		(1,347	)		(76	)		(1,525	)

Net gain (loss) on sale of securities	$	213		$	(59	)	$	190		$	(14	)

The following tables present the fair values and unrealized losses for available-for-sale securities in a continuous unrealized loss position for less than 12 months and for 12 months or longer as of the dates indicated:


	June 30, 2015
	Less than 12 Months					12 Months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
(Amounts in thousands)
U.S. Agency securities	$	3,041	$	(14	)	$	25,102	$	(967	)	$	28,143	$	(981	)
Municipal securities		20,138		(660	)		10,120		(820	)		30,258		(1,480	)
Single issue trust preferred securities		—		—			48,344		(7,507	)		48,344		(7,507	)
Corporate securities		55,581		(136	)		—		—			55,581		(136	)
Mortgage-backed Agency securities		28,497		(199	)		40,246		(1,239	)		68,743		(1,438	)
Equity securities		—		—			146		(9	)		146		(9	)

Total	$	107,257	$	(1,009	)	$	123,958	$	(10,542	)	$	231,215	$	(11,551	)


	December 31, 2014
	Less than 12 Months					12 Months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
(Amounts in thousands)
U.S. Agency securities	$	—	$	—		$	29,448	$	(1,017	)	$	29,448	$	(1,017	)
Municipal securities		1,112		(8	)		25,007		(684	)		26,119		(692	)
Single issue trust preferred securities		—		—			46,137		(9,685	)		46,137		(9,685	)
Mortgage-backed Agency securities		2,778		(3	)		45,790		(854	)		48,568		(857	)
Equity securities		150		(6	)		—		—			150		(6	)

Total	$	4,040	$	(17	)	$	146,382	$	(12,240	)	$	150,422	$	(12,257	)

The following tables present the fair values and unrealized losses for held-to-maturity securities in a continuous unrealized loss position for less than 12 months and for 12 months or longer as of the dates indicated.


	June 30, 2015
	Less than 12 Months					12 Months or longer				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(Amounts in thousands)
U.S. Agency securities	$	3,754	$	(3	)	$	—	$	—	$	3,754	$	(3	)
Corporate securities		3,642		(9	)		—		—		3,642		(9	)

Total	$	7,396	$	(12	)	$	—	$	—	$	7,396	$	(12	)

	December 31, 2014
	Less than 12 Months					12 Months or longer				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
(Amounts in thousands)
U.S. Agency securities	$	28,188	$	(54	)	$	—	$	—	$	28,188	$	(54	)
Corporate securities		10,548		(34	)		—		—		10,548		(34	)

Total	$	38,736	$	(88	)	$	—	$	—	$	38,736	$	(88	)

As of June 30, 2015, there were 131 securities in an unrealized loss position, and their combined depreciation in value represented 2.58% of the investment securities portfolio. As of December 31, 2014, there were 97 individual securities in an unrealized loss position, and their combined depreciation in value represented 3.21% of the investment securities portfolio.

The Company reviews its investment portfolio quarterly for indications of OTTI. Debt securities not beneficially owned by the Company include securities issued from the U.S. Department of the Treasury (“Treasury”), municipal securities, and single issue trust preferred securities. For debt securities not beneficially owned, the Company analyzes factors such as the severity and duration of the impairment, adverse conditions within the issuing industry, prospects for the issuer, performance of the security, changes in rating by rating agencies, and other qualitative factors to determine if the impairment will be recovered. If the evaluation suggests that the impairment will not be recovered, the Company calculates the present value of the security to determine the amount of OTTI. The security is then written down to its current present value and the Company calculates and records the amount of the loss due to credit factors in earnings through noninterest income and the amount due to other factors in stockholders’ equity through OCI. Temporary impairment on these securities is primarily related to changes in benchmark interest rates, changes in pricing in the credit markets, destabilization in the Eurozone, and other current economic factors. During the three and six months ended June 30, 2015 and 2014, the Company incurred no OTTI charges related to debt securities not beneficially owned.

Debt securities beneficially owned by the Company consist of corporate securities, certificates of deposit, and mortgage-backed securities (“MBSs”). For debt securities beneficially owned, the Company analyzes the cash flows for each applicable security to determine if an adverse change in cash flows expected to be collected has occurred. If the projected value of cash flows at the current reporting date is less than the present value previously projected, and less than the current book value, an adverse change has occurred. The Company then compares the current present value of cash flows to the current net book value to determine the credit-related portion of the OTTI. The credit-related OTTI is recorded in earnings through noninterest income and any remaining noncredit-related OTTI is recorded in stockholders’ equity through OCI. During the three and six months ended June 30, 2015, the Company incurred no credit-related OTTI charges related to debt securities beneficially owned. During the three months ended June 30, 2014, the Company incurred credit-related OTTI charges related to debt securities beneficially owned of $254 thousand. During the six months ended June 30, 2014, the Company incurred credit-related OTTI charges related to debt securities beneficially owned of $486 thousand. These charges were associated with a non-Agency MBS that was sold in November 2014. The following table presents the activity for credit-related losses recognized in earnings on debt securities where a portion of an OTTI was recognized in OCI for the periods indicated:


	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
(Amounts in thousands)
Beginning balance⁽¹⁾	$	—	$	8,030	$	—	$	7,798
Additions for credit losses on securities previously recognized		—		254		—		486

Ending balance	$	—	$	8,284	$	—	$	8,284

(1)	The beginning balance includes credit related losses included in OTTI charges recognized on debt securities in prior periods.

For equity securities, the Company considers its intent to hold or sell the security before recovery, the severity and duration of the decline in fair value of the security below its cost, the financial condition and near-term prospects of the issuer, and whether the decline appears to be related to issuer, general market, or industry conditions to determine if the impairment will be recovered. If the Company deems the impairment other-than-temporary in nature, the security is written down to its current present value and the OTTI loss is charged to earnings. During the three and six months ended June 30, 2015, the Company incurred no OTTI charges related to equity holdings. During the three months ended June 30, 2014, the Company incurred no OTTI charges related to equity holdings. During the six months ended June 30, 2014, the Company incurred OTTI charges related to certain equity holdings of $32 thousand.

The carrying amount of securities pledged for various purposes totaled $244.96 million as of June 30, 2015, and $268.78 million as of December 31, 2014.