4. Investment Securities

Summary information regarding investment securities classified as available for sale and held to maturity as of December 31, 2013 and 2012 follows.


*(dollars in thousands)*	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses				Fair Value
					Less Than 1 Year		Over 1 Year
December 31, 2013
Available for sale:
U.S. agency mortgage-backed	$	96,145	$	1,765	$	909	$	216	$	96,785
Non-U.S. agency mortgage-backed		9,765		58		31		43		9,749
Municipal bonds		19,879		318		279		119		19,799
U.S. government agency		23,543		236		480		—		23,299

Total available for sale	$	149,332	$	2,377	$	1,699	$	378	$	149,632


Held to maturity:
U.S. agency mortgage-backed	$	132	$	1	$	—	$	—	$	133
Municipal bonds		9,273		67		198		—		9,142

Total held to maturity	$	9,405	$	68	$	198	$	—	$	9,275


*(dollars in thousands)*	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses				Fair Value
					Less Than 1 Year		Over 1 Year
December 31, 2012
Available for sale:
U.S. agency mortgage-backed	$	99,137	$	3,391	$	14	$	1	$	102,513
Non-U.S. agency mortgage-backed		12,426		280		—		38		12,668
Municipal bonds		16,843		774		32		—		17,585
U.S. government agency		23,944		553		7		—		24,490

Total available for sale	$	152,350	$	4,998	$	53	$	39	$	157,256


Held to maturity:
U.S. agency mortgage-backed	$	693	$	13	$	—	$	—	$	706
Municipal bonds		972		68		—		—		1,040

Total held to maturity	$	1,665	$	81	$	—	$	—	$	1,746

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic and market conditions warrant such evaluations. Consideration is given to (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the Company’s intent to sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost, which may extend to maturity and our ability and intent to hold the security for a period of time that allows for the recovery in value in the case of equity securities.

The Company developed a process to identify securities that could potentially have a credit impairment that is other-than-temporary. This process involves evaluating each security for impairment by monitoring credit performance, collateral type, collateral geography, bond credit support, loan-to-value ratios, credit scores, loss severity levels, pricing levels, downgrades by rating agencies, cash flow projections and other factors as indicators of potential credit issues. When the Company determines that a security is deemed to be other than temporarily impaired, an impairment loss is recognized.

As of December 31, 2013, 64 debt securities had unrealized losses totaling 3.3% of the individual securities’ amortized cost basis and 1.4% of the Company’s total amortized cost basis of the investment securities portfolio. Nine of the 64 securities had been in a continuous loss position for over 12 months at such date. The nine securities had an aggregate amortized cost basis and unrealized loss of $7,478,000 and $378,000, respectively, at December 31, 2013. Management has the intent and ability to hold these debt securities until maturity, or until anticipated recovery. No declines in these 64 securities were deemed to be other-than-temporary.

As of December 31, 2012, 16 debt securities had unrealized losses totaling 0.7% of the individual securities’ amortized cost basis and 0.1% of the Company’s total amortized cost basis of the investment securities portfolio. Five of the 16 securities had been in a continuous loss position for over 12 months at such date. The five securities had an aggregate amortized cost basis and unrealized loss of $2,653,000 and $39,000, respectively, at December 31, 2012. Management has the intent and ability to hold these debt securities until maturity, or until anticipated recovery. No declines in these five securities were deemed to be other-than-temporary.

The amortized cost and estimated fair value by maturity of investment securities as of December 31, 2013 are shown in the following tables. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. The expected maturity of a security, may differ from its contractual maturity because of the exercise of call options and potential paydowns. Accordingly, actual maturities may differ from contractual maturities.


*(dollars in thousands)*	One Year or Less		After One Year through Five Years		After Five Years through Ten Years		After Ten Years		Total
Fair Value
Securities available for sale:
U.S. agency mortgage-backed	$	113	$	231	$	15,665	$	80,776	$	96,785
Non-U.S. agency mortgage-backed		—		—		—		9,749		9,749
Municipal bonds		503		4,858		11,574		2,864		19,799
U.S. government agency		2,512		5,293		10,510		4,984		23,299

Total securities available for sale	$	3,128	$	10,382	$	37,749	$	98,373	$	149,632


Securities held to maturity:
U.S. agency mortgage-backed	$	133	$	—	$	—	$	—	$	133
Municipal bonds		216		797		6,886		1,243		9,142

Total securities held to maturity	$	349	$	797	$	6,886	$	1,243	$	9,275


*(dollars in thousands)*	One Year or Less		After One Year through Five Years		After Five Years through Ten Years		After Ten Years		Total
Amortized Cost
Securities available for sale:
U.S. agency mortgage-backed	$	108	$	214	$	15,696	$	80,127	$	96,145
Non-U.S. agency mortgage-backed		—		—		—		9,765		9,765
Municipal bonds		503		4,743		11,761		2,872		19,879
U.S. government agency		2,500		5,225		10,990		4,828		23,543

Total securities available for sale	$	3,111	$	10,182	$	38,447	$	97,592	$	149,332


Securities held to maturity:
U.S. agency mortgage-backed	$	132	$	—	$	—	$	—	$	132
Municipal bonds		215		756		7,041		1,261		9,273

Total securities held to maturity	$	347	$	756	$	7,041	$	1,261	$	9,405

For the year ended December 31, 2013, the Company recorded gross gains of $428,000 and no gross losses related to the sale of investment securities. For the year ended December 31, 2012, the Company recorded gross gains of $230,000 and gross losses of $8,000 related to the sale of investment securities.

As of December 31, 2013 and 2012, the Company had accrued interest receivable for investment securities of $679,000 and $565,000, respectively.

As of December 31, 2013 and 2012, the Company had $43,977,000 and $41,462,000, respectively, of securities pledged to secure public deposits.