Note 2.

Securities

The Company invests in U.S. agency and mortgage-backed securities, obligations of states and political subdivisions and corporate equity securities. Amortized costs and fair values of securities available for sale at December 31, 2013 and 2012 were as follows:


	2013
	(in thousands)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
U.S. agency and mortgage-backed securities	$	86,365	$	670	$	(2,138	)	$	84,897
Obligations of states and political subdivisions		18,647		350		(598	)		18,399
Corporate equity securities		1		4		—			5

	$	105,013	$	1,024	$	(2,736	)	$	103,301


	2012
	(in thousands)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
U.S. agency and mortgage-backed securities	$	72,129	$	1,325	$	(236	)	$	73,218
Obligations of states and political subdivisions		15,556		762		(83	)		16,235
Corporate equity securities		1		2		—			3

	$	87,686	$	2,089	$	(319	)	$	89,456

At December 31, 2013 and 2012, investments in an unrealized loss position that are temporarily impaired were as follows:


	2013
						(in thousands)
	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)
U.S. agency and mortgage-backed securities	$	49,810	$	(1,755	)	$	10,180	$	(383	)	$	59,990	$	(2,138	)
Obligations of states and political subdivisions		7,165		(422	)		2,663		(176	)		9,828		(598	)

	$	56,975	$	(2,177	)	$	12,843	$	(559	)	$	69,818	$	(2,736	)


	2012
						(in thousands)
	Less than 12 months					12 months or more				Total
	Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)		Fair Value		Unrealized (Loss)
U.S. agency and mortgage-backed securities	$	19,612	$	(236	)	$	—	$	—	$	19,612	$	(236	)
Obligations of states and political subdivisions		4,287		(83	)		—		—		4,287		(83	)

	$	23,899	$	(319	)	$	—	$	—	$	23,899	$	(319	)

The tables above provide information about securities that have been in an unrealized loss position for less than twelve consecutive months and securities that have been in an unrealized loss position for twelve consecutive months or more. Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Impairment is considered to be other-than temporary if the Company (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its cost, or (3) does not expect to recover the security’s entire amortized cost basis. Presently, the Company does not intend to sell any of these securities, will not be required to sell these securities, and expects to recover the entire amortized cost of all the securities.

At December 31, 2013, there were forty U.S. agency and mortgage-backed securities and twenty-one obligations of states and political subdivisions in an unrealized loss position. One hundred percent of the Company’s investment portfolio is considered investment grade. The weighted-average re-pricing term of the portfolio was 4.5 years at December 31, 2013. At December 31, 2012, there were twelve U.S. agency and mortgage-backed securities and nine obligations of states and political subdivisions in an unrealized loss position. The weighted-average re-pricing term of the portfolio was 3.6 years at December 31, 2012. The change in the unrealized gains and losses from December 31, 2012 to December 31, 2013 in the U.S. Agency and mortgage-backed securities portfolio and the obligation of states and political subdivisions portfolio was related to changes in market interest rates and not credit concerns of the issuers.

The amortized cost and fair value of securities available for sale at December 31, 2013 by contractual maturity are shown below. Expected maturities of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties. Corporate equity securities are not included in the maturity categories in the following maturity summary because they do not have a stated maturity date.


	(in thousands)
	Amortized		Fair
	Cost		Value
Due within one year	$	899	$	923
Due after one year through five years		5,301		5,329
Due after five years through ten years		20,353		19,901
Due after ten years		78,459		77,143
Corporate equity securities		1		5

	$	105,013	$	103,301

Proceeds from sales, calls and maturities of securities available for sale during 2013, 2012 and 2011 were $4.6 million, $36.3 million and $14.9 million, respectively. Gross gains of $1.3 million and $65 thousand were realized on those sales during 2012 and 2011, respectively. There were no gross gains realized in 2013. Gross losses of $6 thousand were realized on those sales during 2011. There were no gross losses realized in 2013 and 2012.

Securities having a book value of $3.1 million and $24.0 million at December 31, 2013 and 2012 were pledged to secure public deposits and for other purposes required by law.

Federal Home Loan Bank, Federal Reserve Bank and Community Bankers’ Bank stock are generally viewed as long-term investments and as restricted securities, which are carried at cost, because there is a minimal market for the stock. Therefore, when evaluating restricted securities for impairment, their value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Company does not consider these investments to be other-than-temporarily impaired at December 31, 2013, and no impairment has been recognized. Restricted securities are not part of the available for sale securities portfolio.

The composition of restricted securities at December 31, 2013 and December 31, 2012 was as follows:


	(in thousands)
	December 31, 2013		December 31, 2012
Federal Home Loan Bank stock	$	908	$	1,078
Federal Reserve Bank stock		846		846
Community Bankers’ Bank stock		50		50

	$	1,804	$	1,974