Note 7 - Investments

The following tables summarize the Bank’s holdings for both securities held-to-maturity and securities available-for-sale as of September 30, 2013 and December 31, 2012 (amounts in thousands):


		September 30, 2013
	Amortized	Gross Unrealized		Fair Value
	Costs	Gains	(Losses)
Held-to-Maturity
US agency obligations	$ 3,543	$ 234	$ -	$ 3,777

Available-for-Sale
US Treasuries	$ 3,905	$ -	$ (206)	$ 3,699
US agency obligations	20,312	3	(2,095)	18,220
Mortgage-backed securities	8,470	37	(153)	8,354
Municipals	15,451	33	(835)	14,649
Other	2,012	-	(123)	1,889
	$ 50,150	$ 73	$ (3,412)	$ 46,811

		December 31, 2012
	Amortized	Gross Unrealized		Fair Value
	Costs	Gains	(Losses)
Held-to-Maturity
US agency obligations	$ 3,075	$ 342	$ -	$ 3,417

Available-for-Sale
US agency obligations	$ 22,980	$ 184	$ (95)	$ 23,069
Mortgage-backed securities	1,805	7	-	1,812
Municipals	22,099	780	(75)	22,804
Other	2,548	61	-	2,609
	$ 49,432	$ 1,032	$ (170)	$ 50,294

Note 7 – Investments (continued)

The following tables show the gross unrealized losses and fair value of the Bank’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2013 and December 31, 2012 (amounts in thousands):


	Less than 12 months		More than 12 months		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
September 30, 2013	Value	Losses	Value	Losses	Value	Losses
Description of securities
US Treasuries	$ 3,699	$ 206	$ -	$ -	$ 3,699	$ 206
U.S. agency obligations	16,274	2,095	-	-	16,274	2,095
Mortgage-backed securities	4,833	153	-	-	4,833	153
Municipals	11,206	718	946	117	12,152	835
Other	1,889	123	-	-	1,889	123
Total	$ 37,901	$ 3,295	$ 946	$ 117	$ 38,847	$ 3,412

	Less than 12 months		More than 12 months		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
December 31, 2012	Value	Losses	Value	Losses	Value	Losses
Description of securities
U.S. agency obligations	$ 9,116	$ 95	$ -	$ -	$ 9,116	$ 95
Municipals	1,879	75	-	-	1,879	75
Total	$ 10,995	$ 170	$ -	$ -	$ 10,995	$ 170

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and may do so more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) the intent of Financial, if any, to sell the security; (4) whether Financial more likely than not will be required to sell the security before recovering its cost; and (5) whether Financial does not expect to recover the security’s entire amortized cost basis (even if Financial does not intend to sell the security).

At September 30, 2013, the Company did not consider the unrealized losses as other-than-temporary losses due to the nature of the securities involved. As of September 30, 2013, the Bank owned 42 securities that were being evaluated for other than temporary impairment. Eleven of these securities were S&P rated AAA, 30 were S&P rated AA, and one was S&P rated A. As of September 30, 2013, 17 of these securities were direct obligations of the U.S. government or government sponsored entities, 22 were municipal issues, and three were publicly traded U.S. corporations.

Based on the analysis performed by management as mandated by the Bank’s investment policy, management believes the default risk to be minimal. Because the Bank expects to recover the entire amortized cost basis, no declines currently are deemed to be other-than-temporary.