NOTE 2 – SECURITIES

Securities consist of the following at March 31, 2014 and December 31, 2013:

 

(Dollars in thousands)		Amortized cost				Gross unrealized gains				Gross unrealized losses				Fair value
March 31, 2014
Available-for-sale securities
U.S. Treasury security		$	1,005			$	—			$	9			$	996
U.S. government agencies			25,534				9				494				25,049
Mortgage-backed securities of government agencies			52,429				638				291				52,776
Other mortgage-backed securities			216				4				—				220
Asset-backed securities of government agencies			2,708				13				7				2,714
State and political subdivisions			16,193				424				104				16,513
Corporate bonds			4,501				41				2				4,540
Equity securities			106				20				—				126
Total available-for-sale securities			102,692				1,149				907				102,934
Held-to-maturity securities
U.S. government agencies			19,204				2				311				18,895
Mortgage-backed securities of government agencies			24,484				83				474				24,093
Total held-to-maturity securities			43,688				85				785				42,988
Restricted stock			4,613				—				—				4,613
Total securities		$	150,993			$	1,234			$	1,692			$	150,535
December 31, 2013
Available-for-sale securities
U.S. Treasury security		$	1,005			$	—			$	8			$	997
U.S. government agencies			22,999				8				706				22,301
Mortgage-backed securities of government agencies			54,455				536				691				54,300
Other mortgage-backed securities			230				5				—				235
Asset-backed securities of government agencies			2,739				36				—				2,775
State and political subdivisions			16,219				371				143				16,447
Corporate bonds			4,500				44				5				4,539
Equity securities			106				23				1				128
Total available-for-sale securities			102,253				1,023				1,554				101,722
Held-to-maturity securities
U.S. government agencies			19,186				—				828				18,358
Mortgage-backed securities of government agencies			25,164				—				879				24,285
Total held-to-maturity securities			44,350				—				1,707				42,643
Restricted stock			5,463				—				—				5,463
Total securities		$	152,066			$	1,023			$	3,261			$	149,828

 

The amortized cost and fair value of debt securities at March 31, 2014, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

(Dollars in thousands)		Amortized cost				Fair value
Available-for-sale:
Due in one year or less		$	840			$	856
Due after one through five years			17,303				17,458
Due after five through ten years			24,907				24,695
Due after ten years			59,536				59,799
Total debt securities available-for-sale		$	102,586			$	102,808
Held-to-maturity:
Due in one year or less		$	—			$	—
Due after one through five years			—				—
Due after five through ten years			7,725				7,707
Due after ten years			35,963				35,281
Total debt securities held-to-maturity		$	43,688			$	42,988

Securities with a carrying value of approximately $83.3 million and $87.9 million were pledged at March 31, 2014 and December 31, 2013, respectively, to secure public deposits, as well as other deposits and borrowings as required or permitted by law.

Restricted stock primarily consists of investments in Federal Home Loan Bank (FHLB) and Federal Reserve Bank stock. The Bank’s investment in FHLB stock amounted to approximately $4.1 million at March 31, 2014 and $5.0 million at December 31, 2013. The FHLB of Cincinnati mandatorily redeemed members’ stock during the first quarter of 2014. Federal Reserve Bank stock was $471 thousand at March 31, 2014 and December 31, 2013.

 

The following table presents gross unrealized losses and fair value of securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2014 and December 31, 2013:

 

		Securities in a continuous unrealized loss position
		Less than 12 months								12 months or more								Total
(Dollars in thousands)		Gross unrealized losses				Fair value				Gross unrealized losses				Fair value				Gross unrealized losses				Fair value
March 31, 2014
Available-for-sale
U.S. Treasury securities		$	9			$	996			$	—			$	—			$	9			$	996
U.S. Government agencies			306				16,693				188				3,812				494				20,505
Mortgage-backed securities of government agencies			291				21,627				—				—				291				21,627
Asset-backed securities of government agencies			7				1,706				—				—				7				1,706
State and political subdivisions			62				2,197				42				787				104				2,984
Corporate bonds			2				573				—				—				2				573
Held-to-maturity
U.S. Government agencies			301				13,179				10				2,792				311				15,971
Mortgage-backed securities of government agencies			474				19,775				—				—				474				19,775
Total temporarily impaired securities		$	1,452			$	76,746			$	240			$	7,391			$	1,692			$	84,137
December 31, 2013
Available-for-sale
U.S. Treasury securities		$	8			$	997			$	—			$	—			$	8			$	997
U.S. Government agencies			590				15,409				116				1,884				706				17,293
Mortgage-backed securities of government agencies			691				29,938				—				—				691				29,938
State and political subdivisions			122				3,522				21				233				143				3,755
Corporate bonds			4				1,163				1				499				5				1,662
Equity securities			—				—				1				1				1				1
Held-to-maturity
U.S. Government agencies			771				14,559				57				1,799				828				16,358
Mortgage-backed securities of government agencies			879				20,149				—				—				879				20,149
Total temporarily impaired securities		$	3,065			$	85,737			$	196			$	4,416			$	3,261			$	90,153

There were sixty-three (63) securities in an unrealized loss position at March 31, 2014, eleven (11) of which were in a continuous loss position for twelve months or more. At least quarterly, the Company conducts a comprehensive security-level impairment assessment. The assessments are based on the nature of the securities, the extent and duration of the securities in an unrealized loss position, the extent and duration of the loss and management’s intent to sell or if it is more likely than not that management will be required to sell a security before recovery of its amortized cost basis, which may be maturity. Management believes the Company will fully recover the cost of these securities. It does not intend to sell these securities and likely will not be required to sell them before the anticipated recovery of the remaining amortized cost basis, which may be maturity. As a result, management concluded that these securities were not other-than-temporarily impaired at March 31, 2014.