REPUBLIC BANCORP INC /KY/ - Quarter Report: 2014 June (Form 10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

For the quarterly period ended June 30, 2014

 

or

 

 

Commission File Number: 0-24649

 

 

REPUBLIC BANCORP, INC.

(Exact name of registrant as specified in its charter)

 

 

 

(502) 584-3600

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes   o No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x Yes  o No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o Yes  x No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

The number of shares outstanding of the registrant’s Class A Common Stock and Class B Common Stock, as of July 31, 2014, was 18,548,340 and 2,245,492, respectively.

 

 

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TABLE OF CONTENTS

 

PART I — FINANCIAL INFORMATION			3
Item 1.		Financial Statements.	3
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.	58
Item 3.		Quantitative and Qualitative Disclosures about Market Risk.	101
Item 4.		Controls and Procedures.	101
PART II — OTHER INFORMATION			101
Item 1.		Legal Proceedings.	101
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds.	102
Item 6.		Exhibits.	103
		SIGNATURES	104

 

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PART I — FINANCIAL INFORMATION

 

Item 1.  Financial Statements.

 

CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited)

 

		June 30,			December 31,
		2014			2013
ASSETS
Cash and cash equivalents		$	84,273		$	170,863
Securities available for sale		463,646			432,893
Securities held to maturity (fair value of $48,594 in 2014 and $50,768 in 2013)		48,338			50,644
Mortgage loans held for sale, at fair value		6,809			3,506
Loans		2,725,017			2,589,792
Allowance for loan losses		(22,772		)	(23,026		)
Loans, net		2,702,245			2,566,766
Federal Home Loan Bank stock, at cost		28,208			28,342
Premises and equipment, net		32,481			32,908
Goodwill		10,168			10,168
Other real estate owned		11,613			17,102
Bank owned life insurance		50,656			25,086
Other assets and accrued interest receivable		26,887			33,626
TOTAL ASSETS		$	3,465,324		$	3,371,904
LIABILITIES
Deposits:
Non interest-bearing		$	519,651		$	488,642
Interest-bearing		1,485,332			1,502,215
Total deposits		2,004,983			1,990,857
Securities sold under agreements to repurchase and other short-term borrowings		197,439			165,555
Federal Home Loan Bank advances		640,000			605,000
Subordinated note		41,240			41,240
Other liabilities and accrued interest payable		26,371			26,459
Total liabilities		2,910,033			2,829,111
Commitments and contingent liabilities (Footnote 9)		—			—
STOCKHOLDERS’ EQUITY
Preferred stock, no par value		—			—
Class A Common Stock and Class B Common Stock, no par value		4,893			4,894
Additional paid in capital		133,320			133,012
Retained earnings		412,338			401,766
Accumulated other comprehensive income		4,740			3,121
Total stockholders’ equity		555,291			542,793
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	3,465,324		$	3,371,904

 

See accompanying footnotes to consolidated financial statements.

 

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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(in thousands, except per share data)

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2014			2013			2014			2013
INTEREST INCOME:
Loans, including fees		$	30,110		$	31,735		$	60,272		$	63,649
Taxable investment securities		1,908			1,976			3,767			4,016
Federal Home Loan Bank stock and other		387			408			863			855
Total interest income		32,405			34,119			64,902			68,520
INTEREST EXPENSE:
Deposits		937			975			1,915			2,030
Securities sold under agreements to repurchase and other short-term borrowings		22			13			44			42
Federal Home Loan Bank advances		3,267			3,735			6,831			7,293
Subordinated note		629			629			1,258			1,258
Total interest expense		4,855			5,352			10,048			10,623
NET INTEREST INCOME		27,550			28,767			54,854			57,897
Provision for loan losses		693			905			(10		)	280
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		26,857			27,862			54,864			57,617
NON-INTEREST INCOME:
Service charges on deposit accounts		3,563			3,498			6,858			6,708
Net refund transfer fees		1,836			1,683			16,224			13,697
Mortgage banking income		812			2,180			1,298			5,454
Debit card interchange fee income		1,738			1,656			3,673			3,467
Bargain purchase gain - First Commercial Bank		—			—			—			1,324
Net gain on sale of other real estate owned		264			1,034			666			1,311
Increase in cash surrender value of bank owned life insurance		379			—			570			—
Other		920			732			1,683			1,347
Total non-interest income		9,512			10,783			30,972			33,308
NON-INTEREST EXPENSES:
Salaries and employee benefits		13,965			15,086			28,448			31,200
Occupancy and equipment, net		5,508			5,315			11,330			10,892
Communication and transportation		856			991			1,882			2,021
Marketing and development		983			880			1,575			1,782
FDIC insurance expense		414			402			983			815
Bank franchise tax expense		831			857			3,170			2,572
Data processing		913			792			1,754			1,508
Debit card interchange expense		807			718			1,761			1,561
Supplies		60			218			500			572
Other real estate owned expense		560			945			1,630			1,834
Legal expense		88			1,338			500			1,768
Other		1,730			2,157			4,126			4,476
Total non-interest expenses		26,715			29,699			57,659			61,001
INCOME BEFORE INCOME TAX EXPENSE		9,654			8,946			28,177			29,924
INCOME TAX EXPENSE		3,332			2,827			9,871			10,449
NET INCOME		$	6,322		$	6,119		$	18,306		$	19,475
BASIC EARNINGS PER COMMON SHARE:
Class A Common Stock		$	0.31		$	0.30		$	0.88		$	0.94
Class B Common Stock		$	0.29		$	0.28		$	0.85		$	0.91
DILUTED EARNINGS PER COMMON SHARE:
Class A Common Stock		$	0.30		$	0.30		$	0.88		$	0.94
Class B Common Stock		$	0.29		$	0.28		$	0.85		$	0.90
DIVIDENDS DECLARED PER COMMON SHARE:
Class A Common Stock		$	0.187		$	0.176		$	0.363		$	0.341
Class B Common Stock		$	0.170		$	0.160		$	0.330		$	0.310

 

See accompanying footnotes to consolidated financial statements.

 

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(in thousands)

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2014			2013			2014			2013
Net income		$	6,322		$	6,119		$	18,306		$	19,475
OTHER COMPREHENSIVE INCOME (LOSS):
Change in fair value of derivatives used for cash flow hedges		(265		)	—			(505		)	—
Unrealized gain (loss) on securities available for sale		2,626			(2,566		)	2,628			(2,965		)
Change in unrealized gain on securities available for sale for which a portion of an other-than-temporary impairment has been recognized in earnings		315			238			369			422
Net unrealized gains (losses)		2,676			(2,328		)	2,492			(2,543		)
Tax effect		(937		)	815			(873		)	891
Total other comprehensive income (loss), net of tax		1,739			(1,513		)	1,619			(1,652		)
COMPREHENSIVE INCOME		$	8,061		$	4,606		$	19,925		$	17,823

 

See accompanying footnotes to consolidated financial statements.

 

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CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2014

 

		Common Stock														Accumulated
		Class A		Class B					Additional							Other			Total
		Shares		Shares					Paid In			Retained				Comprehensive			Stockholders’
(in thousands, except per share data)		Outstanding		Outstanding		Amount			Capital			Earnings				Income			Equity
Balance, January 1, 2014		18,541		2,260		$	4,894		$	133,012		$		401,766		$	3,121		$	542,793
Net income		—		—		—			—			18,306				—			18,306
Net change in accumulated other comprehensive income		—		—		—			—			—				1,619			1,619
Dividend declared Common Stock:
Class A shares ($0.363 per share)		—		—		—			—			(6,727			)	—			(6,727		)
Class B shares ($0.330 per share)		—		—		—			—			(744			)	—			(744		)
Stock options exercised, net of shares redeemed		7		—		2			129			(14			)	—			117
Repurchase of Class A Common Stock		(15	)	—		(3		)	(95		)	(249			)	—			(347		)
Conversion of Class B Common Stock to Class A Common Stock		15		(15	)	—			—			—				—			—
Net change in notes receivable on Class A Common Stock		—		—		—			(85		)	—				—			(85		)
Deferred director compensation expense - Class A Common Stock		2		—		—			91			—				—			91
Stock based compensation - restricted stock		(2	)	—		—			255			—				—			255
Stock based compensation expense - options		—		—		—			13			—				—			13
Balance, June 30, 2014		18,548		2,245		$	4,893		$	133,320		$		412,338		$	4,740		$	555,291

 

See accompanying footnotes to consolidated financial statements.

 

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

SIX MONTHS ENDED JUNE 30, 2014 AND 2013 (in thousands)

 

		2014			2013
OPERATING ACTIVITIES:
Net income		$	18,306		$	19,475
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of premises and equipment		3,386			2,715
Amortization (accretion) on investment securitites, net		330			337
Amortization (accretion) on loans, net		(4,494		)	(4,989		)
Provision for loan losses		(10		)	280
Net gain on sale of mortgage loans held for sale		(1,166		)	(5,408		)
Origination of mortgage loans held for sale		(33,284		)	(208,094		)
Proceeds from sale of mortgage loans held for sale		31,147			199,942
Net realized recovery of mortgage servicing rights		—			(312		)
Net gain on sale of other real estate owned		(666		)	(1,311		)
Writedowns of other real estate owned		1,217			884
Deferred director compensation expense - Company Stock		91			89
Stock based compensation expense		268			274
Bargain purchase gain on acquisition		—			(1,324		)
Increase in cash surrender value of bank owned life insurance		(570		)	—
Net change in other assets and liabilities:
Accrued interest receivable		189			604
Accrued interest payable		(198		)	11
Other assets		5,887			(2,123		)
Other liabilities		(1,549		)	723
Net cash provided by operating activities		18,884			1,773
INVESTING ACTIVITIES:
Purchases of securities available for sale		(109,549		)	(78,205		)
Purchases of securities to be held to maturity		—			(15,000		)
Proceeds from calls, maturities and paydowns of securities available for sale		81,567			93,401
Proceeds from calls, maturities and paydowns of securities to be held to maturity		2,269			5,806
Proceeds from sales of Federal Home Loan Bank stock		134			35
Proceeds from sales of other real estate owned		8,136			15,055
Net change in other loans		(25,008		)	(5,520		)
Net change in outstanding warehouse lines of credit		(94,555		)	38,886
Purchase of loans, including premiums paid		(14,695		)	—
Purchase of bank owned life insurance		(25,000		)	—
Net purchases of premises and equipment		(2,297		)	(667		)
Net cash provided by (used in) investing activities		(178,998		)	53,791
FINANCING ACTIVITIES:
Net change in deposits		14,126			(11,881		)
Net change in securities sold under agreements to repurchase and other short-term borrowings		31,884			(122,352		)
Payments of Federal Home Loan Bank advances		(83,000		)	(556		)
Proceeds from Federal Home Loan Bank advances		118,000			50,000
Repurchase of Common Stock		(347		)	(4,095		)
Net proceeds from Common Stock options exercised		117			111
Cash dividends paid		(7,256		)	(6,792		)
Net cash provided by (used in) financing activities		73,524			(95,565		)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(86,590		)	(40,001		)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD		170,863			137,691
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	84,273		$	97,690
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	10,246		$	10,612
Income taxes		7,304			20,100
SUPPLEMENTAL NONCASH DISCLOSURES:
Transfers from loans to real estate acquired in settlement of loans		$	4,492		$	4,242
Loans provided for sales of other real estate owned		1,294			569
Change in fair value of derivatives used for cash flow hedges		(505		)	—

 

See accompanying footnotes to consolidated financial statements.

 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — JUNE 30, 2014 AND 2013 (UNAUDITED) AND DECEMBER 31, 2013

 

1.                                            BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation — The consolidated financial statements include the accounts of Republic Bancorp, Inc. (the “Parent Company”) and its wholly-owned subsidiary, Republic Bank & Trust Company (“RB&T” or the “Bank”). The Bank is a Kentucky-based, state chartered non-member financial institution. Republic Bancorp Capital Trust (“RBCT”) is a Delaware statutory business trust that is a wholly-owned unconsolidated finance subsidiary of Republic Bancorp, Inc. All companies are collectively referred to as “Republic” or the “Company.” All significant intercompany balances and transactions are eliminated in consolidation.

 

On May 9, 2014, Republic Bank, the Company’s wholly-owned, federally chartered savings institution, merged into RB&T. The merged institution operates under the name Republic Bank & Trust Company. The merger did not materially impact the Company’s consolidated financial statements.

 

Subsequent to June 30, 2014, the Company formed Republic Insurance Services, Inc. (the “Captive”). The Captive is a wholly-owned insurance subsidiary of the Company that will provide property and casualty insurance coverage to the Company and the Bank and reinsurance to five other third party insurance captives for which insurance may not be currently available or economically feasible in today’s insurance marketplace.

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, the financial statements do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for fair presentation have been included. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. For further information, refer to the consolidated financial statements and footnotes thereto included in Republic’s Form 10-K for the year ended December 31, 2013.

 

As of June 30, 2014, the Company was divided into three distinct business operating segments: Traditional Banking, Mortgage Banking and Republic Processing Group (“RPG”). Tax Refund Solutions (“TRS”), Republic Payment Solutions (“RPS”) and Republic Credit Solutions (“RCS”) operate as divisions of the RPG segment. The RPS and RCS divisions are considered immaterial for separate and independent segment reporting.

 

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Traditional Banking and Mortgage Banking (collectively “Core Banking”)

 

As of June 30, 2014, in addition to an Internet delivery channel, Republic had 42 full-service banking centers with locations as follows:

 

·                  Kentucky — 33

·                  Metropolitan Louisville — 20

·                  Central Kentucky — 8

·                  Elizabethtown — 1

·                  Frankfort — 1

·                  Georgetown — 1

·                  Lexington — 4

·                  Shelbyville — 1

·                  Western Kentucky — 2

·                  Owensboro — 2

·                  Northern Kentucky — 3

·                  Covington — 1

·                  Florence — 1

·                  Independence — 1

·                  Southern Indiana — 3

·                  Floyds Knobs — 1

·                  Jeffersonville — 1

·                  New Albany — 1

·                  Metropolitan Tampa, Florida — 3

·                  Metropolitan Cincinnati, Ohio — 1

·                  Metropolitan Nashville, Tennessee — 2

 

Republic’s headquarters are located in Louisville, which is the largest city in Kentucky based on population.

 

Core Banking results of operations are primarily dependent upon net interest income, which represents the difference between the interest income and fees on interest-earning assets and the interest expense on interest-bearing liabilities. Principal interest-earning Core Banking assets represent investment securities and commercial and consumer loans primarily secured by real estate and/or personal property. Interest-bearing liabilities primarily consist of interest-bearing deposit accounts, securities sold under agreements to repurchase, as well as short-term and long-term borrowing sources. FHLB advances have traditionally been a significant borrowing source for the Bank.

 

The Bank provides short-term, revolving credit facilities to mortgage bankers across the Nation through mortgage warehouse lines of credit.  These credit facilities are secured by single family, first lien residential real estate loans.

 

The Bank began acquiring single family mortgage loans for investment through its Correspondent Lending division in May 2014. Correspondent lending generally involves the Bank acquiring closed loans that meet the Bank’s specifications from its Mortgage Warehouse clients. Substantially all loans purchased through the Correspondent Lending channel are purchased at a premium.  Premiums on loans held for investment acquired though the Correspondent Lending division are amortized into income on the level-yield method over the expected life of the loan.

 

Other sources of Core Banking income include service charges on deposit accounts, debit and credit card interchange fee income, title insurance commissions, fees charged to customers for trust services and revenue generated from Mortgage Banking activities. Mortgage Banking activities represent both the origination and sale of loans in the secondary market and the servicing of loans for others, primarily the Federal Home Loan Mortgage Corporation (“Freddie Mac” or “FHLMC”).

 

Core Banking operating expenses consist primarily of salaries and employee benefits, occupancy and equipment expenses, communication and transportation costs, data processing, debit card interchange expenses, marketing and development expenses, FDIC insurance expense, and various general and administrative costs. Core Banking results of operations are significantly impacted by general economic and competitive conditions, particularly changes in market interest rates, government laws and policies and actions of regulatory agencies.

 

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Republic Processing Group

 

All divisions of the RPG segment operate through the Bank. Nationally, RPG facilitates the receipt and payment of federal and state tax refunds under the TRS division, primarily through refund transfers (“RT”s). RTs are products whereby a tax refund is issued to the taxpayer after the Bank has received the refund from the federal or state government. There is no credit risk or borrowing cost associated with these products, because they are only delivered to the taxpayer upon receipt of the tax refund directly from the governmental paying authority. Fees earned on RTs, net of rebates, are the primary source of revenue for the TRS division and the RPG segment, and are reported as non-interest income under the line item “Net refund transfer fees.”

 

The TRS division historically originated and obtained a significant source of revenue from Refund Anticipation Loans (“RAL”s), but terminated this product effective April 30, 2012. RALs were short-term consumer loans offered to taxpayers that were secured by the customer’s anticipated tax refund, which represented the sole source of repayment. While RALs were terminated in 2012, TRS has received and expects to continue receiving recoveries from previously charged-off RALs.

 

The RPS division is an issuing bank offering general purpose reloadable prepaid debit cards through third party program managers. The RCS division is piloting short-term consumer credit products.

 

Reclassifications and recasts — Certain amounts presented in prior periods have been reclassified to conform to the current period presentation. These reclassifications had no impact on prior years’ net income.

 

Accounting Standards Update (“ASU”) 2014-08 — Presentation of Financial Statements and Property, Plant and Equipment (Topic 205 and Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.

 

The amendments in this ASU change the criteria for reporting discontinued operations for all public and nonpublic entities. A discontinued operation may include a component of an entity or a group of components of an entity, or a business or nonprofit activity. A disposal of a component of an entity or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results. The amendments in this ASU are effective for the Company beginning January 1, 2015 and are not expected to have a material impact on the Company’s financial statements.

 

ASU 2014-11 — Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings and Disclosures.

 

The amendments in this ASU require that repurchase-to-maturity transactions be accounted for as secured borrowings consistent with the accounting for other repurchase agreements. In addition, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty (a repurchase financing), which will result in secured borrowing accounting for the repurchase agreement. The amendments require an entity to disclose information about transfers accounted for as sales in transactions that are economically similar to repurchase agreements, in which the transferor retains substantially all of the exposure to the economic return on the transferred financial asset throughout the term of the transaction. In addition the amendments require disclosure of the types of collateral pledged in repurchase agreements, securities lending transactions, and repurchase-to-maturity transactions and the tenor of those transactions. The amendments in this ASU are effective for the Company beginning January 1, 2015 and are not expected to have a material impact on the Company’s financial statements.

 

ASU 2014-12 — Compensation — Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That Performance Targets Could Be Achieved after the Requisite Service Period.

 

The amendments in this ASU are intended to resolve the diverse accounting treatment of share-based awards that require a specific performance target. The amendments in this ASU are effective for the Company beginning January 1, 2015 and are not expected to have a material impact on the Company’s financial statements.

 

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2.                                                        INVESTMENT SECURITIES

 

Securities Available for Sale:

 

The gross amortized cost and fair value of securities available for sale and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

 

		Gross			Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
June 30, 2014 (in thousands)		Cost			Gains			Losses			Value
U.S. Treasury securities and U.S. Government agencies		$	144,821		$	640		$	(17	)	$	145,444
Private label mortgage backed security		4,347			1,114			—			5,461
Mortgage backed securities - residential		131,702			4,803			(87		)	136,418
Collateralized mortgage obligations		159,137			1,308			(912		)	159,533
Freddie Mac preferred stock		—			718			—			718
Mutual fund		1,000			11			—			1,011
Corporate bonds		15,013			52			(4		)	15,061
Total securities available for sale		$	456,020		$	8,646		$	(1,020	)	$	463,646

 

		Gross			Gross			Gross
		Amortized			Unrealized			Unrealized			Fair
December 31, 2013 (in thousands)		Cost			Gains			Losses			Value
U.S. Treasury securities and U.S. Government agencies		$	97,157		$	409		$	(101	)	$	97,465
Private label mortgage backed security		4,740			745			—			5,485
Mortgage backed securities - residential		146,087			4,288			(288		)	150,087
Collateralized mortgage obligations		164,264			1,228			(1,546		)	163,946
Mutual fund		1,000			—			(5		)	995
Corporate bonds		15,015			50			(150		)	14,915
Total securities available for sale		$	428,263		$	6,720		$	(2,090	)	$	432,893

 

Securities Held to Maturity:

 

The carrying value, gross unrecognized gains and losses, and fair value of securities held to maturity were as follows:

 

					Gross			Gross
		Carrying			Unrecognized			Unrecognized			Fair
June 30, 2014 (in thousands)		Value			Gains			Losses			Value
U.S. Treasury securities and U.S. Government agencies		$	2,275		$	5		$	(8	)	$	2,272
Mortgage backed securities - residential		412			53			—			465
Collateralized mortgage obligations		40,651			387			(52		)	40,986
Corporate bonds		5,000			—			(129		)	4,871
Total securities held to maturity		$	48,338		$	445		$	(189	)	$	48,594

 

					Gross			Gross
		Carrying			Unrecognized			Unrecognized			Fair
December 31, 2013 (in thousands)		Value			Gains			Losses			Value
U.S. Treasury securities and U.S. Government agencies		$	2,311		$	7		$	(13	)	$	2,305
Mortgage backed securities - residential		420			43			—			463
Collateralized mortgage obligations		42,913			387			(184		)	43,116
Corporate bonds		5,000			—			(116		)	4,884
Total securities held to maturity		$	50,644		$	437		$	(313	)	$	50,768

 

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