The Bank accounts for Income Taxes in accordance with income tax accounting guidance in FASB ASC 740, which sets out a consistent framework to determine the appropriate level of tax reserves to maintain for uncertain tax positions.  Uncertain tax positions are recognized if it is more likely than not, based on the technical merits,  that the tax position will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50 percent; the term sustained upon examination also includes resolution of the related appeals or litigation processes, if any. A tax position that meets the more - likely- than -not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being realized upon settlement with a taxing authority that has full knowledge of all relevant information.  The determination of whether or not a tax position has met the more - likely- than -not recognition threshold considers the facts, circumstances, and information available at the reporting date and is subject to management’ s judgment.  The Bank recognizes interest and penalties on income taxes as a component of income tax expense. With limited exception, tax years prior to 2010 are no longer subject to examination by tax authorities.  In the ordinary course of business,  the Bank has entered into off -  balance sheet financial instruments consisting of commitments to extend credit and letters of credit.  Such financial instruments are recorded in the balance sheet when they are funded.  Accounting principles generally accepted in the United States of America require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on securities available - for -sale, are reported as a separate component of the shareholders’ equity section of the balance sheet, such items, along with net income, are components of comprehensive income.  A summary of amortized cost and fair values of securities available - for -sale as of December 31,  2013 and 2012 is as follows (in thousands):  Comprehensive Income Off -  Balance Sheet Financial Instruments 2. Securities Available -  for -Sale G ross G ross Amortized Unrealized Unrealized December 31, 2013 Cost Gains Losses Fair Value U. S. treasury securities U. S. agency securities 1, 294 47 1, 341 State and municipal securities 11, 557 137 273)  11, 421 Mortgage- backed securities 20, 891 318 320)  20, 889 Collateralized mortgage obligations 5, 498 74 20)  5, 552 39, 240 576 613)  39, 203 17 17