NOTE 3. SECURITIES

Securities available for sale were as follows:

Available For Sale			GROSS		GROSS
	AMORTIZED		UNREALIZED		UNREALIZED			FAIR
At September 30, 2014	COST		GAINS		(LOSSES)			VALUE
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	48,747	$	191	$	(2,009	)	$	46,929
Small business administration securities		66,541		543		(72	)		67,012
Non-bank qualified obligations of states and political subdivisions		368,897		2,494		(3,811	)		367,580
Mortgage-backed securities		663,690		3,519		(9,339	)		657,870
Total debt securities		1,147,875		6,747		(15,231	)		1,139,391
Common equities and mutual funds		539		291		(5	)		825
Total available for sale securities	$	1,148,414	$	7,038	$	(15,236	)	$	1,140,216

			GROSS		GROSS
	AMORTIZED		UNREALIZED		UNREALIZED			FAIR
At September 30, 2013	COST		GAINS		(LOSSES)			VALUE
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	52,897	$	136	$	(4,249	)	$	48,784
Small business administration securities		10,099		482		-			10,581
Obligations of states and political subdivisions		1,880		-		(153	)		1,727
Non-bank qualified obligations of states and political subdivisions		255,189		-		(16,460	)		238,729
Mortgage-backed securities		596,343		3,968		(18,939	)		581,372
Total available for sale securities	$	916,408	$	4,586	$	(39,801	)	$	881,193

Securities held to maturity were as follows:

			GROSS		GROSS
	AMORTIZED		UNREALIZED		UNREALIZED			FAIR
At September 30, 2014	COST		GAINS		(LOSSES)			VALUE
	(Dollars in Thousands)
Debt securities
Obligations of states and political subdivisions	$	19,304	$	48	$	(372	)	$	18,980
Non-bank qualified obligations of states and political subdivisions		193,595		894		(2,329	)		192,160
Mortgage-backed securities		70,034		-		(1,862	)		68,172
Total held to maturity securities	$	282,933	$	942	$	(4,563	)	$	279,312

			GROSS		GROSS
	AMORTIZED		UNREALIZED		UNREALIZED			FAIR
At September 30, 2013	COST		GAINS		(LOSSES)			VALUE
	(Dollars in Thousands)
Debt securities
Agency and instrumentality securities	$	10,003	$	-	$	(390	)	$	9,613
Obligations of states and political subdivisions		19,549		13		(1,220	)		18,342
Non-bank qualified obligations of states and political subdivisions		181,547		-		(12,085	)		169,462
Mortgage-backed securities		76,927		-		(3,826	)		73,101
Total held to maturity securities	$	288,026	$	13	$	(17,521	)	$	270,518

Included in securities available for sale are trust preferred securities as follows:

At September 30, 2014
					Unrealized			S&P	Moody's
Issuer⁽¹⁾	Amortized Cost		Fair Value		Gain (Loss)			Credit Rating	Credit Rating
	(Dollars in Thousands)

Key Corp. Capital I	$	4,985	$	4,400	$	(585	)	BB+	Baa3
Huntington Capital Trust II SE		4,977		4,300		(677	)	BB	Baa3
PNC Capital Trust		4,962		4,400		(562	)	BBB-	Baa2
Wells Fargo (Corestates Capital) Trust		4,444		4,400		(44	)	BBB+	A3
Total	$	19,368	$	17,500	$	(1,868	)

(1) Trust preferred securities are single-issuance. There are no known deferrals, defaults or excess subordination.

At September 30, 2013
					Unrealized			S&P		Moody's
Issuer⁽¹⁾	Amortized Cost		Fair Value		Gain (Loss)			Credit Rating		Credit Rating
	(Dollars in Thousands)

Key Corp. Capital I	$	4,984	$	4,100	$	(884	)	BBB-		Baa3
Huntington Capital Trust II SE		4,976		4,075		(901	)	BB+		Baa3
PNC Capital Trust		4,959		4,175		(784	)	BBB		Baa2
Wells Fargo (Corestates Capital) Trust		4,399		4,050		(349	)		A-		A3
Total	$	19,318	$	16,400	$	(2,918	)

(1) Trust preferred securities are single-issuance. There are no known deferrals, defaults or excess subordination.

Management has a process to identify securities that could potentially have a credit impairment that is other-than-temporary. This process involves evaluating the length of time and extent to which the fair value has been less than the amortized cost basis, reviewing available information regarding the financial position of the issuer, monitoring the rating of the security, monitoring changes in value, and projecting cash flows. Other factors, but not necessarily all, considered are: that the risk of loss is minimized and easier to determine due to the single-issuer, rather than pooled, nature of the securities, the financial condition of the issuers listed, and whether there have been any payment deferrals or defaults to-date. Such factors are subject to change over time.

Management also determines if it is more likely than not we will be required to sell the security before the recovery of its amortized cost basis which, in some cases, may extend to maturity. To the extent we determine that a security is deemed to be other-than-temporarily impaired, an impairment loss is recognized.

For all securities that are considered temporarily impaired, the Company does not intend to sell these securities (has not made a decision to sell) and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may occur at maturity. The Company believes that it will collect all principal and interest due on all investments that have amortized cost in excess of fair value that are considered only temporarily impaired.

Gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position at September 30, 2014 and 2013 are as follows:

Available For Sale	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
At September 30, 2014	Value		(Losses)			Value		(Losses)			Value		(Losses)
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	6,073	$	(47	)	$	25,359	$	(1,962	)	$	31,432	$	(2,009	)
Small Business Administration securities		8,454		(72	)		-		-			8,454		(72	)
Non-bank qualified obligations of states and political subdivisions		27,062		(70	)		191,146		(3,741	)		218,208		(3,811	)
Mortgage-backed securities		238,980		(1,248	)		234,347		(8,091	)		473,327		(9,339	)
Total debt securities		280,569		(1,437	)		450,852		(13,794	)		731,421		(15,231	)
Common equities and mutual funds		123		(5	)		-		-			123		(5	)
Total available for sale securities	$	280,692	$	(1,442	)	$	450,852	$	(13,794	)	$	731,544	$	(15,236	)

	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
At September 30, 2013	Value		(Losses)			Value		(Losses)			Value		(Losses)
	(Dollars in Thousands)
Debt securities
Trust preferred and corporate securities	$	29,312	$	(1,433	)	$	13,477	$	(2,816	)	$	42,789	$	(4,249	)
Obligations of states and political subdivisions		1,727		(153	)		-		-			1,727		(153	)
Non-bank qualified obligations of states and political subdivisions		238,729		(16,460	)		-		-			238,729		(16,460	)
Mortgage-backed securities		357,850		(18,939	)		-		-			357,850		(18,939	)
Total available for sale securities	$	627,618	$	(36,985	)	$	13,477	$	(2,816	)	$	641,095	$	(39,801	)

Held To Maturity	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
At September 30, 2014	Value		(Losses)			Value		(Losses)			Value		(Losses)
	(Dollars in Thousands)
Debt securities
Obligations of states and political subdivisions	$	1,056	$	(2	)	$	14,079	$	(370	)	$	15,135	$	(372	)
Non-bank qualified obligations of states and political subdivisions		-		-			147,949		(2,329	)		147,949		(2,329	)
Mortgage-backed securities		-		-			68,172		(1,862	)		68,172		(1,862	)
Total held to maturity securities	$	1,056	$	(2	)	$	230,200	$	(4,561	)	$	231,256	$	(4,563	)

	LESS THAN 12 MONTHS					OVER 12 MONTHS					TOTAL
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
At September 30, 2013	Value		(Losses)			Value		(Losses)			Value		(Losses)
	(Dollars in Thousands)
Debt securities
Agency and instrumentality securities	$	9,613	$	(390	)		-		-			9,613		(390	)
Obligations of states and political subdivisions		17,253		(1,220	)		-		-			17,253		(1,220	)
Non-bank qualified obligations of states and political subdivisions		169,462		(12,085	)		-		-			169,462		(12,085	)
Mortgage-backed securities		73,101		(3,826	)		-		-			73,101		(3,826	)
Total held to maturity securities	$	269,429	$	(17,521	)	$	-	$	-		$	269,429	$	(17,521	)

As of September 30, 2014, the investment portfolio included securities with current unrealized losses which have existed for longer than one year. All of these securities are considered to be acceptable credit risks. Because the declines in fair value were due to changes in market interest rates, not in estimated cash flows, no other-than-temporary impairment was recorded at September 30, 2014 and 2013.

The amortized cost and fair value of debt securities by contractual maturity are shown below. Certain securities have call features which allow the issuer to call the security prior to maturity. Expected maturities may differ from contractual maturities in mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Therefore, mortgage-backed securities are not included in the maturity categories in the following maturity summary.

Available For Sale	AMORTIZED		FAIR
	COST		VALUE
September 30, 2014	(Dollars in Thousands)

Due in one year or less	$	2,999	$	3,048
Due after one year through five years		9,922		10,079
Due after five years through ten years		285,413		285,698
Due after ten years		185,851		182,696
		484,185		481,521
Mortgage-backed securities		663,690		657,870
Common equities and mutual funds		539		825
Total available for sale securities	$	1,148,414	$	1,140,216

	AMORTIZED		FAIR
	COST		VALUE
September 30, 2013	(Dollars in Thousands)

Due in one year or less	$	-	$	-
Due after one year through five years		9,929		10,061
Due after five years through ten years		162,203		155,014
Due after ten years		147,933		134,746
		320,065		299,821
Mortgage-backed securities		596,343		581,372
Total available for sale securities	$	916,408	$	881,193

Held To Maturity	AMORTIZED		FAIR
	COST		VALUE
September 30, 2014	(Dollars in Thousands)

Due in one year or less	$	347	$	348
Due after one year through five years		4,726		4,718
Due after five years through ten years		91,532		89,984
Due after ten years		116,294		116,090
		212,899		211,140
Mortgage-backed securities		70,034		68,172
Total held to maturity securities	$	282,933	$	279,312

	AMORTIZED		FAIR
	COST		VALUE
September 30, 2013	(Dollars in Thousands)

Due in one year or less	$	649	$	649
Due after one year through five years		2,234		2,203
Due after five years through ten years		50,547		47,519
Due after ten years		157,669		147,046
		211,099		197,417
Mortgage-backed securities		76,927		73,101
Total held to maturity securities	$	288,026	$	270,518

Activities related to the sale of securities available for sale are summarized below.

	2014		2013		2012
	(Dollars in Thousands)

Proceeds from sales	$	166,804	$	209,172	$	678,833
Gross gains on sales		2,292		2,947		15,426
Gross losses on sales		2,185		401		1,671