5.	SECURITIES

Securities available for sale at September 30, 2013 and December 31, 2012 are as follows:


	September 30, 2013									December 31, 2012
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Treasury	$	2,003	$	4	$	0		$	2,007	$	4,018	$	18	$	0		$	4,036
U.S. Gov’t sponsored entities		179,875		3,175		(5,820	)		177,230		157,965		5,977		(161	)		163,781
State & political subdivisions		177,503		4,416		(2,056	)		179,863		170,223		11,113		(57	)		181,279
Residential & multi-family mortgage		258,466		2,945		(6,372	)		255,039		308,800		8,724		(702	)		316,822
Commercial mortgage		971		0		(21	)		950		1,275		29		0			1,304
Corporate notes & bonds		15,741		56		(1,640	)		14,157		17,368		26		(2,370	)		15,024
Pooled trust preferred		800		0		(24	)		776		800		0		(200	)		600
Pooled SBA		71,924		652		(3,063	)		69,513		50,667		2,277		(17	)		52,927
Other securities		1,020		0		(24	)		996		1,521		17		0			1,538

Total	$	708,303	$	11,248	$	(19,020	)	$	700,531	$	712,637	$	28,181	$	(3,507	)	$	737,311

At September 30, 2013, there were no holdings of securities of any one issuer, other than the U.S. Government sponsored entities, in an amount greater than 10% of shareholders’ equity. The Corporation’s residential and multi-family mortgage securities are issued by government sponsored entities, and the Corporation holds one commercial mortgage security that is private label.

Trading securities at September 30, 2013 and December 31, 2012 are as follows:


	September 30, 2013		December 31, 2012
Corporate equity securities	$	2,998	$	3,117
Certificates of deposit		253		408
International mutual funds		257		287
Large cap growth mutual funds		182		157
Large cap value mutual funds		121		104
Real estate investment trust mutual funds		40		65
Corporate notes and bonds		152		101
Mid cap mutual funds		81		26
Small cap mutual funds		81		26
U.S. Government sponsored entities		53		58
Commodities mutual funds		54		0
Money market mutual funds		86		110

Total	$	4,358	$	4,459

Securities with unrealized losses at September 30, 2013 and December 31, 2012, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

September 30, 2013


	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury	$	0	$	0		$	0	$	0		$	0	$	0
U.S. Gov’t sponsored entities		110,419		(5,820	)		0		0			110,419		(5,820	)
State & political subdivisions		58,955		(2,047	)		474		(9	)		59,429		(2,056	)
Residential & multi-family mortgage		157,880		(6,201	)		5,124		(171	)		163,004		(6,372	)
Commercial mortgage		950		(21	)		0		0			950		(21	)
Corporate notes & bonds		0		0			9,754		(1,640	)		9,754		(1,640	)
Pooled trust preferred		0		0			776		(24	)		776		(24	)
Pooled SBA		40,735		(2,933	)		1,802		(130	)		42,537		(3,063	)
Other securities		996		(24	)		0		0			996		(24	)

	$	369,935	$	(17,046	)	$	17,930	$	(1,974	)	$	387,865	$	(19,020	)

December 31, 2012


	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury	$	0	$	0		$	0	$	0		$	0	$	0
U.S. Gov’t sponsored entities		41,715		(161	)		0		0			41,715		(161	)
State & political subdivisions		7,857		(57	)		0		0			7,857		(57	)
Residential & multi-family mortgage		32,159		(688	)		4,254		(14	)		36,413		(702	)
Commercial mortgage		0		0			0		0			0		0
Corporate notes & bonds		0		0			13,002		(2,370	)		13,002		(2,370	)
Pooled trust preferred		0		0			600		(200	)		600		(200	)
Pooled SBA		3,521		(17	)		0		0			3,521		(17	)
Other securities		0		0			0		0			0		0

	$	85,252	$	(923	)	$	17,856	$	(2,584	)	$	103,108	$	(3,507	)

The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

At September 30, 2013, the Corporation held one structured pooled trust preferred security with an adjusted amortized cost of $800 and a fair value of $776. The Corporation evaluated this security for other-than-temporary impairment by estimating the cash flows expected to be received, taking into account future estimated levels of deferrals and defaults by the underlying issuers, and discounting those cash flows at the appropriate accounting yield. For the three and nine months ended September 30, 2013 and 2012, no other-than-temporary impairment was required to be realized in earnings. At September 30, 2013 and December 31, 2012, the Corporation held four structured pooled trust preferred securities with an adjusted amortized cost and fair value of zero.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the three and nine months ended September 30, 2013 and 2012 is as follows:


Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$	4,054
Additional credit loss for which other-than-temporary impairment was not previously recognized		0
Additional credit loss for which other-than-temporary impairment was previously recognized		0

Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$	4,054

Due to the insignificance of the adjusted amortized cost balance, no further disclosures are required with respect to the Corporation’s structured pooled trust preferred securities.

For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for other-than-temporary impairment. For financial institution issuers, management monitors information from quarterly “call” report filings that are used to generate Uniform Bank Performance Reports. All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed, as appropriate given the following considerations. When reviewing securities for other-than-temporary impairment, management considers the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred. Management also considers the length of time and extent to which fair value has been less than cost, and management does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

As of September 30, 2013 and December 31, 2012, management concluded that the securities described in the previous paragraph were not other-than-temporarily impaired for the following reasons:

•

There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.

•

All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.

The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis.

Information pertaining to security sales is as follows:


	Proceeds		Gross Gains		Gross Losses
Three months ended September 30, 2013	$	0	$	0	$	0
Nine months ended September 30, 2013		33,672		822		(494	)
Three months ended September 30, 2012		4,090		103		0
Nine months ended September 30, 2012		92,707		1,549		(149	)

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at September 30, 2013:


	Amortized		Fair
	Cost		Value
1 year or less	$	31,904	$	31,651
1 year – 5 years		137,688		138,186
5 years – 10 years		163,672		162,836
After 10 years		42,658		41,360

		375,922		374,033
Residential and multi-family mortgage		258,466		255,039
Pooled SBA		71,924		69,513
Commercial mortgage		971		950

Total debt securities	$	707,283	$	699,535

Mortgage and asset backed securities and pooled SBA securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

On September 30, 2013 and December 31, 2012, securities carried at $340,446 and $264,813, respectively, were pledged to secure public deposits and for other purposes as provided by law.