4. Securities

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


	December 31, 2013								December 31, 2012
	Amortized Cost		Unrealized				Fair Value		Amortized Cost		Unrealized					Fair Value
	Amortized Cost		Gains		Losses		Fair Value		Amortized Cost		Gains		Losses			Fair Value
U.S. Treasury		$ 0		$ 0		$ 0		$ 0		$ 4,018		$ 18	$	0			$4,036
U.S. Gov’t sponsored entities		185,205		2,894		(6,474)		181,625		157,965		5,977		(161	)		163,781
State & political subdivisions		176,490		3,770		(2,317)		177,943		170,223		11,113		(57	)		181,279
Residential & multi-family mortgage		248,017		2,410		(7,820)		242,607		308,800		8,724		(702	)		316,822
Commercial mortgage		385		0		(11)		374		1,275		29		0			1,304
Corporate notes & bonds		15,744		65		(1,734)		14,075		17,368		26		(2,370	)		15,024
Pooled trust preferred		800		0		(139)		661		800		0		(200	)		600
Pooled SBA		70,077		688		(3,044)		67,721		50,667		2,277		(17	)		52,927
Other securities		1,020		0		(35)		985		1,521		17		0			1,538

Total		$697,738		$9,827		$(21,574)		$685,991		$712,637		$28,181		$(3,507)			$737,311

At December 31, 2013 and 2012, there were no holdings of securities by any one issuer, other than 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 December 31, 2013 and 2012 are as follows:


	2013		2012

Corporate equity securities	$	2,705	$	3,117
Certificates of deposit		253		408
International mutual funds		259		287
Large cap growth mutual funds		197		157
Money market mutual funds		124		110
Large cap value mutual funds		129		104
Corporate notes and bonds		152		101
Real estate investment trust mutual funds		39		65
U.S. Government sponsored entities		52		58
Small cap mutual funds		83		26
Mid cap mutual funds		84		26
Commodities mutual funds		50		0

Total	$	4,127	$	4,459

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


December 31, 2013	Less than 12 Months					12 Months or More					Total
Description of Securities	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		95,677		(5,394	)		17,964		(1,080	)		113,641		(6,474	)
State & political subdivisions		57,526		(2,192	)		5,324		(125	)		62,850		(2,317	)
Residential & multi-family mortgage		150,229		(6,806	)		16,608		(1,014	)		166,837		(7,820	)
Commercial mortgage		374		(11	)		0		0			374		(11	)
Corporate notes & bonds		0		0			9,662		(1,734	)		9,662		(1,734	)
Pooled trust preferred		0		0			661		(139	)		661		(139	)
Pooled SBA		36,842		(2,296	)		8,277		(748	)		45,119		(3,044	)
Other securities		985		(35	)		0		0			985		(35	)

	$	341,633	$	(16,734	)	$	58,496	$	(4,840	)	$	400,129	$	(21,574	)


	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
December 31, 2012
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 and 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.

The following table provides detailed information related to the Corporation’s structured pooled trust preferred securities as of December 31, 2013 and for the years ended December 31, 2013, 2012, and 2011:


	As of December 31, 2013							Credit Losses Realized in Earnings
	Adjusted Amortized		Unrealized			Fair		Year Ended December 31,
	Cost		Gain (Loss)			Value		2013		2012		2011
ALESCO Preferred Funding V, Ltd.	$	800	$	(139	)	$	661	$	0	$	0	$	0
ALESCO Preferred Funding XII, Ltd.		0		0			0		0		0		280
ALESCO Preferred Funding XVII, Ltd.		0		0			0		0		0		0
Preferred Term Securities XVI, Ltd.		0		0			0		0		0		118
US Capital Funding VI, Ltd.		0		0			0		0		0		0

Total	$	800	$	(139	)	$	661	$	0	$	0	$	398

At December 31, 2013, the Corporation evaluated the ALESCO Preferred Funding V, Ltd. 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.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the years ended December 31, 2013, 2012 and 2011 is as follows:


	2013		2012		2011

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	$	4,054	$	3,656
Additional credit loss for which other-than-temporary impairment was not previously recognized		0		0		0
Additional credit loss for which other-than-temporary impairment was previously recognized		0		0		398

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	$	4,054	$	4,054

Due to the insignificance of the adjusted amortized cost of structured pooled trust preferred securities as of December 31, 2013 and 2012, no further disclosures are required.

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 whether 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 December 31, 2013 and 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.

On December 31, 2013 and 2012, securities carried at $353,102 and $264,813, respectively, were pledged to secure public deposits and for other purposes as provided by law.

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at December 31, 2013:


	December 31, 2013
	Amortized Cost		Fair Value
1 year or less	$	31,192	$	30,902
1 year – 5 years		141,228		141,410
5 years – 10 years		165,713		163,735
After 10 years		40,106		38,257

		378,239		374,304
Residential and multi-family mortgage		248,017		242,607
Pooled SBA		70,077		67,721
Commercial mortgage		385		374

Total debt securities	$	696,718	$	685,006

Mortgage 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.

Information pertaining to security sales is as follows:


Year ended December 31	Proceeds		Gross Gains		Gross Losses

2013	$	35,633	$	849	$	494
2012		125,579		1,809		430
2011		69,740		878		264

The tax provision related to these net realized gains was $124, $483, and $215, respectively.

During 2013, 2012 and 2011, the Corporation sold trading securities. Proceeds were $5,811 in 2013, $3,386 in 2012, and $343 in 2011, resulting in net gains of $579 in 2013, $298 in 2012, and $30 in 2011.