4.	SECURITIES

Securities available for sale at March 31, 2014 and December 31, 2013 are as follows:


	March 31, 2014									December 31, 2013
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Treasury	$	0	$	0	$	0		$	0	$	0	$	0	$	0		$	0
U.S. Gov’t sponsored entities		184,938		2,899		(5,110	)		182,727		185,205		2,894		(6,474	)		181,625
State & political subdivisions		172,586		4,964		(1,282	)		176,268		176,490		3,770		(2,317	)		177,943
Residential & multi-family mortgage		248,878		2,263		(5,313	)		245,828		248,017		2,410		(7,820	)		242,607
Commercial mortgage		232		0		(7	)		225		385		0		(11	)		374
Corporate notes & bonds		15,746		93		(1,637	)		14,202		15,744		65		(1,734	)		14,075
Pooled trust preferred		800		0		(2	)		798		800		0		(139	)		661
Pooled SBA		68,749		797		(2,722	)		66,824		70,077		688		(3,044	)		67,721
Other securities		1,020		0		(30	)		990		1,020		0		(35	)		985

Total	$	692,949	$	11,016	$	(16,103	)	$	687,862	$	697,738	$	9,827	$	(21,574	)	$	685,991

At March 31, 2014, 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 March 31, 2014 and December 31, 2013 are as follows:


	March 31, 2014		December 31, 2013
Corporate equity securities	$	2,680	$	2,705
Mutual funds		933		965
Certificates of deposit		254		253
Corporate notes and bonds		152		152
U.S. Government sponsored entities		54		52

Total	$	4,073	$	4,127

Securities with unrealized losses at March 31, 2014 and December 31, 2013, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

March 31, 2014


	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		86,700		(3,868	)		28,237		(1,242	)		114,937		(5,110	)
State & political subdivisions		40,214		(1,037	)		5,762		(245	)		45,976		(1,282	)
Residential & multi-family mortgage		143,416		(4,088	)		21,511		(1,225	)		164,927		(5,313	)
Commercial mortgage		0		0			255		(7	)		255		(7	)
Corporate notes & bonds		0		0			9,761		(1,637	)		9,761		(1,637	)
Pooled trust preferred		0		0			798		(2	)		798		(2	)
Pooled SBA		25,259		(1,255	)		18,400		(1,467	)		43,659		(2,722	)
Other securities		990		(30	)		0		0			990		(30	)

	$	296,579	$	(10,278	)	$	84,724	$	(5,825	)	$	381,303	$	(16,103	)

December 31, 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		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 and 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	)

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 March 31, 2014, the Corporation held one structured pooled trust preferred security with an adjusted amortized cost of $800 and a fair value of $798. 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 months ended March 31, 2014 and 2013, no other-than-temporary impairment was required to be realized in earnings. At March 31, 2014 and December 31, 2013, 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 months ended March 31, 2014 and 2013 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 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 March 31, 2014 and December 31, 2013, 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 March 31, 2014	$	12,951	$	149	$	83
Three months ended March 31, 2013		1,324		76		0

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at March 31, 2014:


	Amortized		Fair
	Cost		Value
1 year or less	$	32,146	$	31,894
1 year – 5 years		148,788		149,925
5 years – 10 years		154,290		154,341
After 10 years		38,846		37,835

		374,070		373,995
Residential and multi-family mortgage		248,878		245,828
Pooled SBA		68,749		66,824
Commercial mortgage		232		225

Total debt securities	$	691,929	$	686,872

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 March 31, 2014 and December 31, 2013, securities carried at $339,490 and $353,102, respectively, were pledged to secure public deposits and for other purposes as provided by law.