(3.) INVESTMENT SECURITIES

The amortized cost and fair value of investment securities are summarized below (in thousands):


		Amortized		Unrealized		Unrealized		Fair
		Cost		Gains		Losses		Value
March 31, 2014
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	190,967	$	1,659	$	2,132	$	190,494
Mortgage-backed securities:
Federal National Mortgage Association		174,591		1,561		3,784		172,368
Federal Home Loan Mortgage Corporation		34,713		641		130		35,224
Government National Mortgage Association		60,857		2,164		113		62,908
Collateralized mortgage obligations:
Federal National Mortgage Association		65,427		339		1,708		64,058
Federal Home Loan Mortgage Corporation		104,334		232		3,656		100,910
Government National Mortgage Association		46,172		924		156		46,940
Privately issued		-		1,402		-		1,402
Total collateralized mortgage obligations		215,933		2,897		5,520		213,310
Total mortgage-backed securities		486,094		7,263		9,547		483,810
Asset-backed securities		18		328		-		346
Total available for sale securities	$	677,079	$	9,250	$	11,679	$	674,650
Securities held to maturity:
State and political subdivisions	$	253,576	$	2,578	$	63	$	256,091


		Amortized		Unrealized		Unrealized		Fair
		Cost		Gains		Losses		Value
December 31, 2013
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	135,840	$	1,414	$	2,802	$	134,452
Mortgage-backed securities:
Federal National Mortgage Association		173,507		1,511		4,810		170,208
Federal Home Loan Mortgage Corporation		36,737		562		205		37,094
Government National Mortgage Association		61,832		2,152		142		63,842
Collateralized mortgage obligations:
Federal National Mortgage Association		63,838		261		3,195		60,904
Federal Home Loan Mortgage Corporation		102,660		169		5,856		96,973
Government National Mortgage Association		43,734		913		586		44,061
Privately issued		-		1,467		-		1,467
Total collateralized mortgage obligations		210,232		2,810		9,637		203,405
Total mortgage-backed securities		482,308		7,035		14,794		474,549
Asset-backed securities		18		381		-		399
Total available for sale securities	$	618,166	$	8,830	$	17,596	$	609,400
Securities held to maturity:
State and political subdivisions	$	249,785	$	1,340	$	468	$	250,657

Sales and calls of securities available for sale were as follows (in thousands):


		Three months ended
		March 31,
		2014		2013
Proceeds from sales	$	19,470	$	952
Gross realized gains		313		892

The scheduled maturities of securities available for sale and securities held to maturity at March 31, 2014 are shown below (in thousands). Actual expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations.


		Amortized		Fair
		Cost		Value
Debt securities available for sale:
Due in one year or less	$	49,052	$	49,051
Due from one to five years		51,365		52,669
Due after five years through ten years		252,569		248,478
Due after ten years		324,093		324,452
	$	677,079	$	674,650


Debt securities held to maturity:
Due in one year or less	$	24,841	$	24,908
Due from one to five years		111,876		112,972
Due after five years through ten years		116,817		118,157
Due after ten years		42		54
	$	253,576	$	256,091

Unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (in thousands):


		Less than 12 months				12 months or longer				Total
		Fair		Unrealized		Fair	Unrealized			Fair	Unrealized
		Value		Losses		Value		Losses		Value		Losses
March 31, 2014
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	82,112	$	1,072	$	22,184	$	1,060	$	104,296	$	2,132
Mortgage-backed securities:
Federal National Mortgage Association		96,533		2,416		25,166		1,368		121,699		3,784
Federal Home Loan Mortgage Corporation		8,490		130		-		-		8,490		130
Government National Mortgage Association		6,097		113		-		-		6,097		113
Collateralized mortgage obligations:
Federal National Mortgage Association		35,545		656		15,645		1,052		51,190		1,708
Federal Home Loan Mortgage Corporation		71,893		2,158		20,989		1,498		92,882		3,656
Government National Mortgage Association		8,417		156		-		-		8,417		156
Total collateralized mortgage obligations		115,855		2,970		36,634		2,550		152,489		5,520
Total mortgage-backed securities		226,975		5,629		61,800		3,918		288,775		9,547
Total available for sale securities		309,087		6,701		83,984		4,978		393,071		11,679
Securities held to maturity:
State and political subdivisions		10,907		63		-		-		10,907		63
Total temporarily impaired securities	$	319,994	$	6,764	$	83,984	$	4,978	$	403,978	$	11,742

December 31, 2013
Securities available for sale:
U.S. Government agencies and government
sponsored enterprises	$	86,177	$	2,788	$	2,717	$	14	$	88,894	$	2,802
Mortgage-backed securities:
Federal National Mortgage Association		103,778		3,491		20,689		1,319		124,467		4,810
Federal Home Loan Mortgage Corporation		14,166		205		-		-		14,166		205
Government National Mortgage Association		14,226		142		-		-		14,226		142
Collateralized mortgage obligations:
Federal National Mortgage Association		35,632		2,586		11,760		609		47,392		3,195
Federal Home Loan Mortgage Corporation		72,655		4,980		15,762		876		88,417		5,856
Government National Mortgage Association		8,396		586		-		-		8,396		586
Total collateralized mortgage obligations		116,683		8,152		27,522		1,485		144,205		9,637
Total mortgage-backed securities		248,853		11,990		48,211		2,804		297,064		14,794
Total available for sale securities		335,030		14,778		50,928		2,818		385,958		17,596
Securities held to maturity:
State and political subdivisions		72,269		468		-		-		72,269		468
Total temporarily impaired securities	$	407,299	$	15,246	$	50,928	$	2,818	$	458,227	$	18,064

The total number of security positions in the investment portfolio in an unrealized loss position at March 31, 2014 was 141 compared to 331 at December 31, 2013. At March 31, 2014, the Company had positions in 21 investment securities with a fair value of $84.0 million and a total unrealized loss of $5.0 million that have been in a continuous unrealized loss position for more than 12 months. There were a total of 120 securities positions in the Company's investment portfolio, with a fair value of $320.0 million and a total unrealized loss of $6.8 million at March 31, 2014, that have been in a continuous unrealized loss position for less than 12 months. The unrealized loss on these investment securities was predominantly caused by changes in market interest rates subsequent to purchase. The fair value of most of the investment securities in the Company's portfolio fluctuates as market interest rates change.

The Company reviews investment securities on an ongoing basis for the presence of other-than-temporary impairment ("OTTI") with formal reviews performed quarterly. When evaluating debt securities for OTTI, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intention to sell the debt security or whether it is more likely than not that it will be required to sell the debt security before its anticipated recovery. The assessment of whether OTTI exists involves a high degree of subjectivity and judgment and is based on the information then available to management. There was no impairment recorded during the three months ended March 31, 2014 and 2013.

Based on management's review and evaluation of the Company's debt securities as of March 31, 2014, the debt securities with unrealized losses were not considered to be OTTI. As of March 31, 2014, the Company did not intend to sell any of the securities in a loss position and believes that it is not likely that it will be required to sell any such securities before the anticipated recovery of amortized cost. Accordingly, as of March 31, 2014, management has concluded that unrealized losses on its investment securities are temporary and no further impairment loss has been realized in the Company's consolidated statements of income.