NOTE 3 SECURITIES

Amortized cost and estimated fair value of securities available for sale are as follows (dollars in thousands):

	March 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	181,676	$	1,767	$	473	$	182,970
Mortgage-backed securities, residential		99,974		1,284		121		101,137
Collateralized mortgage obligations		777		12		-		789
Obligations of states and political subdivisions		37,368		1,012		35		38,345
Corporate bonds and notes		2,869		63		6		2,926
SBA loan pools		1,426		15		3		1,438
Trust Preferred securities		1,900		137		-		2,037
Corporate stocks		443		7,051		2		7,492
Total	$	326,433	$	11,341	$	640	$	337,134

	December 31, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	187,098	$	1,915	$	907	$	188,106
Mortgage-backed securities, residential		104,069		1,036		749		104,356
Collateralized mortgage obligations		1,001		14		-		1,015
Obligations of states and political subdivisions		37,339		1,059		22		38,376
Corporate bonds and notes		2,879		76		9		2,946
SBA loan pools		1,471		17		-		1,488
Trust preferred securities		1,898		136		-		2,034
Corporate stocks		444		7,253		2		7,695
Total	$	336,199	$	11,506	$	1,689	$	346,016

Amortized cost and estimated fair value of securities held to maturity are as follows (dollars in thousands):

	March 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Obligations of states and political subdivisions	$	5,304	$	392	$	-	$	5,696
Time deposits with other financial institutions		822		14		-		836
Total	$	6,126	$	406	$	-	$	6,532

	December 31, 2013
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Obligations of states and political subdivisions	$	5,472	$	419	$	-	$	5,891
Time deposits with other financial institutions		1,023		16		-		1,039
Total	$	6,495	$	435	$	-	$	6,930

The amortized cost and estimated fair value of debt securities are shown below by expected maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately (dollars in thousands):

	March 31, 2014
	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Within One Year	$	23,856	$	24,217	$	2,537	$	2,567
After One, But Within Five Years		182,121		184,229		2,297		2,477
After Five, But Within Ten Years		17,836		17,832		1,292		1,488
After Ten Years		-		-		-		-
		223,813		226,278		6,126		6,532
Mortgage-backed securities, residential		99,974		101,137		-		-
Collateralized mortgage obligations		777		789		-		-
SBA loan pools		1,426		1,438		-		-
Total	$	325,990	$	329,642	$	6,126	$	6,532

There were no proceeds from sales and calls of securities resulting in gains or losses at March 31, 2014 and 2013.

The following tables summarize the investment securities available for sale with unrealized losses at March 31, 2014 and December 31, 2013 by aggregated major security type and length of time in a continuous unrealized loss position (dollars in thousands):

	Less than 12 months				12 months or longer				Total
March 31, 2014	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	89,296	$	444	$	1,984	$	29	$	91,280	$	473
Mortgage-backed securities, residential		33,382		121		-		-		33,382		121
Obligations of states and political subdivisions		5,778		35		-		-		5,778		35
Corporate bonds and notes		240		6		-		-		240		6
SBA loan pools		631		3		-		-		631		3
Corporate stocks		-		-		2		2		2		2
Total temporarily impaired securities	$	129,327	$	609	$	1,986	$	31	$	131,313	$	640

	Less than 12 months				12 months or longer				Total
December 31, 2013	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	83,840	$	867	$	1,978	$	39	$	85,818	$	906
Mortgage-backed securities, residential		63,115		750		-		-		63,115		750
Obligations of states and political subdivisions		4,589		22		-		-		4,589		22
Corporate bonds and notes		238		9		-		-		238		9
Corporate stocks		-		-		2		2		2		2
Total temporarily impaired securities	$	151,782	$	1,648	$	1,980	$	41	$	153,762	$	1,689

Other-Than-Temporary Impairment

As of March 31, 2014, the majority of the Corporation’s unrealized losses in the investment securities portfolio related to obligations of U.S. Government and U.S. Government sponsored enterprises and mortgage-backed securities. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Corporation does not have the intent to sell these securities and it is not likely that it will be required to sell these securities before their anticipated recovery, the Corporation does not consider these securities to be other-than-temporarily impaired at March 31, 2014.

During the first quarter of 2014, the Corporation received notice that one CDO consisting of a pool of trust preferred securities was liquidated and recorded $0.5 million in other operating income during the first quarter of 2014. The Corporation does not own any other CDO’s in its investment securities portfolio.

The tables below present a roll forward of the cumulative credit losses recognized in earnings for the three-month periods ending March 31, 2014 and 2013 (dollars in thousands):

	2014			2013
Beginning balance, January 1,	$	1,939		$	3,506
Amounts related to credit loss for which an other-than-temporary impairment was not previously recognized		-			-
Additions/Subtractions:
Amounts realized for securities sold during the period		-			-
Amounts related to securities for which the company intends to sell or that it will be more likely than not that the company will be required to sell prior to recovery of amortized cost basis		-			-
Reductions for increase in cash flows expected to be collected that are recognized over the remaining life of the security		-			-
Reductions for previous credit losses realized in securities liquidated during the period		(1,939	)		-
Increases to the amount related to the credit loss for which other-than-temporary impairment was previously recognized		-			-
Ending balance, March 31,	$	-		$	3,506