NOTE 3 SECURITIES

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

	June 30, 2015
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	130,736	$	1,160	$	2	$	131,894
Mortgage-backed securities, residential		115,727		672		723		115,676
Collateralized mortgage obligations		139		2		-		141
Obligations of states and political subdivisions		39,379		671		83		39,967
Corporate bonds and notes		1,249		13		2		1,260
SBA loan pools		1,138		10		2		1,146
Corporate stocks		285		202		-		487
Total	$	288,653	$	2,730	$	812	$	290,571

	December 31, 2014
	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	180,535	$	1,300	$	162	$	181,673
Mortgage-backed securities, residential		60,787		892		19		61,660
Collateralized mortgage obligations		335		3		-		338
Obligations of states and political subdivisions		30,677		802		28		31,451
Corporate bonds and notes		1,502		35		4		1,533
SBA loan pools		1,296		11		3		1,304
Trust preferred securities		1,906		122		-		2,028
Corporate stocks		285		235		-		520
Total	$	277,323	$	3,400	$	216	$	280,507

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

	June 30, 2015
	Amortized Cost			Unrealized Gains			Unrealized Losses			Estimated Fair Value
Obligations of states and political subdivisions		$	5,605		$	304		$	-		$	5,909
Time deposits with other financial institutions			440			2			-			442
Total		$	6,045		$	306		$	-		$	6,351

	December 31, 2014
	Amortized Cost			Unrealized Gains			Unrealized Losses			Estimated Fair Value
Obligations of states and political subdivisions		$	5,175		$	360		$	-		$	5,535
Time deposits with other financial institutions			656			6			-			662
Total		$	5,831		$	366		$	-		$	6,197

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 (in thousands):

	June 30, 2015
	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Within one year	$	40,628	$	41,060	$	3,397	$	3,430
After one, but within five years		110,547		111,777		2,431		2,674
After five, but within ten years		20,189		20,284		217		247
After ten years		-		-		-		-
		171,364		173,121		6,045		6,351
Mortgage-backed securities, residential		115,727		115,676		-		-
Collateralized mortgage obligations		139		141		-		-
SBA loan pools		1,138		1,146		-		-
Total	$	288,368	$	290,084	$	6,045	$	6,351

The proceeds from sales and calls of securities resulting in gains or losses for the three months ended June 30, 2015 and 2014 are listed below (in thousands):

	2015		2014
Proceeds	$	54,268	$	49,765
Gross gains	$	252	$	522
Tax expense	$	97	$	201

The proceeds from sales and calls of securities resulting in gains or losses for the six months ended June 30, 2015 and 2014 are listed below (in thousands):

	2015		2014
Proceeds	$	54,319	$	49,765
Gross gains	$	302	$	522
Tax expense	$	116	$	201

The following tables summarize the investment securities available for sale with unrealized losses at June 30, 2015 and December 31, 2014 by aggregated major security type and length of time in a continuous unrealized loss position (in thousands):

	Less than 12 months				12 months or longer				Total
June 30, 2015	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	4,997	$	2	$	-	$	-	$	4,997	$	2
Mortgage-backed securities, residential		80,393		723		-		-		80,393		723
Obligations of states and political subdivisions		12,857		80		737		3		13,594		83
Corporate bonds and notes		245		2		-		-		245		2
SBA loan pools		-		-		506		2		506		2
Total temporarily impaired securities	$	98,492	$	807	$	1,243	$	5	$	99,735	$	812

	Less than 12 months				12 months or longer				Total
December 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	$	57,512	$	108	$	4,945	$	54	$	62,457	$	162
Mortgage-backed securities, residential		11,051		19		-		-		11,051		19
Obligations of states and political subdivisions		4,625		22		1,056		6		5,681		28
Corporate bonds and notes		-		-		243		4		243		4
Corporate stocks		276		1		316		2		592		3
Total temporarily impaired securities	$	73,464	$	150	$	6,560	$	66	$	80,024	$	216

Other-Than-Temporary Impairment

As of June 30, 2015, the majority of the Corporation’s unrealized losses in the investment securities portfolio related to mortgage backed securities. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because it is not likely that the Corporation 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 June 30, 2015.

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 $500 thousand in other operating income during the first quarter of 2014. The Corporation does not own any other CDO’s in its investment securities portfolio.

There were no cumulative credit losses recognized in earnings for the three month periods ended June 30, 2015 and 2014. The table below presents a roll forward of the cumulative credit losses recognized in earnings for the six month periods ended June 30, 2015 and 2014 (in thousands):

	2015		2014
Beginning balance, January 1,	$	-	$	1,939
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 Corporation intends to sell or that it will be more likely than not that the Corporation 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, June 30,	$	-	$	-