NOTE 4. Securities

Amortized costs and fair values of securities available for sale at March 31, 2013 and December 31, 2012 were as follows:


				Gross		Gross
		Amortized		Unrealized		Unrealized			Fair
		Cost		Gains		(Losses)			Value
				March 31, 2013
				(in thousands)
Obligations of U.S. government corporations and
agencies	$	34,512	$	863	$	(10	)	$	35,365
Mortgage-backed securities		19,599		1,047		(19	)		20,627
Obligations of states and political subdivisions		41,857		2,136		(38	)		43,955
Corporate securities		8,965		1,232		—			10,197
Equity securities		2,054		161		—			2,215
	$	106,987	$	5,439	$	(67	)	$	112,359
				December 31, 2012
				(in thousands)
Obligations of U.S. government corporations and
agencies	$	22,781	$	911	$	—		$	23,692
Mortgage-backed securities		20,978		1,229		—			22,207
Obligations of states and political subdivisions		41,185		2,327		(11	)		43,501
Corporate securities		9,963		1,193		—			11,156
Equity securities		2,054		144		—			2,198
	$	96,961	$	5,804	$	(11	)	$	102,754

During the first three months of 2013, the Company sold $2.5 million in available for sale securities for a net gain of $390 thousand. There were no sales of securities available for sale during the first three months of 2012.

The fair value and gross unrealized losses for securities available for sale, totaled by the length of time that individual securities have been in a continuous gross unrealized loss position, at March 31, 2013 and December 31, 2012 were as follows:


		Less than 12 months				12 months or more					Total
				Gross				Gross				Gross
				Unrealized				Unrealized				Unrealized
		Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
						March 31, 2013
						(in thousands)
Obligations of U.S. government
corporations and agencies	$	7,937	$	10	$	—	$	—	$	7,937	$	10
Mortgage-backed securities		2,010		19		—		—		2,010		19
Obligations of states and political
subdivisions		2,377		33		259		5		2,636		38
Corporate securities		—		—		—		—		—		—
Equity securities		—		—		—		—		—		—
	$	12,324	$	62	$	259	$	5	$	12,583	$	67
						December 31, 2012
						(in thousands)
Obligations of U.S. government
corporations and agencies	$	—	$	—	$	—	$	—	$	—	$	—
Mortgage-backed securities		—		—		—		—		—		—
Obligations of states and political
subdivisions		495		6		274		5		769		11
Corporate securities		—		—		—		—		—		—
Equity securities		—		—		—		—		—		—
	$	495	$	6	$	274	$	5	$	769	$	11

Gross unrealized losses on available for sale securities included fifteen (15) and two (2) debt securities at March 31, 2013 and December 31, 2012, respectively. The Company evaluates securities for other-than-temporary impairment on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. The Company's mortgage-backed securities are issued by U.S. government agencies, which guarantee payments to investors regardless of the status of the underlying mortgages. Consideration is given to the length of time and the amount of an unrealized loss, the financial condition of the issuer, and the intent and ability of the Company to retain its investment in the issuer long enough to allow for an anticipated recovery in fair value. The fair value of a security reflects its liquidity as compared to similar instruments, current market rates on similar instruments, and the creditworthiness of the issuer. Absent any change in the liquidity of a security or the creditworthiness of the issuer, prices will decline as market rates rise and vice-versa. The primary cause of the unrealized losses at March 31, 2013 and December 31, 2012 was changes in market interest rates. Since the losses can be primarily attributed to changes in market interest rates and not expected cash flows or an issuer's financial condition, the unrealized losses are deemed to be temporary. The current economic crisis involving housing, liquidity and credit were also a contributing factor to the unrealized losses on these securities at March 31, 2013 and December 31, 2012. The Company monitors the financial condition of these issuers continuously and will record other-than-temporary impairment if the recovery of value is unlikely.

The Company's securities are exposed to various risks, such as interest rate, market, currency and credit risks. Due to the level of risk associated with certain securities and the level of uncertainty related to changes in the value of securities, it is at least reasonably possible that changes in risks in the near term would materially affect securities reported in the financial statements. In addition, recent economic uncertainty and market events have led to unprecedented volatility in currency, commodity, credit and equity markets culminating in failures of some banking and financial services firms and government intervention to solidify others. These events underscore the level of investment risk associated with the current economic environment, and accordingly the level of risk in the Company's securities.

Securities having a carrying value of $5.8 million at March 31, 2013 were pledged to secure securities sold under agreements to repurchase and other purposes required by law.

The composition of restricted investments at March 31, 2013 and December 31, 2012 was as follows:


		March 31, 2013	December 31, 2012
		(in thousands)
Federal Reserve Bank Stock	$	344	$	344
Federal Home Loan Bank Stock		2,158		2,293
Community Bankers' Bank Stock		140		140
	$	2,642	$	2,777