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2. Investment Securities

3 Months Ended

Mar. 31, 2013

Investments, Debt and Equity Securities [Abstract]

Investment Securities

Investment securities available for sale at March 31, 2013 and December 31, 2012 are as follows:

(Dollars in thousands)
	March 31, 2013
	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Mortgage-backed securities	$	134,210		1,881		347		135,744
U.S. Government
sponsored enterprises		19,395		150		89		19,456
State and political subdivisions		127,046		5,749		450		132,345
Corporate bonds		3,559		23		57		3,525
Trust preferred securities		1,250		-		-		1,250
Equity securities		748		857		-		1,605
Total	$	286,208		8,660		943		293,925

(Dollars in thousands)
	December 31, 2012
	Amortized Cost			Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Mortgage-backed securities	$	146,755		1,875		606		148,024
U.S. Government
sponsored enterprises		18,714		203		80		18,837
State and political subdivisions		118,591		7,171		104		125,658
Corporate bonds		2,571		19		4		2,586
Trust preferred securities		1,250		-		-		1,250
Equity securities		748		720		-		1,468
Total	$	288,629		9,988		794		297,823

The current fair value and associated unrealized losses on investments in securities with unrealized losses at March 31, 2013 and December 31, 2012 are summarized in the tables below, with the length of time the individual securities have been in a continuous loss position.

(Dollars in thousands)
	March 31, 2013
	Less than 12 Months					12 Months or More				Total
	Fair Value			Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-backed securities	$	35,129		237		7,171		110		42,300		347
U.S. Government
sponsored enterprises		6,796		89		-		-		6,796		89
State and political subdivisions		25,406		450		-		-		25,406		450
Corporate bonds		1,522		57		-		-		1,522		57
Total	$	68,853		833		7,171		110		76,024		943

(Dollars in thousands)
	December 31, 2012
	Less than 12 Months					12 Months or More				Total
	Fair Value			Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-backed securities	$	48,126		468		12,913		138		61,039		606
U.S. Government
sponsored enterprises		3,402		80		-		-		3,402		80
State and political subdivisions		9,490		104		-		-		9,490		104
Corporate bonds		1,035		4		-		-		1,035		4
Total	$	62,053		656		12,913		138		74,966		794

At March 31, 2013, unrealized losses in the investment securities portfolio relating to debt securities totaled $943,000. The unrealized losses on these debt securities arose due to changing interest rates and are considered to be temporary. From the March 31, 2013 tables above, 24 out of 160 securities issued by state and political subdivisions contained unrealized losses, 23 out of 92 securities issued by U.S. Government sponsored enterprises, including mortgage-backed securities contained unrealized losses, and two out of five securities issued by corporations, contained unrealized losses. These unrealized losses are considered temporary because of acceptable investment grades on each security and the repayment sources of principal and interest on U.S. Government sponsored enterprises, including mortgage-backed securities, are government backed.

The amortized cost and estimated fair value of investment securities available for sale at March 31, 2013, by contractual maturity, are shown below. Expected maturities of mortgage-backed securities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollars in thousands)
	Amortized Cost			Estimated Fair Value
Due within one year	$	4,469		4,538
Due from one to five years		22,073		22,834
Due from five to ten years		99,051		102,764
Due after ten years		25,657		26,440
Mortgage-backed securities		134,210		135,744
Equity securities		748		1,605
Total	$	286,208		293,925

Proceeds from sales of securities available for sale during the three months ended March 31, 2013 were $5.8 million and resulted in gross gains of $263,000. Proceeds from sales of securities available for sale during the three months ended March 31, 2012 were $20.4 million and resulted in gross gains of $527,000.

Securities with a fair value of approximately $74.0 million and $73.9 million at March 31, 2013 and December 31, 2012, respectively, were pledged to secure public deposits and for other purposes as required by law.

Tabular disclosure of marketable securities. This may consist of investments in certain debt and equity securities, short-term investments and other assets.

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