Note 3.

Investment Securities

The following table shows the amortized cost and the estimated fair value of the held-to-maturity securities and available-for-sale securities at June 30, 2013 and December 31, 2012 by contractual maturity within each type:


	At June 30, 2013									At December 31, 2012
(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value

Securities Held-to-Maturity
Corporate bonds:
Within 1 year	$	12,313	$	118	$	—		$	12,431	$	3,026	$	7	$	—		$	3,033
After 1 year to 5 years		57,112		969		(483	)		57,598		66,819		1,526		(51	)		68,294

		69,425		1,087		(483	)		70,029		69,845		1,533		(51	)		71,327

Total	$	69,425	$	1,087	$	(483	)	$	70,029	$	69,845	$	1,533	$	(51	)	$	71,327


Securities Available-for-Sale
U.S. treasuries:
After 5 years to 10 years	$	4,963	$	—	$	(200	)	$	4,763	$	4,960	$	—	$	(22	)	$	4,938

		4,963		—		(200	)		4,763		4,960		—		(22	)		4,938

U.S. government corporations and agencies:
Within 1 year		5,998		51		—			6,049		1,517		9		—			1,526
After 1 year to 5 years		153,254		490		(1,649	)		152,095		148,120		1,509		(70	)		149,559
After 5 years to 10 years		15,885		—		(608	)		15,277		20,953		109		(5	)		21,057

		175,137		541		(2,257	)		173,421		170,590		1,627		(75	)		172,142

State and political subdivisions:
Within 1 year		5,383		34		—			5,417		4,607		75		—			4,682
After 1 year to 5 years		3,925		40		(36	)		3,929		4,130		88		(19	)		4,199
After 5 years to 10 years		41,966		844		(562	)		42,248		36,499		1,245		(7	)		37,737
Over 10 years		66,555		2,098		(313	)		68,340		70,495		5,055		—			75,550

		117,829		3,016		(911	)		119,934		115,731		6,463		(26	)		122,168

Residential mortgage-backed securities:
After 5 years to 10 years		22,236		468		(73	)		22,631		20,140		777		—			20,917
Over 10 years		44,750		617		(75	)		45,292		66,962		2,861		—			69,823

		66,986		1,085		(148	)		67,923		87,102		3,638		—			90,740


Collateralized mortgage obligations:
After 1 year to 5 years		155		3		—			158		41		—		—			41
After 5 years to 10 years		—		—		—			—		626		7		—			633
Over 10 years		10,335		74		(93	)		10,316		25,698		645		(5	)		26,338

		10,490		77		(93	)		10,474		26,365		652		(5	)		27,012

Corporate bonds:
After 1 year to 5 years		10,081		23		(207	)		9,897		4,993		21		—			5,014
After 5 years to 10 years		22,179		—		(1,068	)		21,111		—		—		—			—

		32,260		23		(1,275	)		31,008		4,993		21		—			5,014

Money market mutual funds:
Within 1 year		5,500		—		—			5,500		4,878		—		—			4,878

		5,500		—		—			5,500		4,878		—		—			4,878

Equity securities:
No stated maturity		2,161		867		(16	)		3,012		2,279		696		(133	)		2,842

		2,161		867		(16	)		3,012		2,279		696		(133	)		2,842

Total	$	415,326	$	5,609	$	(4,900	)	$	416,035	$	416,898	$	13,097	$	(261	)	$	429,734

Expected maturities may differ from contractual maturities because debt issuers may have the right to call or prepay obligations without call or prepayment penalties. Unrealized losses in investment securities at June 30, 2013 and December 31, 2012 do not represent other-than-temporary impairments.

Securities with a carrying value of $305.7 million and $368.2 million at June 30, 2013 and December 31, 2012, respectively, were pledged to secure public deposits and for other purposes as required by law.

The following table presents information related to sales of securities available-for-sale during the six months ended June 30, 2013 and 2012:


	Six Months Ended June 30,
(Dollars in thousands)	2013		2012
Securities available-for-sale:
Proceeds from sales	$	35,415	$	57,162
Gross realized gains on sales		1,524		1,178
Gross realized losses on sales		—		896
Tax expense related to net realized gains on sales		533		99

The Corporation realized other-than-temporary impairment charges to noninterest income of $0 thousand and $9 thousand, respectively, on its equity portfolio during the six months ended June 30, 2013 and 2012. The Corporation determined that it was probable that the fair value of certain equity securities would not recover to the Corporation’s cost basis within a reasonable period of time due to a decline in the financial stability of the underlying companies. The Corporation carefully monitors all of its equity securities and has not taken impairment losses on certain other equity securities in an unrealized loss position, at this time, as the financial performance of the underlying companies is not indicative of the market deterioration of their stock and it is probable that the market value of the equity securities will recover to the Corporation’s cost basis in the individual securities in a reasonable amount of time. The equity securities within the following table consist of common stocks of other financial institutions, which have experienced declines in value consistent with the industry as a whole. Management evaluated the near-term prospects of the issuers in relation to the severity and duration of the impairment. The Corporation has the intent and ability to hold these securities until recovery to the Corporation’s cost basis occurs. The Corporation does not consider these investments to be other-than-temporarily impaired at June 30, 2013 and December 31, 2012.

Management evaluates debt securities, which are comprised of U.S. government, government sponsored agencies, municipalities, corporate bonds and other issuers, for other-than-temporary impairment and considers the current economic conditions, the length of time and the extent to which the fair value has been less than cost, interest rates and the bond rating of each security. All of the debt securities are rated as investment grade and management believes that it will not incur any losses. The unrealized losses on the Corporation’s investments in debt securities are temporary in nature since they are primarily related to market interest rates and are not related to the underlying credit quality of the issuers within our investment portfolio. The Corporation does not have the intent to sell the debt securities and believes it is more likely than not, that it will not have to sell the securities before recovery of their cost basis. The Corporation has not recognized any other-than-temporary impairment charges on debt securities for the six months ended June 30, 2013 and 2012.

At June 30, 2013 and December 31, 2012, there were no investments in any single non-federal issuer representing more than 10% of shareholders’ equity.

The following table shows the amount of securities that were in an unrealized loss position at June 30, 2013 and December 31, 2012:

At June 30, 2013

Less than Twelve Months

Twelve Months or Longer

Total

(Dollars in thousands)

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

Fair Value

Unrealized
Losses

U.S. treasuries

4,763

(200

)

—

4,763

(200

)

U.S. government corporations and agencies

111,718

(2,257

)

—

111,718

(2,257

)

State and political subdivisions

25,144

(911

)

—

25,144

(911

)

Residential mortgage-backed securities

25,535

(148

)

—

25,535

(148

)

Collateralized mortgage obligations

6,602

(93

)

—

6,602

(93

)

Corporate bonds

45,778

(1,758

)

—

45,778

(1,758

)

Equity securities

1,064

(16

)

—

1,064

(16

)

Total

220,604

(5,383

)

—

220,604

(5,383

)


	At December 31, 2012
	Less than Twelve Months					Twelve Months or Longer					Total
(Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses

U.S. treasuries	$	4,938	$	(22	)	$	—	$	—		$	4,938	$	(22	)
U.S. government corporations and agencies		36,793		(75	)		—		—			36,793		(75	)
State and political subdivisions		4,574		(14	)		480		(12	)		5,054		(26	)
Collateralized mortgage obligations		5,006		(5	)		—		—			5,006		(5	)
Corporate bonds		10,410		(51	)		—		—			10,410		(51	)
Equity securities		976		(133	)		—		—			976		(133	)

Total	$	62,697	$	(300	)	$	480	$	(12	)	$	63,177	$	(312	)