4. Investment Securities

Investment securities at December 31, 2012 and 2011 are as follows:

2012	Amortized cost

	(in thousands)
Available for sale securities:
Mortgage-backed securities	$	9	1	-	10
Corporate bonds		30,408	248	(3)	30,653
Affiliated mutual funds		73,443	3,749	(1,090)	76,102

	$	103,860	3,998	(1,093)	106,765

Trading securities:
Mortgage-backed securities					44
Municipal bonds					501
Corporate bonds					12,112
Common stock					37
Affiliated mutual funds					56,683

					69,377

Total investment securities					176,142

2011	Amortized cost

	(in thousands)
Available for sale securities:
Mortgage-backed securities	$	9	2	-	11
Municipal bonds		2,549	-	(13)	2,536
Corporate bonds		45,893	170	(89)	45,974
Affiliated mutual funds		51,456	2,738	(5,379)	48,815

	$	99,907	2,910	(5,481)	97,336

Trading securities:
Mortgage-backed securities					63
Municipal bonds					500
Corporate bonds					17,319
Common stock					37
Affiliated mutual funds					19,007

					36,926

Total investment securities					134,262

A summary of available for sale debt securities and affiliated mutual funds with fair values below carrying values at December 31, 2012 is as follows:

	Less than 12 months				12 months or longer				Total

	Fair value		Unrealized losses		Fair value		Unrealized losses		Fair value		Unrealized losses
	(in thousands)
Corporate bonds	$	997		(3)		-		-		997		(3)
Affiliated mutual funds		23,478		(469)		5,604		(621)		29,082		(1,090)

Total temporarily impaired securities	$	24,475		(472)		5,604		(621)		30,079		(1,093)

Based upon our assessment of these corporate bonds and affiliated mutual funds, the time frame investments have been in a loss position, our intent to hold affiliated mutual funds until they have recovered and our history of holding bonds until maturity, we determined that a write-down was not necessary at December 31, 2012.

Mortgage-backed securities and corporate bonds accounted for as available for sale and held as of December 31, 2012 mature as follows:

	Amortized cost

	(in thousands)
Within one year	$	15,488	15,529
After one year but within 10 years		14,929	15,134

	$	30,417	30,663

Mortgage-backed securities, municipal bonds and corporate bonds accounted for as trading and held as of December 31, 2012 mature as follows:

	Fair value

	(in thousands)
Within one year	$	2,531
After one year but within 10 years		10,126

	$	12,657

Investment securities with fair values of $79.9 million, $55.7 million and $45.1 million were sold during 2012, 2011 and 2010, respectively. During 2012, net realized gains of $3.2 million and $5.3 million were recognized from the sale of $32.9 million in available for sale securities and the sale of $47.0 million in trading securities, respectively. During 2011, net realized gains of $2.3 million and $1.4 million were recognized from the sale of $22.1 million in available for sale securities and the sale of $33.6 million in trading securities, respectively. During 2010, net gains of $2.9 million and $2.9 million were recognized from the sale of $24.2 million in available for sale securities and the sale of $20.9 million in trading securities, respectively.

The aggregate carrying amount of our equity method investments, classified in other assets, was $4.6 million and $5.6 million at December 31, 2012 and 2011, respectively. At December 31, 2012, our investments consist of limited partnership interests in venture capital funds.

Accounting standards establish a framework for measuring fair value and a three-level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of the asset. Inputs may be observable or unobservable and refer broadly to the assumptions that market participants would use in pricing the asset. An individual investment's fair value measurement is assigned a level based upon the observability of the inputs that are significant to the overall valuation. The three-tier hierarchy of inputs is summarized as follows:

•

Level 1 – Investments are valued using quoted prices in active markets for identical securities.

•

Level 2 – Investments are valued using other significant observable inputs, including quoted prices in active markets for similar securities.

•

Level 3 – Investments are valued using significant unobservable inputs, including the Company's own assumptions in determining the fair value of investments.

Assets classified as Level 2 can have a variety of observable inputs. These observable inputs are collected and utilized, primarily by an independent pricing service, in different evaluated pricing approaches depending upon the specific asset to determine a value. The fair value of municipal bonds is measured based on pricing models that take into account, among other factors, information received from market makers and broker/dealers, current trades, bid-wants lists, offerings, market movements, the callability of the bond, state of issuance and benchmark yield curves. The fair value of corporate bonds is measured using various techniques, which consider recently executed transactions in securities of the issuer or comparable issuers, market price quotations (where observable), bond spreads and fundamental data relating to the issuer.

Securities' values classified as Level 3 are primarily determined through the use of a single quote (or multiple quotes) from dealers in the securities using proprietary valuation models. These quotes involve significant unobservable inputs, and thus, the related securities are classified as Level 3 securities.

The following tables summarize our investment securities as of December 31, 2012 and 2011 that are recognized in our consolidated balance sheets using fair value measurements based on the differing levels of inputs. There were no transfers between levels for the years ended December 31, 2012 or 2011.

2012	Level 1		Level 2		Level 3		Total


	(in thousands)
Mortgage-backed securities	$	-		54		-		54
Municipal bonds		-		501		-		501
Corporate bonds		-		42,765		-		42,765
Common stock		37		-		-		37
Affiliated mutual funds		132,785		-		-		132,785

Total	$	132,822	$	43,320	$	-	$	176,142

2011	Level 1		Level 2		Level 3		Total


	(in thousands)
Mortgage-backed securities		-		74		-		74
Municipal bonds		-		3,036		-		3,036
Corporate bonds		-		63,293		-		63,293
Common stock		37		-		-		37
Affiliated mutual funds		67,822		-		-		67,822

Total	$	67,859	$	66,403	$	-	$	134,262