Note 3 – Securities

The fair value of securities is as follows:


September 30, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U.S. Treasury and federal agencies	$	43,161	$	243	$	(647	)	$	42,757
State and municipal		176,711		5,505		(2,699	)		179,517
Federal agency collateralized mortgage obligations		111,266		1,293		(1,777	)		110,782
Federal agency mortgage-backed pools		176,880		3,907		(1,593	)		179,194
Private labeled mortgage-backed pools		1,290		44		—			1,334
Corporate notes		532		28		—			560

Total available for sale investment securities	$	509,840	$	11,020	$	(6,716	)	$	514,144

Held to maturity, State and Municipal	$	9,910	$	—	$	—		$	9,910


December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for sale
U.S. Treasury and federal agencies	$	51,458	$	351	$	(30	)	$	51,779
State and municipal		162,147		10,842		(84	)		172,905
Federal agency collateralized mortgage obligations		95,337		1,533		(39	)		96,831
Federal agency mortgage-backed pools		152,372		6,847		(15	)		159,204
Private labeled mortgage-backed pools		1,960		71		—			2,031
Corporate notes		32		19		—			51

Total available for sale investment securities	$	463,306	$	19,663	$	(168	)	$	482,801

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information, and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary. While these securities are held in the available for sale portfolio, Horizon intends, and has the ability, to hold them until the earlier of a recovery in fair value or maturity.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified. At September 30, 2013, no individual investment security had an unrealized loss that was determined to be other-than-temporary.

The unrealized losses on the Company’s investments in securities of state and municipal governmental agencies, and federal agency mortgage-backed pools were caused by interest rate volatility and not a decline in credit quality. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Company expects to recover the amortized cost basis over the term of the securities. Because the Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider those investments to be other-than-temporarily impaired at September 30, 2013.

The amortized cost and fair value of securities available for sale and held to maturity at September 30, 2013 and December 31, 2012, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


	September 30, 2013				December 31, 2012
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Available for sale
Within one year	$	3,968	$	3,987	$	4,358	$	4,368
One to five years		49,167		49,763		49,415		50,673
Five to ten years		99,931		102,194		98,551		104,258
After ten years		67,338		66,890		61,313		65,436

		220,404		222,834		213,637		224,735
Federal agency collateralized mortgage obligations		111,266		110,782		95,337		96,831
Federal agency mortgage-backed pools		176,880		179,194		152,372		159,204
Private labeled mortgage-backed pools		1,290		1,334		1,960		2,031

Total available for sale investment securities	$	509,840	$	514,144	$	463,306	$	482,801


Held to maturity
Within one year	$	9,910	$	9,910	$	—	$	—
One to five years		—		—		—		—

Total held to maturity investment securities	$	9,910	$	9,910	$	—	$	—

The following table shows the gross unrealized losses and the fair value of the Company’s investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position.


	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
September 30, 2013	Value		Losses			Value		Losses			Value		Losses

U.S. Treasury and federal agencies	$	27,836	$	(647	)	$	—	$	—		$	27,836	$	(647	)
State and municipal		53,822		(2,686	)		1,033		(13	)		54,855		(2,699	)
Federal agency collateralized mortgage obligations		56,488		(1,645	)		4,499		(132	)		60,987		(1,777	)
Federal agency mortgage-backed pools		52,517		(1,593	)		—		—			52,517		(1,593	)

Total temporarily impaired securities	$	190,663	$	(6,571	)	$	5,532	$	(145	)	$	196,195	$	(6,716	)


	Less than 12 Months					12 Months or More				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
December 31, 2012	Value		Losses			Value		Losses		Value		Losses

U.S. Treasury and federal agencies	$	13,064	$	(30	)	$	—	$	—	$	13,064	$	(30	)
State and municipal		11,928		(84	)		—		—		11,928		(84	)
Federal agency collateralized mortgage obligations		12,719		(39	)		—		—		12,719		(39	)
Federal agency mortgage-backed pools		4,126		(15	)		—		—		4,126		(15	)

Total temporarily impaired securities	$	41,837	$	(168	)	$	—	$	—	$	41,837	$	(168	)


	Three months ended September 30				Nine months ended September 30
	2013		2012		2013			2012
Sales of securities available for sale (Unaudited)
Proceeds	$	648	$	—	$	23,853		$	—
Gross gains		6		—		382			—
Gross losses		—		—		(8	)		—