Note 3 – Securities

The amortized cost and estimated fair value of investments in debt and equity securities at June 30, 2013 and December 31, 2012 were as follows:

	June 30, 2013
(in thousands)	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Securities available for sale:
Federal agencies and GSEs	$	54,965	$	172	$	496	$	54,641
Mortgage-backed and CMOs		74,299		1,074		446		74,927
State and municipal		193,223		7,092		486		199,829
Corporate		10,952		2		216		10,738
Total securities available for sale	$	333,439	$	8,340	$	1,644	$	340,135

	December 31, 2012
(in thousands)	Amortized		Unrealized		Unrealized		Estimated
	Cost		Gains		Losses		Fair Value
Securities available for sale:
Federal agencies and GSE	$	42,458	$	306	$	5	$	42,759
Mortgage-backed and CMOs		81,585		1,829		106		83,308
State and municipal		189,810		12,935		14		202,731
Corporate		6,317		131		-		6,448
Total securities available for sale	$	320,170	$	15,201	$	125	$	335,246

Temporarily Impaired Securities

The following table shows estimated fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2013. The reference point for determining when securities are in an unrealized loss position is month-end. Therefore, it is possible that a security's market value exceeded its amortized cost on other days during the past twelve-month period.

Available for sale securities that have been in a continuous unrealized loss position are as follows:

	Total				Less than 12 Months				12 Months or More
(in thousands)	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss			Estimated Fair Value		Unrealized Loss
Federal agencies and GSEs	$	39,222	$	496	$	39,222	$	496		$	-	$	-
Mortgage-backed and CMOs		28,184		446		23,012		374			5,172		72
State and municipal		29,771		486		29,771		486			-		-
Corporate		8,582		216		8,582		216			-		-
Total	$	105,759	$	1,644	$	100,587	$	1,572		$	5,172	$	72

GSE debt securities: The unrealized losses on the Company's investment in 17 government sponsored entities ("GSE") were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2013.

Mortgage-backed securities and CMOs: The unrealized losses on the Company's investment in 22 GSE mortgage-backed securities and CMOs were caused by interest rate increases. The contractual cash flows of those investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company's investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2013.

State and municipal securities: The unrealized losses on 35 state and municipal securities were caused by interest rate increases. 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. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2013.

Corporate securities: The unrealized losses on eight investments in corporate securities were caused by interest rate increases. 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. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at June 30, 2013.

The Company's investment in FHLB stock totaled $2,000,000 at June 30, 2013. FHLB stock is generally viewed as a long-term investment and as a restricted investment security, which is carried at cost, because there is no market for the stock, other than the FHLB or member institutions. Therefore, when evaluating FHLB stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Company does not consider this investment to be other-than-temporarily impaired at June 30, 2013 and no impairment has been recognized. FHLB stock is shown in restricted stock on the balance sheet and is not a part of the available for sale securities portfolio.

The table below shows gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position, at December 31, 2012.

	Total				Less than 12 Months				12 Months or More
(in thousands)	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Federal agencies and GSEs	$	5,501	$	5	$	5,501	$	5	$	-	$	-
Mortgage-backed and CMOs		16,353		106		12,941		42		3,412		64
State and municipal		4,329		14		4,329		14		-		-
Total	$	26,183	$	125	$	22,771	$	61	$	3,412	$	64

Other-Than-Temporary-Impaired Securities

As of June 30, 2013 and December 31, 2012, there were no securities classified as having other-than-temporary impairment.