SECURITIES

The following tables summarize the amortized costs and estimated fair values of securities available-for-sale (“AFS”), as of June 30, 2013 and December 31, 2012:



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
June 30, 2013
Obligations of states and political subdivisions	$	29,079	$	1,410	$	—		$	30,489
Mortgage-backed securities issued or guaranteed by U.S. government sponsored enterprises	347,342		6,837		(5,401		)	348,778
Collateralized mortgage obligations issued or guaranteed by U.S. government sponsored enterprises	408,826		1,271		(7,840		)	402,257
Private issue collateralized mortgage obligations	8,106		12		(273		)	7,845
Total securities available-for-sale	$	793,353	$	9,530	$	(13,514	)	$	789,369
December 31, 2012
Obligations of states and political subdivisions	$	31,112	$	1,928	$	—		$	33,040
Mortgage-backed securities issued or guaranteed by U.S. government sponsored enterprises	345,528		12,699		(79		)	358,148
Collateralized mortgage obligations issued or guaranteed by U.S. government sponsored enterprises	375,627		6,181		(120		)	381,688
Private issue collateralized mortgage obligations	8,871		—		(697		)	8,174
Total securities available-for-sale	$	761,138	$	20,808	$	(896	)	$	781,050

Net unrealized gains (losses) on securities AFS at June 30, 2013 and December 31, 2012 and included in accumulated other comprehensive income (loss) amounted to $(2.6) million and $12.9 million, net of deferred taxes of $(1.4) million and $7.0 million, respectively.

Impaired Securities

Management periodically reviews the Company’s investment portfolio to determine the cause, magnitude and duration of declines in the fair value of each security. Thorough evaluations of the causes of the unrealized losses are performed to determine whether the impairment is temporary or other-than-temporary in nature. Considerations such as the ability of the securities to meet cash flow requirements, levels of credit enhancements, risk of curtailment, recoverability of invested amount over a reasonable period of time and the length of time the security is in a loss position, for example, are applied in determining other-than-temporary impairment (“OTTI”). Once a decline in value is determined to be other-than-temporary, the value of the security is reduced and a corresponding charge to earnings is recognized.

The following table presents the estimated fair values and gross unrealized losses of investment securities that were in a continuous loss position at June 30, 2013 and December 31, 2012, by length of time that individual securities in each category have been in a continuous loss position:



	Less Than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2013
Mortgage-backed securities	$	171,566	$	(5,401	)	$	—	$	—		$	171,566	$	(5,401	)
Collateralized mortgage obligations	298,708		(7,840		)	—		—			298,708		(7,840		)
Private issue collateralized mortgage obligations	139		(5		)	5,985		(268		)	6,124		(273		)
Total	$	470,413	$	(13,246	)	$	5,985	$	(268	)	$	476,398	$	(13,514	)
December 31, 2012
Mortgage-backed securities	$	42,782	$	(79	)	$	—	$	—		$	42,782	$	(79	)
Collateralized mortgage obligations	73,098		(120		)	—		—			73,098		(120		)
Private issue collateralized mortgage obligations	—		—			8,174		(697		)	8,174		(697		)
Total	$	115,880	$	(199	)	$	8,174	$	(697	)	$	124,054	$	(896	)

At June 30, 2013, the Company held $476.4 million in investment securities with unrealized losses that are considered temporary. Included in the unrealized losses were non-agency private issue collateralized mortgage obligations (“non-agency”). At June 30, 2013, the Company held $7.8 million in non-agencies of which $6.0 million had unrealized losses for twelve months or longer. Management believes the unrealized losses for the non-agencies are the result of current market conditions and the underestimation of their value in the market. Management currently has the intent and ability to retain these investment securities with unrealized losses until the decline in value has been recovered. Stress tests are performed monthly on the non-agencies, which are higher risk bonds, within the investment portfolio using current statistical data to determine expected cash flows and forecast potential losses. The results of the stress tests during the first six months of 2013 indicated potential future credit losses that were lower than previously recorded OTTI and as such no additional OTTI was recorded during the second quarter of 2013.

Security Gains and Losses and Other-Than-Temporary Impairment of Securities

The following tables details the Company’s sales of investment securities, the gross realized gains and losses, and impairment of securities:



	Three Months Ended June 30,					Six Months Ended June 30,
Available-for-sale	2013		2012			2013		2012
Proceeds from sales of securities	$	—	$	18,324		$	4,875	$	31,364
Gross realized gains	—		951			138		1,104
Gross realized (losses)	—		(200		)	—		(203		)
Other-than-temporary impairment of securities	—		—			—		(29		)

During the first six months of 2013, the Company sold certain investment securities with a total carrying value of $4.9 million in order to manage its liquidity and interest rate risk. The securities that were sold were primarily selected based on an assessment of their prepayment speed and did not have any recorded OTTI.

Securities Pledged

At June 30, 2013 and December 31, 2012, securities with an amortized cost of $440.1 million and $465.0 million and a fair value of $443.1 million and $482.4 million, respectively, were pledged to secure Federal Home Loan Bank (“FHLB”) advances, public deposits, and securities sold under agreements to repurchase and for other purposes required or permitted by law.

Contractual Maturities

The amortized cost and estimated fair values of debt securities by contractual maturity at June 30, 2013, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



Available-for-sale	Amortized Cost		Fair Value
Due in one year or less	$	1,881	$	1,924
Due after one year through five years	25,541		26,278
Due after five years through ten years	129,625		130,554
Due after ten years	636,306		630,613
	$	793,353	$	789,369