SECURITIES

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



	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
September 30, 2013
Obligations of states and political subdivisions	$	27,848	$	1,352	$	—		$	29,200
Mortgage-backed securities issued or guaranteed by U.S. government sponsored enterprises	358,436		6,384		(4,612		)	360,208
Collateralized mortgage obligations issued or guaranteed by U.S. government sponsored enterprises	397,064		1,045		(11,763		)	386,346
Private issue collateralized mortgage obligations	7,700		31		(242		)	7,489
Total securities available-for-sale	$	791,048	$	8,812	$	(16,617	)	$	783,243
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 September 30, 2013 and December 31, 2012 and included in accumulated other comprehensive income (loss) amounted to $(5.1) million and $12.9 million, net of a deferred tax benefit of $2.7 million and liability of $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 to fair value 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 September 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
September 30, 2013
Mortgage-backed securities	$	149,819	$	(4,612	)	$	13	$	—		$	149,832	$	(4,612	)
Collateralized mortgage obligations	307,640		(11,763		)	—		—			307,640		(11,763		)
Private issue collateralized mortgage obligations	131		(2		)	5,357		(240		)	5,488		(242		)
Total	$	457,590	$	(16,377	)	$	5,370	$	(240	)	$	462,960	$	(16,617	)
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 September 30, 2013, the Company held $463.0 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 September 30, 2013, the Company held $7.5 million in non-agencies of which $5.4 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 nine months of 2013 indicated expected future cash flows in excess of cost, and, as such the non-agencies are not considered to be OTTI.

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

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



	Three Months Ended September 30,					Nine Months Ended September 30,
Available-for-sale	2013		2012			2013		2012
Proceeds from sales of securities	$	12,738	$	7,337		$	17,613	$	38,701
Gross realized gains	647		198			785		1,302
Gross realized (losses)	—		(1		)	—		(204		)
Other-than-temporary impairment of securities	—		(10		)	—		(39		)

For the three and nine months ended September 30, 2013, the Company sold certain securities AFS with a total carrying value of $12.7 million and $17.6 million, respectively. For the three and nine months ended September 30, 2013, the Company recorded net gains of $647,000 and $785,000, respectively, in the consolidated statements of income in net gain on sale of securities and other-than-temporary impairment of securities.

For the three and nine months ended September 30, 2012, the Company sold certain securities AFS with a total carrying value of $7.3 million and $38.7 million, respectively. For the three and nine months ended September 30, 2012, the Company recorded net gains of $187,000 and $1.1 million, respectively, in the consolidated statements of income in net gain on sale of securities and other-than-temporary impairment of securities.

The cost basis of securities sold is measured on a specific identification basis.

Securities Pledged

At September 30, 2013 and December 31, 2012, securities with an amortized cost of $487.0 million and $465.0 million and a fair value of $484.9 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 September 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	$	1,739	$	1,765
Due after one year through five years	24,679		25,403
Due after five years through ten years	150,623		152,200
Due after ten years	614,007		603,875
	$	791,048	$	783,243