NOTE 3 - SECURITIES

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

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
March 31, 2013
Obligations of states and political subdivisions	$	29,181	$	1,786	$	-		$	30,967
Mortgage-backed securities issued or guaranteed by U.S. government sponsored enterprises		340,550		10,925		(630	)		350,845
Collateralized mortgage obligations issued or guaranteed by U.S. government sponsored enterprises		409,866		5,373		(1,325	)		413,914
Private issue collateralized mortgage obligations		8,556		-		(662	)		7,894
Total securities available-for-sale	$	788,153	$	18,084	$	(2,617	)	$	803,620
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 on securities AFS at March 31, 2013 and December 31, 2012 and included in accumulated other comprehensive income amounted to $10.1 million and $12.9 million, net of deferred taxes of $5.4 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 March 31, 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
March 31, 2013
Mortgage-backed securities	$	70,023	$	(630	)	$	15	$	-		$	70,038	$	(630	)
Collateralized mortgage obligations		125,125		(1,325	)		-		-			125,125		(1,325	)
Private issue collateralized mortgage obligations		160		(1	)		7,725		(661	)		7,885		(662	)
Total	$	195,308	$	(1,956	)	$	7,740	$	(661	)	$	203,048	$	(2,617	)
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 March 31, 2013, the Company held $203.0 million in investment securities with unrealized losses that are considered temporary. Included in the unrealized losses were $7.2 million in non-agency private issue collateralized mortgage obligations ("non-agency") which have been downgraded to non-investment grade. The Company's share of these downgraded non-agencies is in the senior tranches. 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. Including the non-agencies, there were 14 securities with a fair value of $7.7 million in the investment portfolio which had unrealized losses for twelve months or longer. 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 higher risk bonds in 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 three 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 first quarter of 2013.

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 March 31,
Available-for-sale	2013		2012
Proceeds from sales of securities	$	4,875	$	13,040
Gross realized gains		138		153
Gross realized (losses)		-		(3	)
Other-than-temporary impairment of securities		-		(29	)

During the first three 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 March 31, 2013 and December 31, 2012, securities with an amortized cost of $450.8 million and $465.0 million and a fair value of $464.2 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 March 31, 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	$	1,769	$	1,812
Due after one year through five years		23,249		24,102
Due after five years through ten years		133,781		138,478
Due after ten years		629,354		639,228
	$	788,153	$	803,620