(3) SECURITIES

Amortized cost and estimated fair value of securities available for sale at December 31, 2014 and 2013 are as follows (amounts in thousands):

	2014				2013
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	180,535	$	181,673	$	187,098	$	188,106
Mortgage-backed securities, residential		60,787		61,660		104,069		104,356
Collateralized mortgage obligations		335		338		1,001		1,015
Obligations of states and political subdivisions		30,677		31,451		37,339		38,376
Corporate bonds and notes		1,502		1,533		2,879		2,946
SBA loan pools		1,296		1,304		1,471		1,488
Trust preferred securities		1,906		2,028		1,898		2,034
Corporate stocks		285		520		444		7,695
Total	$	277,323	$	280,507	$	336,199	$	346,016

Gross unrealized gains and losses on securities available for sale at December 31, 2014 and 2013, were as follows (amounts in thousands):

	2014				2013
	Unrealized		Unrealized		Unrealized		Unrealized
	Gains		Losses		Gains		Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	1,300	$	162	$	1,914	$	906
Mortgage-backed securities, residential		892		19		1,037		750
Collateralized mortgage obligations		3		-		14		-
Obligations of states and political subdivisions		802		28		1,059		22
Corporate bonds and notes		35		4		76		9
SBA loan pools		11		3		17		-
Trust preferred securities		122		-		136		-
Corporate stocks		235		-		7,253		2
Total	$	3,400	$	216	$	11,506	$	1,689

The amortized cost and estimated fair value of debt securities available for sale are shown below by expected maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately (amounts in thousands):

	December 31, 2014
	Amortized		Fair
	Cost		Value
Within one year	$	37,087	$	37,552
After one, but within five years		172,100		173,534
After five, but within ten years		5,433		5,599
After ten years		-		-
Mortgage-backed securities, residential		60,787		61,660
Collateralized mortgage obligations		335		338
SBA loan pools		1,296		1,304
Total	$	277,038	$	279,987

Actual maturities may differ from contractual maturities above because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

The proceeds from sales and calls of securities resulting in gains or losses are listed below (amounts in thousands):

	2014		2013		2012
Proceeds	$	36,258	$	2,650	$	26,210
Gross gains	$	6,869	$	16	$	301
Tax expense	$	2,641	$	6	$	116

Amortized cost and estimated fair value of securities held to maturity at December 31, 2014 and 2013 are as follows (amounts in thousands):

	2014						2013
	Amortized Cost			Estimated Fair Value			Amortized Cost			Estimated Fair Value
Obligations of states and political subdivisions		$	5,175		$	5,535		$	5,472		$	5,891
Time deposits with other financial institutions			656			662			1,023			1,039
		$	5,831		$	6,197		$	6,495		$	6,930

Gross unrealized gains and losses on securities held to maturity at December 31, 2014 and 2013, were as follows (amounts in thousands):

	2014						2013
	Unrealized			Unrealized			Unrealized			Unrealized
	Gains			Losses			Gains			Losses
Obligations of states and political subdivisions		$	360		$	-		$	419		$	-
Time deposits with other financial institutions			6			-			16			-
Total		$	366		$	-		$	435		$	-

There were no sales of securities held to maturity in 2014 or 2013.

The contractual maturity of securities held to maturity is as follows at December 31, 2014 (amounts in thousands):

	December 31, 2014
	Amortized			Fair
	Cost			Value
Within one year		$	2,629		$	2,658
After one, but within five years			2,199			2,390
After five, but within ten years			1,003			1,149
After ten years			-			-
Total		$	5,831		$	6,197

The following table summarizes the investment securities available for sale with unrealized losses at December 31, 2014 and December 31, 2013 by aggregated major security type and length of time in a continuous unrealized position (amounts in thousands):

	Less than 12 months				12 months or longer				Total
2014	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	57,512	$	108	$	4,945	$	54	$	62,457	$	162
Mortgage-backed securities, residential		11,051		19		-		-		11,051		19
Obligations of states and political subdivisions		4,625		22		1,056		6		5,681		28
Corporate bonds and notes		-		-		243		4		243		4
SBA loan pools		276		1		316		2		592		3
Total temporarily impaired securities	$	73,464	$	150	$	6,560	$	66	$	80,024	$	216

	Less than 12 months				12 months or longer				Total
2013	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	83,840	$	867	$	1,978	$	39	$	85,818	$	906
Mortgage-backed securities, residential		63,115		750		-		-		63,115		750
Obligations of states and political subdivisions		4,589		22		-		-		4,589		22
Corporate bonds and notes		238		9		-		-		238		9
Corporate stocks		-		-		2		2		2		2
Total temporarily impaired securities	$	151,782	$	1,648	$	1,980	$	41	$	153,762	$	1,689

Other-Than-Temporary-Impairment

As of December 31, 2014, the majority of the Corporation’s unrealized losses in the investment securities portfolio related to obligations of U.S. Government and U.S. Government sponsored enterprises and mortgage-backed securities. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Corporation does not have the intent to sell these securities and it is not likely that it will be required to sell these securities before their anticipated recovery, the Corporation does not consider these securities to be other-than-temporarily impaired at December 31, 2014.

During the fourth quarter of 2013, the Corporation sold one CDO consisting of a pool of trust preferred securities that had an amortized cost of $600 thousand. Total proceeds from the sale of this CDO, was $600 thousand resulting in a slight loss. The Corporation recognized $29 thousand of additional credit loss in OTTI during 2013. This CDO was sold in light of the uncertainty surrounding the recently released rules contained in the “Volcker Rule” regarding the ability of banks to hold these types of securities and based on current market conditions.

The table below presents a roll forward of the cumulative credit losses recognized in earnings for the periods ended December 31, 2014, 2013 and 2012 (amounts in thousands):

	2014			2013			2012
Beginning balance, January 1,	$	1,939		$	3,506		$	3,506
Amounts related to credit loss for which other-than-temporary impairment was not previously recognized		-			-			-
Additions/Subtractions:
Amounts related to securities for which the company intends to sell or that it will be more likely than not that the company will be required to sell prior to recovery of amortized cost basis		-			-			-
Reductions for increase in cash flows expected to be collected that are recognized over the remaining life of the security		-			-			-
Reductions for previous credit losses realized on securities sold during the year		-			(1,596	)		-
Reductions for previous credit losses realized on securities liquidated during the year		(1,939	)		-			-
Increases to the amount related to the credit loss for which other-than-temporary impairment was previously recognized		-			29			-
Ending balance, December 31,	$	-		$	1,939		$	3,506

During the first quarter of 2014, the Corporation received notice that one CDO consisting of a pool of trust preferred securities was liquidated and recorded $500 thousand in other operating income during the first quarter of 2014 to reflect proceeds received from the liquidation. The Corporation does not own any other CDO’s in its investment securities portfolio.

The fair value of securities pledged to secure public funds on deposit or for other purposes as required by law was $190.7 million at December 31, 2014 and $188.9 million at December 31, 2013.

The table below shows the securities pledged to secure securities sold under agreements to repurchase at December 31, 2014 and 2013. (amounts in thousands)

	2014				2013
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Obligations of U.S. Government and U. S. Government sponsored enterprises	$	36,195	$	36,641	$	33,746	$	34,369
Mortgage-backed securities, residential		7,934		8,350		11,802		12,365
Collateralized mortgage obligations		48		48		205		207
Total	$	44,177	$	45,039	$	45,753	$	46,941

There are no securities of a single issuer (other than securities of U.S. Government sponsored enterprises) that exceed 10% of shareholders' equity at December 31, 2014 or 2013.

The Corporation has an equity investment in Cephas Capital Partners, L.P. This small business investment company was established for the purpose of providing financing to small businesses in market areas served by the Corporation, including minority-owned small businesses and those that are anticipated to create jobs for the low to moderate income levels in the targeted areas. As of December 31, 2014 and 2013, these investments totaled $0.7 million and $1.0 million, respectively, are included in other assets, and are accounted for under the equity method of accounting.