2.	Securities Available for Sale

The Company’s securities available for sale portfolio is summarized as follows:

(Dollar amounts in thousands)


	Amortized cost		Unrealized gains		Unrealized losses			Fair value
September 30, 2013:
Trust preferred securities	$	45,898	$	245	$	(7,655	)	$	38,488
Municipal securities		176,076		6,649		(3,288	)		179,437
Equity securities- financial institutions		953		776		—			1,729
Corporate bonds		209,153		6,044		(477	)		214,720
Mortgage-backed securities
U.S. sponsored entities		615,116		20,921		(4,966	)		631,071
Private label		1,934		24		(2	)		1,956

Subtotal mortgage-backed securities		617,050		20,945		(4,968	)		633,027

Total securities	$	1,049,130	$	34,659	$	(16,388	)	$	1,067,401

December 31, 2012:
Trust preferred securities	$	45,894	$	367	$	(8,234	)	$	38,027
Municipal securities		177,414		13,717		(244	)		190,887
Equity securities- financial institutions		1,142		676		—			1,818
Corporate bonds		219,700		7,186		(1,091	)		225,795
Mortgage-backed securities
U.S. sponsored entities		617,158		33,021		(246	)		649,933
Private label		4,139		177		—			4,316

Subtotal mortgage-backed securities		621,297		33,198		(246	)		654,249

Total securities	$	1,065,447	$	55,144	$	(9,815	)	$	1,110,776

The following table shows the Company’s investments gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2013:

As of September 30, 2013

(Dollar amounts in thousands)


	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses
Trust preferred securities		—	$	—	$	—		9	$	36,768	$	7,655		9	$	36,768	$	7,655
Municipal securities		33		27,172		2,894		2		2,853		394		35		30,025		3,288
Corporate bonds		5		13,894		160		4		15,432		317		9		29,326		477
Mortgage-backed securities
U.S. sponsored entities		52		176,057		4,966		—		—		—		52		176,057		4,966
Private label		1		542		2		—		—		—		1		542		2

Subtotal mortgage-backed securities		53		176,599		4,968		—		—		—		53		176,599		4,968

Total		91	$	217,665	$	8,022		15	$	55,053	$	8,366		106	$	272,718	$	16,388

As of December 31, 2012

(Dollar amounts in thousands)


	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses
Trust preferred securities		—	$	—	$	—		9	$	36,179	$	8,234		9	$	36,179	$	8,234
Municipal securities		5		4,179		58		2		3,059		186		7		7,238		244
Corporate bonds		5		15,604		110		5		20,020		981		10		35,624		1,091
Mortgage-backed securities
U.S. sponsored entities		8		28,246		246		—		—		—		8		28,246		246

Total		18	$	48,029	$	414		16	$	59,258	$	9,401		34	$	107,287	$	9,815

The Company primarily invests in mortgage-backed securities, variable and fixed rate corporate bonds, municipal bonds, government bonds and to a lesser extent equity securities. The policy of the Company is to recognize other than temporary impairment (OTTI) on equity securities where the fair value has been significantly below cost for three consecutive quarters. Declines in the fair value of the debt securities that can be attributed to specific adverse conditions affecting the credit quality of the investment would be recorded as OTTI and charged to earnings. In order to determine if a decline in fair value is other than temporary, the Company reviews corporate ratings of the investment, analyst reports and SEC filings of the issuers. For fixed maturity investments with unrealized losses due to interest rates where the Company expects to recover the entire amortized cost basis of the security, declines in value below cost are not assumed to be other than temporary. The Company reviews its position quarterly and has asserted that at September 30, 2013, the declines outlined in the above table represent temporary declines due to changes in interest rates and are not reflections of impairment in the credit quality of the securities. Additionally, the Company does not intend to sell the investment and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis.

The Company reviews investment debt securities on an ongoing basis for the presence of OTTI with formal reviews performed quarterly. Credit-related OTTI losses on individual securities are recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in accumulated other comprehensive income. There were no OTTI losses on individual securities during the quarter or nine months ended September 30, 2013.

The Company holds one pooled trust preferred security that has previously been determined to be other than temporarily impaired by approximately $2.0 million, due solely to credit related factors. This security is a collateralized debt obligation currently comprised of trust preferred securities of 9 financial institutions and has a Moody’s rating of Ca, which is below investment grade. The Company utilized an independent third party to analyze this bond at June 30, 2013, and it was determined that no additional impairment exists. At September 30, 2013 the Company utilized a discounted cash flow pricing method and determined no additional impairment exists.

Because of the subprime crisis, current markets for variable rate corporate trust preferred securities are illiquid. This includes the Company’s eight stand-alone trust preferred securities and the Company’s one pooled trust preferred security. The Company used a discounted cash flow method to price these securities due to a lack of liquidity for resale of this investment type and the absence of reliable pricing information. This method is described more fully in footnote 9, “Fair Value.”

The following table summarizes scheduled maturities of the Company’s securities as of September 30, 2013 and December 31, 2012 excluding equity securities which have no maturity dates:

As of September 30, 2013

(Dollar amounts in thousands)


	Available for sale
	Weighted			Amortized		Fair
	Average Yield			cost		value
Due in one year or less		2.83	%	$	33,273	$	33,721
Due from one year to five years		3.12	%		173,386		179,923
Due from five to ten years		3.26	%		106,118		108,038
Due after ten years		3.08	%		735,400		743,990

		3.10	%	$	1,048,177	$	1,065,672

As of December 31, 2012

(Dollar amounts in thousands)


	Available for sale
	Weighted			Amortized		Fair
	Average Yield			cost		value
Due in one year or less		3.80	%	$	19,137	$	19,411
Due from one year to five years		3.05	%		187,595		195,182
Due from five to ten years		3.27	%		108,288		111,879
Due after ten years		3.30	%		749,285		782,486

		3.26	%	$	1,064,305	$	1,108,958

For purposes of the maturity table, mortgage backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on weighted-average contractual maturities of underlying collateral. The mortgage-backed securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

The proceeds from the sale of securities for the nine month period ended September 30, 2013 was $2.0 million resulting in gross realized gains of $525,000. The proceeds from the sale of securities for the nine month period ended September 30, 2012 was $1.1 million resulting in gross realized gains of $464,000. There were no gross realized losses for the nine months ended September 30, 2013 and September 30, 2012, respectively.