(3)

Debt and Equity Securities

Debt and equity securities have been classified in the consolidated balance sheet according to management’s intent. Debt and equity securities at December 31, 2013 consist of the following:


	Securities Held-To-Maturity
	In Thousands
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value
Mortgage-backed:
Government-sponsored enterprises (GSEs)* residential	$	8,649		73		520		8,202
Obligations of states and political subdivisions		18,174		424		239		18,359

	$	26,823		497		759		26,561


	Securities Available-For-Sale
	In Thousands
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value
U.S. Government-sponsored enterprises (GSEs) and agency-backed securities*	$	146,769		10		5,961		140,818
Mortgage-backed:
GSE residential		175,855		808		1,481		175,182
Obligations of states and political subdivisions		13,711		71		409		13,373

	$	336,335		889		7,851		329,373

*	Such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Federal Home Loan Banks, Federal Farm Credit Banks, Government National Mortgage Association and Small Business Administration.

The Company’s classification of securities at December 31, 2012 is as follows:


	Securities Held-To-Maturity
	In Thousands
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value
Mortgage-backed:
Government-sponsored enterprises (GSEs)* residential	$	2,918		122		—		3,040
Obligations of states and political subdivisions		12,590		687		—		13,277

	$	15,508		809		—		16,317


	Securities Available-For-Sale
	In Thousands
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Market Value
U.S. Government-sponsored enterprises (GSEs)*	$	122,110		643		55		122,698
Mortgage-backed:
GSE residential		177,787		3,373		32		181,128
Obligations of states and political subdivisions		13,214		267		29		13,452

	$	313,111		4,283		116		317,278

*	Such as Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, Federal Home Loan Banks, Federal Farm Credit Banks, and Government National Mortgage Association.

Included in mortgage-backed GSE residential available for sale securities are collateralized mortgage obligations totaling $5,617,000 (fair value of $5,674,000) and $9,262,000 (fair value of $9,357,000) at December 31, 2013 and 2012, respectively.

The amortized cost and estimated market value of debt securities at December 31, 2013, by contractual maturity, 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.


	In Thousands
Securities Held-To-Maturity	Amortized Cost		Estimated Market Value

Due in one year or less	$	660		664
Due after one year through five years		8,322		8,599
Due after five years through ten years		5,386		5,418
Due after ten years		3,806		3,678

		18,174		18,359
Mortgage-backed securities		8,649		8,202

	$	26,823		26,561


	In Thousands
Securities Available-For-Sale	Amortized Cost		Estimated Market Value

Due in one year or less	$	4,091		4,102
Due after one year through five years		45,989		45,304
Due after five years through ten years		99,183		94,162
Due after ten years		6,415		5,891

		155,678		149,459
Mortgage and asset-backed securities		180,657		179,914

	$	336,335		329,373

Results from sales of debt and equity securities are as follows:


	In Thousands
	2013		2012			2011

Gross proceeds	$	6,867		37,353			26,452


Gross realized gains	$	78	$	261			192
Gross realized losses		—		(2	)		—

Net realized gains	$	78	$	259			192

Securities carried in the balance sheet of approximately $156,443,000 (approximate market value of $151,345,000) and $125,593,000 (approximate market value of $126,758,000) were pledged to secure public deposits and for other purposes as required or permitted by law at December 31, 2013 and 2012, respectively.

Included in the securities above are $18,391,000 (approximate market value of $18,545,000) and $12,807,000 (approximate market value of $13,475,000) at December 31, 2013 and 2012, respectively, in obligations of political subdivisions located within the State of Tennessee. Management purchases only obligations of such political subdivisions it considers to be financially sound.

Securities that have rates that adjust prior to maturity totaled $12,000 (approximate market value of $12,000) and $16,000 (approximate market value of $16,000) at December 31, 2013 and 2012, respectively.

Temporarily Impaired Securities

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2013.

Available for sale and held to maturity securities that have been in a continuous unrealized loss position at December 31, 2013 are as follows:


	In Thousands, Except Number of Securities
	Less than 12 Months						12 Months or More						Total
	Fair Value		Unrealized Losses		Number of Securities Included		Fair Value		Unrealized Losses		Number of Securities Included		Fair Value		Unrealized Losses
Held to Maturity Securities:
Debt securities:
Mortgage-backed:
GSE residential	$	6,678	$	520		5	$	—	$	—		—	$	6,678	$	520

Obligations of states and political subdivisions		7,817		231		21		343		8		2		8,160		239


	$	14,495	$	751		26	$	343	$	8		2	$	14,838	$	759

Available-for-Sale Securities:
Debt securities:
GSEs and agency-backed	$	108,234	$	4,358		37	$	19,479	$	1,603		7	$	127,713	$	5,961

Mortgage-backed:
GSE residential		97,805		1,449		32		1,866		32		2		99,671		1,481

Obligations of states and political subdivisions		5,645		95		14		4,766		314		14		10,411		409


	$	211,684	$	5,902		83	$	26,111	$	1,949		23	$	237,795	$	7,851