NOTE 2 –SECURITIES

Amortized cost and fair value of investment securities, by category, at September 30, 2013 are summarized as follows:

2013	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Available for sale
Mortgage-backed securities
U. S. sponsored agency MBS - residential	$	34,688	$	992	$	(200	)	$	35,480
U. S. sponsored agency CMO’s - residential		188,355		3,140		(1,303	)		190,192
Total mortgage-backed securities of government sponsored agencies		223,043		4,132		(1,503	)		225,672
U. S. government sponsored agency securities		7,063		33		(110	)		6,986
Obligations of states and political subdivisions		6,284		292		-			6,576
Other securities		1,299		761		-			2,060
Total available for sale	$	237,689	$	5,218	$	(1,613	)	$	241,294

Amortized cost and fair value of investment securities, by category, at December 31, 2012 are summarized as follows:

2012	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Available for sale
Mortgage-backed securities
U. S. sponsored agency MBS - residential	$	35,172	$	1,928	$	-		$	37,100
U. S. sponsored agency CMO’s - residential		206,466		6,392		(11	)		212,847
Total mortgage-backed securities of government sponsored agencies		241,638		8,320		(11	)		249,947
U. S. government sponsored agency securities		22,062		182		-			22,244
Obligations of states and political subdivisions		7,419		441		-			7,860
Other securities		2,892		1,105		(73	)		3,924
Total available for sale	$	274,011	$	10,048	$	(84	)	$	283,975

The amortized cost and fair value of securities at September 30, 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.

	Amortized Cost		Fair Value
Available for sale
Due in one year or less	$	1,518	$	1,535
Due after one year through five years		8,332		8,641
Due after five years through ten years		3,997		3,886
Due after ten years		377		788
Corporate preferred securities		422		772
Mortgage-backed securities of government sponsored agencies		223,043		225,672
Total available for sale	$	237,689	$	241,294

Proceeds from the sale of securities during the first nine months of 2013 were $149,000 while a $72,000 gain was recognized from the sale of those securities. In addition, a $148,000 gain was recognized from calls of securities during the first nine months of 2013. A $273,000 gain was recorded on the disposition of securities pursuant to issuer calls during the first nine months of 2012. There were no sales of securities during the first nine months of 2012.

Securities with unrealized losses at September 30, 2013 aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position are as follows:

	Less than 12 Months					12 Months or More				Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss

U.S government sponsored agency MBS – residential	$	12,340	$	(200	)	$	-	$	-	$	12,340	$	(200	)
U.S government sponsored agency CMO – residential		47,099		(1,303	)		-		-		47,099		(1,303	)
U.S government sponsored agency securities		3,886		(110	)		-		-		3,886		(110	)

Total temporarily impaired	$	63,325	$	(1,613	)	$	-	$	-	$	63,325	$	(1,613	)

Securities with unrealized losses at December 31, 2012 aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position are as follows:

	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss

U.S government sponsored agency CMO – residential	$	2,077	$	(11	)	$	-	$	-		$	2,077	$	(11	)
Other securities		-		-			4		(73	)		4		(73	)

Total temporarily impaired	$	2,077	$	(11	)	$	4	$	(73	)	$	2,081	$	(84	)

The investment portfolio is predominately high quality interest-bearing debt securities with defined maturity dates backed by the U.S. Government or Government sponsored entities. The unrealized losses at September 30, 2013 and December 31, 2012 are price changes resulting from changes in the interest rate environment and are not considered to be other than temporary declines in the value of the securities. Their fair value is expected to recover as the bonds approach their maturity date and/or market conditions improve.