Note 3.

Securities

Amortized costs and fair values of securities available for sale at March 31, 2013 are summarized as follows:

	March 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Available for Sale
U.S. government agencies	$	14,837	$	442	$	(35	)	$	15,244
Obligations of states and
political subdivisions		79,278		3,415		(229	)		82,464
Mortgage-backed securities:
Agency		164,305		5,630		(335	)		169,600
Non-agency		19,277		223		(101	)		19,399
Other asset backed securities		34,268		1,165		(72	)		35,361
Corporate preferred stock		68		—		(1	)		67
Corporate securities		9,730		41		(256	)		9,515
Total	$	321,763	$	10,916	$	(1,029	)	$	331,650

Amortized costs and fair values of securities available for sale at December 31, 2012 are summarized as follows:

	December 31, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In Thousands)
Available for Sale
U.S. government agencies	$	15,391	$	459	$	(28	)	$	15,822
Obligations of states and
political subdivisions	74,485		3,920		(105		)	78,300
Mortgage-backed securities:
Agency	161,564		5,659		(280		)	166,943
Non-agency	15,310		287		(18		)	15,579
Other asset backed securities	33,648		1,079		(85		)	34,642
Corporate preferred stock	68		—		(6		)	62
Corporate securities	8,730		12		(633		)	8,109
Total	$	309,196	$	11,416	$	(1,155	)	$	319,457

The amortized cost and fair value of securities available for sale as of March 31, 2013, by contractual maturity are shown below. Maturities may differ from contractual maturities in mortgage-backed, other asset-backed, and corporate securities because the mortgages, loans, and securities underlying the securities may be called or repaid without any penalties. Therefore, these securities are not included in the maturity categories in the following maturity summary.

	March 31, 2013
	Amortized Cost		Fair Value
	(In thousands)
Due in one year or less	$	4,601	$	4,660
Due after one year through
five years		33,133		34,410
Due after five years through
ten years		28,179		29,374
Due after ten years		37,932		38,779
Mortgage-backed securities		183,582		188,999
Other asset backed securities		34,268		35,361
Corporate preferred stock		68		67
Total	$	321,763	$	331,650

Proceeds from the sale of securities during the three months ended March 31, 2013 were $3.9 million and net gains of $47,000 were realized on those sales. The tax expense applicable to the net realized gains amounted to $16,000. Additionally, no loss on securities with other than temporary impairment was recognized during the three months ended March 31, 2013.

The carrying value of securities pledged to qualify for fiduciary powers, to secure public monies and for other purposes as required by law amounted to $130.4 million at March 31, 2013.

At March 31, 2013, investments in an unrealized loss position that were temporarily impaired are as follows:

	March 31, 2013
						(In thousands)
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government agencies	$	3,742	$	(35	)	$	16	$	—		$	3,758	$	(35	)
Obligations of states and
political subdivisions	9,687		(229		)	—		—			9,687		(229		)
Mortgage backed securities:
Agency	23,803		(277		)	1,528		(58		)	25,331		(335		)
Non-agency	9,205		(101		)	—		—			9,205		(101		)
Other asset backed securities	1,743		(56		)	1,154		(16		)	2,897		(72		)
Corporate preferred stock	—		—			38		(1		)	38		(1		)
Corporate securities	—		—			4,244		(256		)	4,244		(256		)
Total	$	48,180	$	(698	)	$	6,980	$	(331	)	$	55,160	$	(1,029	)

At December 31, 2012, investments in an unrealized loss position that were temporarily impaired are as follows:

	December 31, 2012
						(In thousands)
	Less than Twelve Months					Twelve Months or Greater					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
U.S. government agencies	$	3,850	$	(28	)	$	16	$	—		$	3,866	$	(28	)
Obligations of states and
political subdivisions	6,966		(105		)	—		—			6,966		(105		)
Mortgage backed securities:
Agency	24,344		(234		)	1,241		(46		)	25,585		(280		)
Non-agency	3,295		(18		)	—		—			3,295		(18		)
Other asset backed securities	2,791		(57		)	1,418		(28		)	4,209		(85		)
Corporate preferred stock	—		—			33		(6		)	33		(6		)
Corporate securities	—		—			6,867		(633		)	6,867		(633		)
Trust-preferred securities	—		—			—		—			—		—
Total	$	41,246	$	(442	)	$	9,575	$	(713	)	$	50,821	$	(1,155	)

A total of 58 securities have been identified by the Company as temporarily impaired at March 31, 2013. Of the 58 securities, 57 are investment grade and 1 is speculative grade. Agency, non-agency mortgage-backed securities, municipal and corporate debt securities make up the majority of temporarily impaired securities at March 31, 2013. The speculative grade security is a municipal bond. Market prices change daily and are affected by conditions beyond the control of the Company. Although the Company has the ability to hold these securities until the temporary loss is recovered, decisions by management may necessitate a sale before the loss is fully recovered. No such sales are anticipated or required as of March 31, 2013. Investment decisions reflect the strategic asset/liability objectives of the Company.

Trust preferred securities

As of March 31, 2013, the Company held no trust preferred securities in its investment portfolio.

The Company previously held trust preferred securities that were identified as other-than-temporarily impaired. These securities were sold during the second quarter of 2012 with a recognized net loss of approximately $142,000. Additionally, these securities incurred cumulative other-than-temporary credit losses recognized in prior period earnings of approximately $2.4 million through December 31, 2011.

The Company also previously held one trust preferred security that was not considered other-than-temporarily impaired while held in its investment portfolio. The security was sold during the third quarter of 2012 with a recognized net loss of approximately $149,000. No credit losses were recognized on this security while held.

Other-than-temporary impairment losses

At March 31, 2013, the Company concluded that no adverse change in cash flows occurred during the quarter and did not consider any portfolio securities to be other-than-temporarily impaired. Based on this analysis and because the Company does not intend to sell securities prior to maturity and it is more likely than not the Company will not be required to sell any securities before recovery of amortized cost basis, which may be at maturity; and, for debt securities related to corporate securities, determined that there was no other adverse change in the cash flows as viewed by a market participant, the Company does not consider the investments in these assets to be other than temporarily impaired at March 31, 2013. However, there is a risk that the Company's continuing reviews could result in recognition of other-than-temporary impairment charges in the future. During the three months ended March 31, 2013 and the three months ended March 31, 2012, no credit related impairment losses were recognized by the Company.