(4) Investment Securities

The following table presents the amortized cost, unrealized gains, unrealized losses and fair value of investment securities available for sale at December 31, 2012 and 2011. At December 31, 2012 and 2011, there were no securities classified as held to maturity or trading.

(dollars in thousands)	December 31, 2012
	Amortized cost		Unrealized gains		Unrealized losses			Fair value
U.S. government agencies	$	87,297	$	1,321	$	(32	)	$	88,586
Residential pass-through securities		165,175		3,430		(182	)		168,423
Taxable state and political subdivisions		4,759		553		-			5,312
Tax exempt state and political subdivisions		56,431		2,703		(149	)		58,985
Corporate obligations		11,000		-		(565	)		10,435
Agency-issued collateralized mortgage obligations		13,967		79		-			14,046
Asset-backed securities		25,108		150		(70	)		25,188
Investments in mutual funds and other equities		2,018		-		(25	)		1,993
Total investment securities available for sale	$	365,755	$	8,236	$	(1,023	)	$	372,968

(dollars in thousands)	December 31, 2011
	Amortized cost		Unrealized gains		Unrealized losses			Fair value
U.S. government agencies	$	75,383	$	1,207	$	(16	)	$	76,574
U.S. Treasuries		42,077		520		-			42,597
Residential pass-through securities		116,219		1,295		(116	)		117,398
Taxable state and political subdivisions		9,143		615		-			9,758
Tax exempt state and political subdivisions		35,263		2,100		(28	)		37,335
Corporate obligations		11,000		-		(713	)		10,287
Investments in mutual funds and other equities		2,018		-		(12	)		2,006
Total investment securities available for sale	$	291,103	$	5,737	$	(885	)	$	295,955

Investment securities that were in an unrealized loss position at December 31, 2012 and 2011, are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position. In the opinion of management, these securities are considered only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral.

(dollars in thousands)	December 31, 2012
	Less than 12 Months					12 Months or Longer					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
U.S. government agencies	$	12,056	$	(32	)	$	-	$	-		$	12,056	$	(32	)
Residential pass-through securities		27,680		(182	)		-		-			27,680		(182	)
Tax exempt state and political subdivisions		10,113		(149	)		-		-			10,113		(149	)
Corporate obligations		-		-			10,435		(565	)		10,435		(565	)
Asset-backed securities		9,856		(70	)		-		-			9,856		(70	)
Investments in mutual funds and other equities		-		-			1,993		(25	)		1,993		(25	)
Total investment securities available for sale	$	59,705	$	(433	)	$	12,428	$	(590	)	$	72,133	$	(1,023	)

(dollars in thousands)	December 31, 2011
	Less than 12 Months					12 Months or Longer					Total
	Fair value		Unrealized losses			Fair value		Unrealized losses			Fair value		Unrealized losses
U.S. government agencies	$	10,499	$	(16	)	$	-	$	-		$	10,499	$	(16	)
Residential pass-through securities		29,838		(116	)		-		-			29,838		(116	)
Tax exempt state and political subdivisions		1,255		(28	)		-		-			1,255		(28	)
Corporate obligations		10,287		(713	)		-		-			10,287		(713	)
Investments in mutual funds and other equities		-		-			2,006		(12	)		2,006		(12	)
Total investment securities available for sale	$	51,879	$	(873	)	$	2,006	$	(12	)	$	53,885	$	(885	)

At December 31, 2012 and 2011, there were 25 and 10 investment securities in unrealized loss positions, respectively. For each security in an unrealized loss position, the Company assesses whether it intends to sell the security, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. For debt securities that are considered other-than-temporarily impaired and that the Company does not intend to sell and will not be required to sell prior to recovery of its amortized cost basis, the Company will separate the amount of the impairment into the amount that is credit related (credit loss component) and the amount due to all other factors. The credit loss component is recognized in earnings and is calculated as the difference between the security's amortized cost basis and the present value of its expected future cash flows. The remaining difference between the security's fair value and the present value of future expected cash flows is deemed to be due to factors that are not credit related and is recognized in other comprehensive income.

The Company does not intend to sell the securities that are temporarily impaired, and it is more likely than not that the Company will not have to sell those securities before recovery of the cost basis. Additionally, the Company has evaluated the credit ratings of its investment securities and their issuers and/or insurers, as applicable. Based on the Company's evaluation, management has determined that no investment security in the Company's investment portfolio was other-than-temporarily impaired at December 31, 2012 or 2011.

The amortized cost and fair value of investment securities, by maturity, are shown in the table below. The amortized cost and fair value of residential pass-through securities, agency-issued collateralized mortgage obligations and asset-backed securities are presented by expected average life, rather than contractual maturity. Expected maturities may differ from contractual maturities because issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.

(dollars in thousands)	December 31, 2012
	Amortized cost		Fair value
Three months or less	$	10,032	$	10,059
Over three months to one year		3,452		3,447
After one year through three years		38,575		39,102
After three years through five years		228,275		232,530
After five years through ten years		60,818		61,977
After ten years		24,603		25,853
Total	$	365,755	$	372,968

The following table shows securities, which were pledged to secure public deposits, borrowings and other items, as permitted or required by law, at December 31, 2012:

(dollars in thousands)	December 31, 2012
	Amortized cost		Fair value
To state and local governments to secure public deposits	$	61,600	$	64,045
To Federal Reserve Bank to secure borrowings		17,537		18,130
To Federal Home Loan Bank to secure borrowings		559		585
Other securities pledged, principally to secure deposits		14,632		15,336
Total pledged investment securities	$	94,328	$	98,096

For the year ended December 31, 2012, the Company realized gross gains of $933 thousand and gross losses of $2 thousand on the sale of investment securities available for sale. For the years ended December 31, 2011 and 2010 there were no sales of investment securities available for sale.