5. INVESTMENT SECURITIES

9 Months Ended

Sep. 30, 2012

Marketable Securities [Table Text Block]

5. INVESTMENT SECURITIES

The amortized cost and estimated fair values of investment securities at September 30, 2012 and December 31, 2011 consisted of the following (dollars in thousands):

Available-for-Sale

	September 30, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Debt securities:
Mortgage-backed securities	$	190,195	$	6,399	$	(164	)	$	196,430
Obligations of states and political subdivisions		27,744		2,113		—			29,857
Corporate bonds		1,507		51		—			1,558
Equity securities:
Corporate stock		64		—		(3	)		61
	$	219,510	$	8,563	$	(167	)	$	227,906

	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Debt securities:
Mortgage-backed securities	$	175,038	$	4,570	$	(154	)	$	179,454
Obligations of states and political subdivisions		27,678		1,510		—			29,188
Equity securities:
Corporate stock		65		4		—			69
	$	202,781	$	6,084	$	(154	)	$	208,711

Net unrealized gains on available-for-sale investment securities totaling $8,396,000 were recorded, net of $3,359,000 in tax liabilities, as accumulated other comprehensive income within shareholders’ equity at September 30, 2012. Proceeds and gross realized gains from the sale and call of available-for-sale investment securities for the three-month period ended September 30, 2012 totaled $2,957,000 and $1,000, respectively, and for the nine-month period ended September 30, 2012 totaled $8,695,000 and $76,000, respectively. There were no transfers of available-for-sale investment securities for the three- and nine-month periods ended September 30, 2012.

Net unrealized gains on available-for-sale investment securities totaling $5,930,000 were recorded, net of $2,372,000 in tax liabilities, as accumulated other comprehensive income within shareholders’ equity at December 31, 2011. Proceeds and gross realized gains from the sale and call of available-for-sale investment securities for the three-month period ended September 30, 2011 totaled $9,294,000 and $326,000, respectively, and the nine-month period ended September 30, 2011 totaled $10,886,000 and $353,000, respectively. There were no transfers of available-for-sale investment securities for the three- and nine-month periods ended September 30, 2011.

Held-to-Maturity 

September 30, 2012

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Debt securities:
Mortgage-backed securities	$	2,740	$	176	$	—	$	2,916

December 31, 2011			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Debt securities:
Mortgage-backed securities	$	4,010	$	221	$	—	$	4,231

There were no sales or transfers of held-to-maturity investment securities for the periods ended September 30, 2012 and September 30, 2011. Investment securities with unrealized losses at September 30, 2012 and December 31, 2011 are summarized and classified according to the duration of the loss period as follows (dollars in thousands):

	2012
	Less than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale
Debt securities:
Mortgage-backed securities	$	19,482	$	(164	)		—		—	$	19,482	$	(164	)
Obligations of states and political subdivisions		—		—			—		—		—		—
Corporate bonds		—		—			—		—		—		—
Equity Securities:
Corporate stock		2		(3	)		—		—		2		(3	)
	$	19,484	$	(167	)	$	—	$	—	$	19,484	$	(167	)

	2011
	Less than 12 Months					12 Months or More				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available-for-Sale
Debt securities:
Mortgage-backed securities	$	23,749	$	(154	)		—		—	$	23,749	$	(154	)
	$	23,749	$	(154	)	$	—	$	—	$	23,749	$	(154	)

There were no held-to-maturity investment securities with unrealized losses as of September 30, 2012 or December 31, 2011.

At September 30, 2012, the Company held 195 securities of which ten were in a loss position for less than twelve months and none were in a loss position for twelve months or more. Of the ten securities in a loss position, nine are mortgage-backed securities and one is a corporate bond. At December 31, 2011, the Company held 189 securities of which eleven were in a loss position for less than twelve months and none were in a loss position for twelve months or more. All eleven securities in a loss position were mortgage-backed securities.

The unrealized loss on the Company’s investments in mortgage-backed securities is primarily driven by interest rates. Because the decline in market value is attributable to a change in interest rates and not credit quality, and because the Company has the ability and intent to hold these investments until recovery of fair value, which may be until maturity, management does not consider these investments to be other-than-temporarily impaired.

The amortized cost and estimated fair values of investment securities at September 30, 2012 by contractual maturity are shown below (dollars in thousands).

	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Within one year	$	875	$	879
After one year through five years		3,247		3,389
After five years through ten years		11,156		12,003
After ten years		13,973		15,144
		29,251		31,415
Investment securities not due at a single maturity date:
Mortgage-backed securities		190,195		196,430	$	2,740	$	2,916
Corporate stock		64		61		—		—
	$	219,510	$	227,906	$	2,740	$	2,916

Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to call or prepay obligations with or without call or prepayment penalties.