5. INVESTMENT SECURITIES

6 Months Ended

Jun. 30, 2013

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

5. INVESTMENT SECURITIES

The amortized cost and estimated fair values of investment securities at June 30, 2013 and December 31, 2012 consisted of the following (dollars in thousands):

Available-for-Sale
	June 30, 2013
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
Mortgage-backed securities	$	222,822	$	3,467	$	(2,141	)	$	224,148
Obligations of states and political subdivisions		28,062		910		(151	)		28,821
Corporate bonds		1,506		70		—			1,576
Equity securities:
Corporate stock		64		35		—			99
	$	252,454	$	4,482	$	(2,292	)	$	254,644

	December 31, 2012
			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
Debt securities:
Mortgage-backed securities	$	195,444	$	5,661	$	(590	)	$	200,515
Obligations of states and political subdivisions		27,682		1,974		—			29,656
Corporate bonds		1,507		87		—			1,594
Equity securities:
Corporate stock		64		10		—			74
	$	224,697	$	7,732	$	(590	)	$	231,839

Net unrealized gains on available-for-sale investment securities totaling $2,190,000 were recorded, net of $876,000 in tax liabilities, as accumulated other comprehensive income within shareholders’ equity at June 30, 2013. Proceeds and gross realized gains from the sale and call of available-for-sale investment securities for the three-month period ended June 30, 2013 totaled zero and zero, respectively, and for the six-month period ended June 30, 2013 totaled $5,822,000 and $3,000, respectively. There were no transfers of available-for-sale investment securities for the three- and six-month periods ended June 30, 2013.

Net unrealized gains on available-for-sale investment securities totaling $4,285,000 were recorded, net of $2,857,000 in tax liabilities, as accumulated other comprehensive income within shareholders’ equity at December 31, 2012. Proceeds and gross realized gains from the sale and call of available-for-sale investment securities for the three-month period ended June 30, 2012 totaled $830,000 and $11,000, respectively, and for the six-month period ended June 30, 2012 totaled $5,738,000 and $75,000, respectively. There were no transfers of available-for-sale investment securities for the three- and six-month periods ended June 30, 2012.

Held-to-Maturity

June 30, 2013

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Debt securities:
Mortgage-backed securities	$	1,497	$	89	$	—	$	1,586

			Gross		Gross		Estimated
December 31, 2012	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Debt securities:
Mortgage-backed securities	$	2,117	$	138	$	—	$	2,255

There were no sales or transfers of held-to-maturity investment securities for the periods ended June 30, 2013 and June 30, 2012. Investment securities with unrealized losses at June 30, 2013 and December 31, 2012 are summarized and classified according to the duration of the loss period as follows (dollars in thousands):

	2013
	Less than 12 Months					12 Months or More				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Losses			Value		Losses		Value		Losses
Available-for-Sale
Debt securities:
Mortgage-backed securities	$	83,494	$	(2,141	)		—		—	$	83,494	$	(2,141	)
Obligations of states and political subdivisions		4,282		(151	)		—		—		4,282		(151	)
	$	87,776	$	(2,292	)	$	—	$	—	$	87,776	$	(2,292	)

	2012
	Less than 12 Months					12 Months or More				Total
	Fair		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Losses			Value		Losses		Value		Losses
Available-for-Sale
Debt securities:
Mortgage-backed securities	$	37,440	$	(590	)		—		—	$	37,440	$	(590	)
	$	37,440	$	(590	)	$	—	$	—	$	27,440	$	(590	)

There were no held-to-maturity investment securities with unrealized losses as of June 30, 2013 or December 31, 2012.

At June 30, 2013, the Company held 216 securities of which 40 were in a loss position for less than twelve months and none were in a loss position for twelve months or more. Of the 40 securities in a loss position, 35 are mortgage-backed securities and five are obligations of states and political subdivisions. At December 31, 2012, the Company held 196 securities of which 16 were in a loss position for less than twelve months and none were in a loss position for twelve months or more. All 16 securities in a loss position were mortgage-backed securities.

The unrealized loss on the Company’s investments in mortgage-backed securities, obligations of states and political subdivisions, and corporate bonds, 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 June 30, 2013 by contractual maturity are shown below (dollars in thousands).

	Available-for-Sale				Held-to-Maturity
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Within one year	$	825	$	828
After one year through five years		3,384		3,512
After five years through ten years		11,618		12,066
After ten years		13,741		13,991
		29,568		30,397
Investment securities not due at a single maturity date:
Mortgage-backed securities		222,822		224,148	$	1,497	$	1,586
Corporate stock		64		99		—		—
	$	252,454	$	254,644	$	1,497	$	1,586

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.