Investment Securities

6 Months Ended

Jun. 30, 2013

Investment Securities [Abstract]

Investment Securities Disclosure [Text Block]

The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities as of June 30, 2013 and December 31, 2012 are as follows (dollars in thousands):

					Gross		Gross
			Amortized		Unrealized		Unrealized		Fair
			Cost		Gains		Losses		Value
June 30, 2013:
Available-for-sale:
	U.S. government agencies		$	15,479	$	245	$	204	$	15,520
	State and municipals			160,349		3,738		4,853		159,234
	Corporate debt securities			8,000		-		97		7,903
	Mortgage-backed securities:
		Residential government sponsored		49,660		2,044		548		51,156
		Other government sponsored		8,465		306		8		8,763
			$	241,953	$	6,333	$	5,710	$	242,576
Held-to-maturity:
	State and municipals		$	207,503	$	630	$	6,468	$	201,665
	Other debt securities			16,000		-		1,040		14,960
			$	223,503	$	630	$	7,508	$	216,625
					Gross		Gross
			Amortized		Unrealized		Unrealized		Fair
			Cost		Gains		Losses		Value
December 31, 2012:
Available-for-sale:
	U. S government agencies		$	15,735	$	660	$	-	$	16,395
	State and municipals			213,679		11,359		1,152		223,886
	Mortgage-backed securities:
		Residential government sponsored		83,764		3,155		29		86,890
		Other government sponsored		13,923		450		5		14,368
			$	327,101	$	15,624	$	1,186	$	341,539
Held-to-maturity:
	State and municipals		$	108,805	$	4,576	$	146	$	113,235
	Other debt securities			6,000		-		1,000		5,000
			$	114,805	$	4,576	$	1,146	$	118,235

During the second quarter of 2013, the Company transferred $86.5million of available-for-sale state and municipal debt securities to the held-to-maturity category, reflecting the Company's intent to hold those securities to maturity. Transfers of investment securities into the held-to-maturity category from the available-for-sale category are made at fair value at the date of transfer. The related $1.2 million of unrealized holding gain that was included in the transfer is retained in other comprehensive income and in the carrying value of the held-to-maturity securities. This amount will be amortized as an adjustment to interest income over the remaining life of the securities. This will offset the impact of amortization of the net premium created in the transfer. There were no gains or losses recognized as a result of this transfer.

The amortized cost and estimated fair value of investment securities at June 30, 2013, by contractual maturity, are shown below (dollars in thousands). The expected life of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to call or prepay the underlying mortgage loans with or without call or prepayment penalties. For purposes of the maturity table, mortgage-backed securities have been included in maturity groupings based on the contractual maturity.

		Amortized Cost		Fair Value
Available-for-sale:
	Due in one year or less	$	4,904	$	4,995
	Due after one through five years		491		500
	Due after five through ten years		18,353		18,381
	Due after ten years		218,205		218,700
		$	241,953	$	242,576
Held-to-maturity:
	Due in one year or less	$	544	$	562
	Due after one year through five years		866		870
	Due after five through ten years		23,868		22,868
	Due after ten years		198,225		192,325
		$	223,503	$	216,625

At June 30, 2013 and December 31,2012, investment securities with an estimated fair value of approximately $168.2million and $175.1million, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

The following is a summary of realized gains and losses from the sales of investment securities classified as available-for-sale (dollars in thousands):

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2013			2012		2013		2012
Proceeds from sales	$	-		$	-	$	15,797	$	39,571
Gross realized gains on sales	$	176	(1)	$	-	$	176	$	1,720
Gross realized losses on sales		-			-		(228)		(101)
Total realized gains (losses), net	$	176		$	-	$	(52)	$	1,619
(1) Gain was derived from the redemption of preferred stock from another financial institution that was purchased at auction from the U.S. Treasury.

The following tables show gross unrealized losses and fair values of investment securities, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at June 30, 2013 and December 31, 2012 (dollars in thousands):

		Less Than 12 Months				12 Months or More				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
June 30, 2013:		Value		Losses		Value		Losses		Value		Losses
Available-for-sale:
	U.S. Government agencies	$	5,799	$	204	$	-	$	-	$	5,799	$	204
	State and municipals		73,625		4,853		-		-		73,625		4,853
	Corporate debt securities		7,903		97		-		-		7,903		97
	Mortgage-backed securities		23,756		556		-		-		23,756		556
		$	111,083	$	5,710	$	-	$	-	$	111,083	$	5,710
Held-to-maturity:
	State and municipals	$	161,054	$	6,468	$	-	$	-	$	161,054	$	6,468
	Other debt securities		-		-		4,960		1,040		4,960		1,040
		$	161,054	$	6,468	$	4,960	$	1,040	$	166,014	$	7,508
		Less Than 12 Months				12 Months or More				Total
		Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2012:		Value		Losses		Value		Losses		Value		Losses
Available-for-sale:
	State and municipals	$	75,551	$	1,152	$	-	$	-	$	75,551	$	1,152
	Mortgage-backed securities		22,465		34		-		-		22,465		34
		$	98,016	$	1,186	$	-	$	-	$	98,016	$	1,186
Held-to-maturity:
	State and municipals	$	10,301	$	146	$	-	$	-	$	10,301	$	146
	Other debt securities		-		-		5,000		1,000		5,000		1,000
		$	10,301	$	146	$	5,000	$	1,000	$	15,301	$	1,146

At June 30, 2013, the unrealized losses relate to 196 state and municipal securities, 23 mortgage-backed securities, three agency securities, two corporate debt securities and two other debt securities. Of those, only the two other debt securities were in a continuous unrealized loss position for more than twelve months. In determining if any credit losses were evident, the Company noted all of the state and municipal securities were investment grade as of June 30, 2013. The gross unrealized losses reported for the agency securities and the mortgage-backed securities relate to investment securities issued by the Federal National Mortgage Association, the Government National Mortgage Association, or the Federal Home Loan Mortgage Corporation. The unrealized losses at June 30, 2013were primarily attributable to recent changes in interest rates and not due to the credit quality of the investment securities. The Company noted the issuers of the corporate and other debt securities are financially sound and well capitalized. The Company does not intend to sell, and it is not more likely than not that the Company will be required to sell, these debt securities before the anticipated recovery of the amortized cost basis and; therefore, does not consider them to be other-than-temporarily impaired at June 30, 2013.