5. Investment Securities

The amortized cost and market values of investment securities, with gross unrealized gains and losses, as of December 31, 2013 and December 31, 2012, were as follows (in thousands):


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses						Estimated Market Value
	Amortized Cost		Gross Unrealized Gains		Less Than One Year			Greater Than One Year			Estimated Market Value
December 31, 2013
Available for sale:
U.S. government agency securities	$	163,964	$	81	$	(10,991	)	$	(1,731	)	$	151,323
U.S. Treasury securities		13,022		—		(873	)		—			12,149
Municipal securities		23,240		140		(213	)		—			23,167
Mortgage-backed securities		57,010		447		(1,897	)		(16	)		55,544
Corporate bonds		37,023		395		(1,677	)		(205	)		35,536

	$	294,259	$	1,063	$	(15,651	)	$	(1,952	)	$	277,719

Held to maturity:
Municipal securities	$	44,294	$	94	$	(398	)	$	—		$	43,990
Mortgage-backed securities		50,610		12		(3,646	)		—			46,976

	$	94,904	$	106	$	(4,044	)	$	—		$	90,966

December 31, 2012
Available for sale:
U.S. government agency securities	$	128,665	$	83	$	(1	)	$	—		$	128,747
U.S. Treasury securities		10,040		5		—			—			10,045
Municipal securities		61,907		884		(44	)		—			62,747
Mortgage-backed securities		152,481		1,615		(254	)		—			153,842
Corporate bonds		49,912		410		(348	)		—			49,974

	$	403,005	$	2,997	$	(647	)	$	—		$	405,355

During 2013, the Company transferred securities with a fair value of $95.4 million from available-for-sale to held to maturity. Management determined that it has both the positive intent and ability to hold these securities until maturity. The reclassified securities consisted of municipal and mortgage-backed securities and were transferred due to movements in interest rates. The securities were reclassified at fair value at the time of the transfer and represented a non-cash transaction. Accumulated other comprehensive income included pre-tax unrealized losses of $5.9 million on these securities at the date of the transfer. These unrealized losses and offsetting other comprehensive income components are being amortized into net interest income over the remaining life of the related securities as a yield adjustment, resulting in no impact on future net income.

At December 31, 2013, the Company’s exposure to three investment security issuers individually exceeded 10% of shareholders’ equity (in thousands):


	Amortized Cost		Estimated Market Value
FHLB	$	83,052	$	78,729
Federal National Mortgage Association (Fannie Mae)		81,693		75,421
Federal Home Loan Mortgage Corporation (Freddie Mac)		62,281		57,860

	$	227,026	$	212,010

As of December 31, 2013, the Company had 88 securities that were in a loss position. The unrealized losses for each of the 88 securities relate to market interest rate changes. The Company has considered the current market for the securities in a loss position, as well as the severity and duration of the impairments, and expects that the value will recover. As of December 31, 2013, management does not intend to sell these investments until the fair value exceeds amortized cost and it is more likely than not that the Company will not be required to sell debt securities before the anticipated recovery of the amortized cost basis of the security; thus, the impairment is determined not to be other-than-temporary.

As of December 31, 2012, the Company had 39 securities that were in a loss position. The unrealized losses for each of the 39 securities relate to market interest rate changes. The Company has considered the current market for the securities in a loss position, as well as the severity and duration of the impairments, and expects that the value will recover. As of December 31, 2012, management had both the intent and ability to hold these investments until the fair value exceeds amortized cost; thus, the impairment is determined not to be other-than-temporary. In addition, management does not believe the Company will be required to sell debt securities before the anticipated recovery of the amortized cost basis of the security.

The amortized cost and estimated market values by contractual maturity of investment securities as of December 31, 2013 and December 31, 2012 are shown in the following table (in thousands). Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	December 31, 2013							December 31, 2012
	Weighted Average Yield			Amortized Cost		Estimated Market Value		Weighted Average Yield			Amortized Cost		Estimated Market Value
Available for sale:
Due in one year or less		1.39	%	$	12,340	$	12,368		1.04	%	$	119,657	$	119,753
Due after one year through five years		2.58			64,790		65,038		1.96			106,676		108,349
Due after five years through ten years		2.12			180,362		168,243		2.36			130,396		130,958
Due after ten years		3.17			36,767		32,070		2.60			46,276		46,295

Total securities		2.30	%	$	294,259	$	277,719		1.67	%	$	403,005	$	405,355

Held to maturity:
Due in one year or less		1.76	%	$	1,007	$	1,007		—	%	$	—	$	—
Due after one year through five years		2.60			18,101		17,539		—			—		—
Due after five years through ten years		3.70			37,591		37,137		—			—		—
Due after ten years		3.41			38,205		35,283		—			—		—

Total securities		3.35	%	$	94,904	$	90,966		—	%	$	—	$	—

Securities with estimated market values of $204.3 million and $121.4 million at December 31, 2013 and December 31, 2012, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase, and long-term borrowings.

Proceeds from sales of securities for the years ended December 31, 2013, 2012 and 2011 were $45.8 million, $125.4 million and $156.8 million, respectively. Gross gains of $0.5 million, $4.3 million, and $1.1 million were realized on these sales for the years ended December 31, 2013, 2012, and 2011, respectively. There were gross losses of $0.2 million for the year ended December 31, 2013, there were no gross losses for the year ended December 31, 2012, and gross losses of $0.6 million were realized for the year ended December 31, 2011.

Other Equity Securities

At December 31, 2013 and 2012, the Company included the following securities in other assets, at cost, in the accompanying consolidated balance sheets (in thousands):


	2013		2012
FHLB stock	$	1,099	$	2,938
First National Bankers Bankshares, Inc. (FNBB) stock		600		600
Other investments		4,853		3,200

Total equity securities	$	6,552	$	6,738