Note 3. Investment Securities

Investment securities available-for-sale were as follows:

	Amortized		Gross		Gross
(Dollars in thousands)	Cost		Unrealized Gains		Unrealized Losses			Fair Value
September 30, 2013
U.S. Treasury and Federal agencies securities	$	394,063	$	5,698	$	(3,468	)	$	396,293
U.S. States and political subdivisions securities	111,843		3,821		(984		)	114,680
Mortgage-backed securities — Federal agencies	280,255		6,277		(2,172		)	284,360
Corporate debt securities	30,890		242		(9		)	31,123
Foreign government and other securities	700		7		—			707
Total debt securities	817,751		16,045		(6,633		)	827,163
Marketable equity securities	2,167		5,021		(3		)	7,185
Total investment securities available-for-sale	$	819,918	$	21,066	$	(6,636	)	$	834,348

December 31, 2012
U.S. Treasury and Federal agencies securities	$	410,983	$	11,353	$	(83	)	$	422,253
U.S. States and political subdivisions securities	100,055		5,864		(482		)	105,437
Mortgage-backed securities — Federal agencies	301,136		11,296		(25		)	312,407
Corporate debt securities	30,897		445		(94		)	31,248
Foreign government and other securities	3,700		26		—			3,726
Total debt securities	846,771		28,984		(684		)	875,071
Marketable equity securities	2,368		3,329		(4		)	5,693
Total investment securities available-for-sale	$	849,139	$	32,313	$	(688	)	$	880,764

At September 30, 2013 and December 31, 2012, the residential mortgage-backed securities held by the Company consisted primarily of GNMA, FNMA and FHLMC pass-through certificates which are guaranteed by those respective agencies of the United States government (Government Sponsored Enterprise, GSEs).

The contractual maturities of investments in debt securities available-for-sale at September 30, 2013 are shown below. 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.

(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	128,276	$	127,885
Due after one year through five years	346,667		352,734
Due after five years through ten years	61,903		61,568
Due after ten years	650		616
Mortgage-backed securities	280,255		284,360
Total debt securities available-for-sale	$	817,751	$	827,163

The following table shows the gross realized gains and losses on sale of securities from the securities available-for-sale portfolio, including marketable equity securities. Realized gains and losses on the sales of all securities are computed using the specific identification cost basis. The gross gains and losses for the three and nine months ended September 30, 2013 primarily reflect the sale of federal agency securities. The trades were done for the purpose of balance sheet realignment and managing reinvestment risk by adjusting the timing of future cash flows. There were no other-than-temporary-impairment (OTTI) write-downs in 2013 or 2012.

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
(Dollars in thousands)	2013			2012		2013			2012
Gross realized gains	$	903		$	—	$	903		$	275
Gross realized losses	(931		)	—		(931		)	—
Net realized (losses) gains	$	(28	)	$	—	$	(28	)	$	275

The following table summarizes gross unrealized losses and fair value by investment category and age.

	Less than 12 Months					12 months or Longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
September 30, 2013
U.S. Treasury and Federal agencies securities	$	139,539	$	(3,337	)	$	15,094	$	(131	)	$	154,633	$	(3,468	)
U.S. States and political subdivisions securities	30,490		(671		)	2,691		(313		)	33,181		(984		)
Mortgage-backed securities - Federal agencies	94,174		(2,171		)	49		(1		)	94,223		(2,172		)
Corporate debt securities	7,900		(3		)	993		(6		)	8,893		(9		)
Foreign government and other securities	100		—			—		—			100		—
Total debt securities	272,203		(6,182		)	18,827		(451		)	291,030		(6,633		)
Marketable equity securities	—		—			4		(3		)	4		(3		)
Total investment securities available-for-sale	$	272,203	$	(6,182	)	$	18,831	$	(454	)	$	291,034	$	(6,636	)

December 31, 2012
U.S. Treasury and Federal agencies securities	$	37,316	$	(83	)	$	—	$	—		$	37,316	$	(83	)
U.S. States and political subdivisions securities	7,730		(46		)	3,364		(436		)	11,094		(482		)
Mortgage-backed securities - Federal agencies	6,264		(24		)	60		(1		)	6,324		(25		)
Corporate debt securities	—		—			4,431		(94		)	4,431		(94		)
Foreign government and other securities	100		—			—		—			100		—
Total debt securities	51,410		(153		)	7,855		(531		)	59,265		(684		)
Marketable equity securities	—		—			5		(4		)	5		(4		)
Total investment securities available-for-sale	$	51,410	$	(153	)	$	7,860	$	(535	)	$	59,270	$	(688	)

The initial indication of OTTI for both debt and equity securities is a decline in fair value below amortized cost. Quarterly, the impaired securities are analyzed on a qualitative and quantitative basis in determining OTTI. Declines in the fair value of available-for-sale debt securities below their cost that are deemed to be other-than-temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of impairment related to other factors is recognized in other comprehensive income. In estimating OTTI impairment losses, the Company considers among other things, (i) the length of time and the extent to which fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) whether it is more likely than not that the Company will not have to sell any such securities before a recovery of cost.

At September 30, 2013, the Company does not have the intent to sell any of the available-for-sale securities in the table above and believes that it is more likely than not, that it will not have to sell any such securities before an anticipated recovery of cost. Primarily the unrealized losses on debt securities are due to increases in market rates over the yields available at the time the underlying securities were purchased and market illiquidity on auction rate securities which are reflected in U.S. States and political subdivisions. The fair value is expected to recover on all debt securities as they approach their maturity date or re-pricing date or if market yields for such investments decline. The Company does not believe any of the securities are impaired due to reasons of credit quality.

At September 30, 2013 and December 31, 2012, investment securities with carrying values of $236.58 million and $216.34 million, respectively, were pledged as collateral to secure government deposits, security repurchase agreements, and for other purposes.