NOTE 4. SECURITIES

The following table presents the amortized costs, unrealized gains, unrealized losses and approximate fair values of investment securities at December 31, 2013, and December 31, 2012:


(Dollars in thousands)	As of December 31, 2013
Available-for-sale securities	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government & agencies	$	6,580	$	0	$	(316	)	$	6,264
Obligations of state and political subdivisions		60,370		672		(1,833	)		59,209
Residential mortgage backed securities and collateralized mortgage obligations		64,026		318		(1,353	)		62,991
Corporate securities		48,836		282		(888	)		48,230
Commercial mortgage backed securities		10,828		24		(380	)		10,472
Other asset backed securities		29,717		388		(631	)		29,474

Total	$	220,357	$	1,684	$	(5,401	)	$	216,640


Held-to-maturity securities
Obligations of state and political subdivisions	$	36,696	$	36	$	(2,707	)	$	34,025


(Dollars in thousands)	As of December 31, 2012
Available-for-sale securities	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. government & agencies	$	2,970	$	0	$	(24	)	$	2,946
Obligations of state and political subdivisions		56,802		1,797		(115	)		58,484
Residential mortgage backed securities and collateralized mortgage obligations		51,177		670		(317	)		51,530
Corporate securities		60,516		1,358		(318	)		61,556
Commercial mortgage backed securities		4,412		2		(90	)		4,324
Other asset backed securities		18,546		269		(301	)		18,514

Total	$	194,423	$	4,096	$	(1,165	)	$	197,354


Held-to-maturity securities
Obligations of state and political subdivisions	$	31,483	$	60	$	(50	)	$	31,493

The amortized cost and estimated fair value of available-for-sale and held-to-maturity securities as of December 31, 2013, are shown below.


(Dollars in thousands)	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
AMOUNTS MATURING IN:
One year or less	$	0	$	0	$	122	$	122
One year through five years		45,765		45,952		604		626
Five years through ten years		96,713		94,527		13,380		12,745
After ten years		77,879		76,161		22,590		20,532

	$	220,357	$	216,640	$	36,696	$	34,025

The amortized cost and fair value of residential mortgage backed, collateralized mortgage obligations and commercial mortgage securities are presented by their expected average life, rather than contractual maturity, in the preceding table. Expected maturities may differ from contractual.

The Company held $43.8 million in securities with safekeeping institutions for pledging purposes. Of this amount, $19.6 million were pledged as of December 31, 2013. The following table presents the fair market value of the securities held, segregated by purpose, as of December 31, 2013:


(Dollars in thousands)	Amount
Public funds collateral	$	21,706
Federal Home Loan Bank borrowings		16,505
Interest rate swap contracts		5,541

Total securities held for pledging purposes	$	43,752

The following table presents the cash proceeds from sales of securities and their associated gross realized gains and gross realized losses that have been included in earnings for the years ended December 31, 2013, 2012 and 2011:


(Dollars in thousands)	For years ended December 31,
	2013			2012			2011
Proceeds from sales of securities	$	103,303		$	112,149		$	104,276

Gross realized gains on sales of securities:
U.S. government & agencies	$	0		$	0		$	165
Obligations of state and political subdivisions		261			2,710			527
Residential mortgage backed securities and collateralized mortgage obligations		250			594			713
Corporate securities		1,022			464			204
Commercial mortgage backed securities		0			43			0
Other asset backed securities		52			195			0

Total gross realized gains on sales of securities	$	1,585		$	4,006		$	1,609

Gross realized losses on sales of securities
U.S. government & agencies	$	(100	)	$	0		$	(5	)
Obligations of state and political subdivisions		(215	)		0			(4	)
Residential mortgage backed securities and collateralized mortgage obligations		(199	)		(158	)		(32	)
Corporate securities		(29	)		(16	)		(12	)
Commercial mortgage backed securities		0			(10	)		(6	)
Other asset backed securities		(47	)		0			0

Total gross realized losses on sales of securities	$	(590	)	$	(184	)	$	(59	)

The following tables present the current fair value and associated unrealized losses on investments with unrealized losses at December 31, 2013, and December 31, 2012. The tables also illustrate whether these securities have had unrealized losses for less than 12 months or for 12 months or longer.


(Dollars in thousands)	As of December 31, 2013
	Less than 12 months					12 months or more					Total
Available-for-sale securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government & agencies	$	5,446	$	(147	)	$	819	$	(168	)	$	6,265	$	(315	)
Obligations of states and political subdivisions		29,943		(1,578	)		2,727		(255	)		32,670		(1,833	)
Residential mortgage backed securities and collateralized mortgage obligations		44,197		(1,214	)		3,271		(139	)		47,468		(1,353	)
Corporate securities		32,649		(792	)		2,960		(96	)		35,609		(888	)
Commercial mortgage backed securities		5,543		(205	)		1,437		(176	)		6,980		(381	)
Other asset backed securities		15,303		(518	)		1,723		(113	)		17,026		(631	)

Total temporarily impaired securities	$	133,081	$	(4,454	)	$	12,937	$	(947	)	$	146,018	$	(5,401	)


Held-to-maturity securities
Obligations of states and political subdivisions	$	23,800	$	(1,524	)	$	7,533	$	(1,183	)	$	31,333	$	(2,707	)


(Dollars in thousands)	As of December 31, 2012
	Less than 12 months					12 months or more					Total
Available-for-sale securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
U.S. government & agencies	$	2,947	$	(24	)	$	0	$	0		$	2,947	$	(24	)
Obligations of states and political subdivisions		8,443		(109	)		166		(6	)		8,609		(115	)
Residential mortgage backed securities and collateralized mortgage obligations		14,367		(288	)		1,662		(29	)		16,029		(317	)
Corporate securities		16,036		(85	)		6,762		(233	)		22,798		(318	)
Commercial mortgage backed securities		1,535		(89	)		0		0			1,535		(89	)
Other asset backed securities		8,091		(153	)		1,419		(149	)		9,510		(302	)

Total temporarily impaired securities	$	51,419	$	(748	)	$	10,009	$	(417	)	$	61,428	$	(1,165	)


Held-to-maturity securities
Obligations of states and political subdivisions	$	11,154	$	(50	)	$	0	$	0		$	11,154	$	(50	)

At December 31, 2013 and December 31, 2012, 195 and 82 securities were in an unrealized loss position, respectively.

The unrealized losses on obligations of political subdivisions and corporate securities were caused by changes in market interest rates and or the widening of market spreads subsequent to the initial purchase of these securities. Management monitors published credit ratings of these securities and there have been no adverse ratings changes below investment grade since the date of purchase. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because the Company does not intend to sell the securities in these classes, and it is more likely than not that the Company will not be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired.

The available-for-sale residential mortgage backed securities, commercial backed securities, and collateralized mortgage obligations portfolio in an unrealized loss position at December 31, 2013, were issued by both public and private agencies. The unrealized losses on residential mortgage backed securities and collateralized mortgage obligations were caused by changes in market interest rates and or the widening of market spreads subsequent to the initial purchase of these securities, and not by the underlying credit of the issuers or the underlying collateral. It is expected that these securities will not be settled at a price less than the amortized cost of each investment. Because the decline in fair value is attributable to changes in interest rates and or widening market spreads and not credit quality, and because the Company does not intend to sell the securities in this class, and it is more likely than not the Company will not be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until contractual maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired.