Securities

(In Thousands, Except Number of Securities)

The amortized cost and fair value of securities held to maturity were as follows as of the dates presented:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2013
Obligations of other U.S. Government agencies and corporations	$	125,061	$	14	$	(8,727	)	$	116,348
Obligations of states and political subdivisions	287,014		7,897		(2,683		)	292,228
	$	412,075	$	7,911	$	(11,410	)	$	408,576
December 31, 2012
Obligations of other U.S. Government agencies and corporations	$	90,045	$	116	$	(232	)	$	89,929
Obligations of states and political subdivisions	227,721		16,860		(35		)	244,546
	$	317,766	$	16,976	$	(267	)	$	334,475

In light of the ongoing fiscal uncertainty in state and local governments, the Company analyzes its exposure to potential losses in its security portfolio on at least a quarterly basis. Management reviews the underlying credit rating and analyzes the financial condition of the respective issuers. Based on this analysis, the Company sold certain securities representing obligations of state and political subdivisions that were classified as held to maturity during 2013 and 2011. The securities sold showed significant credit deterioration in that an analysis of the financial condition of the respective issuers showed the issuers were operating at net deficits with little to no financial cushion to offset future contingencies. The securities sold in 2013 and 2011 had carrying values of $4,292 and $13,017, respectively, and the Company recognized a net gain of $169 and $16 on the sales during the years ended December 31, 2013 and 2011, respectively. No securities classified as held to maturity were sold during the years ended December 31, 2012.

The amortized cost and fair value of securities available for sale were as follows as of the dates presented:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2013
Obligations of other U.S. Government agencies and corporations	$	6,144	$	125	$	(201	)	$	6,068
Residential mortgage backed securities:
Government agency mortgage backed securities	261,659		2,747		(4,414		)	259,992
Government agency collateralized mortgage obligations	149,682		1,542		(4,679		)	146,545
Commercial mortgage backed securities:
Government agency mortgage backed securities	41,252		1,373		(584		)	42,041
Government agency collateralized mortgage obligations	5,007		59		—			5,066
Trust preferred securities	27,531		73		(9,933		)	17,671
Other debt securities	19,544		240		(230		)	19,554
Other equity securities	2,775		1,542		—			4,317
	$	513,594	$	7,701	$	(20,041	)	$	501,254



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2012
Obligations of other U.S. Government agencies and corporations	$	2,169	$	273	$	—		$	2,442
Residential mortgage backed securities:
Government agency mortgage backed securities	139,699		5,209		(91		)	144,817
Government agency collateralized mortgage obligations	115,647		2,273		(399		)	117,521
Commercial mortgage backed securities:
Government agency mortgage backed securities	41,981		3,077		—			45,058
Government agency collateralized mortgage obligations	5,091		316		—			5,407
Trust preferred securities	28,612		—		(13,544		)	15,068
Other debt securities	22,079		852		(1		)	22,930
Other equity securities	2,355		713		—			3,068
	$	357,633	$	12,713	$	(14,035	)	$	356,311

Gross realized gains and gross realized losses on sales of securities available for sale for the years 2013, 2012 and 2011 were as follows:



	Year Ended December 31,
	2013			2012			2011
Gross gains on sales of securities available for sale	$	—		$	2,321		$	5,041
Gross losses on sales of securities available for sale	(115		)	(427		)	—
(Loss)/gain on sales of securities available for sale, net	$	(115	)	$	1,894		$	5,041

At December 31, 2013 and 2012, securities with a carrying value of approximately $604,571 and $308,362, respectively, were pledged to secure government, public, trust, and other deposits. Securities with a carrying value of $7,626 and $19,006 were pledged as collateral for short-term borrowings and derivative instruments at December 31, 2013 and 2012, respectively.

The amortized cost and fair value of securities at December 31, 2013 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may call or prepay obligations with or without call or prepayment penalties.



	Held to Maturity				Available for Sale
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	11,153	$	11,295	$	—	$	—
Due after one year through five years	52,708		54,286		1,079		1,147
Due after five years through ten years	194,469		187,937		5,065		4,921
Due after ten years	153,745		155,058		27,531		17,671
Residential mortgage backed securities:
Government agency mortgage backed securities	—		—		261,659		259,992
Government agency collateralized mortgage obligations	—		—		149,682		146,545
Commercial mortgage backed securities:
Government agency mortgage backed securities	—		—		41,252		42,041
Government agency collateralized mortgage obligations	—		—		5,007		5,066
Other debt securities	—		—		19,544		19,554
Other equity securities	—		—		2,775		4,317
	$	412,075	$	408,576	$	513,594	$	501,254

The following table presents the gross unrealized losses and fair value of investment securities, aggregated by investment category and the length of time the investments have been in a continuous unrealized loss position as of the dates presented:



	Less than 12 Months						12 Months or More						Total
	#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses
Held to Maturity:
December 31, 2013
Obligations of other U.S. Government agencies and corporations	26	$	105,747	$	(7,826	)	2	$	9,090	$	(901	)	28	$	114,837	$	(8,727	)
Obligations of states and political subdivisions	111	59,503		(2,578		)	2	933		(105		)	113	60,436		(2,683		)
Total	137	$	165,250	$	(10,404	)	4	$	10,023	$	(1,006	)	141	$	175,273	$	(11,410	)
December 31, 2012
Obligations of other U.S. Government agencies and corporations	8	$	35,224	$	(232	)	0	$	—	$	—		8	$	35,224	$	(232	)
Obligations of states and political subdivisions	4	2,861		(34		)	1	126		(1		)	5	2,987		(35		)
Total	12	$	38,085	$	(266	)	1	$	126	$	(1	)	13	$	38,211	$	(267	)



	Less than 12 Months						12 Months or More						Total
	#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses			#	Fair Value		Unrealized Losses
Available for Sale:
December 31, 2013
Obligations of other U.S. Government agencies and corporations	1	$	3,799	$	(201	)	0	$	—	$	—		1	$	3,799	$	(201	)
Residential mortgage backed securities:
Government agency mortgage backed securities	32	134,858		(3,451		)	3	13,239		(963		)	35	148,097		(4,414		)
Government agency collateralized mortgage obligations	17	68,496		(3,468		)	4	16,750		(1,211		)	21	85,246		(4,679		)
Commercial mortgage backed securities:
Government agency mortgage backed securities	4	16,570		(584		)	0	—		—			4	16,570		(584		)
Government agency collateralized mortgage obligations	0	—		—			0	—		—			0	—		—
Trust preferred securities	0	—		—			3	16,456		(9,933		)	3	16,456		(9,933		)
Other debt securities	3	7,100		(217		)	1	1,897		(13		)	4	8,997		(230		)
Other equity securities	0	—		—			0	—		—			0	—		—
Total	57	$	230,823	$	(7,921	)	11	$	48,342	$	(12,120	)	68	$	279,165	$	(20,041	)
December 31, 2012
Obligations of other U.S. Government agencies and corporations	0	$	—	$	—		0	$	—	$	—		0	$	—	$	—
Residential mortgage backed securities:
Government agency mortgage backed securities	3	15,431		(91		)	0	—		—			3	15,431		(91		)
Government agency collateralized mortgage obligations	11	44,616		(389		)	1	1,605		(10		)	12	46,221		(399		)
Commercial mortgage backed securities:
Government agency mortgage backed securities	0	—		—			0	—		—			0	—		—
Government agency collateralized mortgage obligations	0	—		—			0	—		—			0	—		—
Trust preferred securities	0	—		—			4	15,068		(13,544		)	4	15,068		(13,544		)
Other debt securities	0	—		—			1	2,188		(1		)	1	2,188		(1		)
Other equity securities	0	—		—			0	—		—			0	—		—
Total	14	$	60,047	$	(480	)	6	$	18,861	$	(13,555	)	20	$	78,908	$	(14,035	)

The Company evaluates its investment portfolio for OTTI on a quarterly basis. Impairment is assessed at the individual security level. The Company considers an investment security impaired if the fair value of the security is less than its cost or amortized cost basis. Impairment is considered to be other-than-temporary if the Company intends to sell the investment security or if the Company does not expect to recover the entire amortized cost basis of the security before the Company is required to sell the security or the security's maturity.

The Company holds investments in pooled trust preferred securities that had a cost basis of $27,531 and $28,612 and a fair value of $17,671 and $15,068 at December 31, 2013 and 2012, respectively. The investments in pooled trust preferred securities consist of four securities representing interests in various tranches of trusts collateralized by debt issued by over 330 financial institutions. Management’s determination of the fair value of each of its holdings in pooled trust preferred securities is based on the current credit ratings, the known deferrals and defaults by the underlying issuing financial institutions and the degree to which future deferrals and defaults would be required to occur before the cash flow for the Company’s tranches is negatively impacted. In addition, management continually monitors key credit quality and capital ratios of the issuing institutions. This determination is further supported by quarterly valuations, which are performed by third parties, of each security obtained by the Company. The Company does not intend to sell the investments, and it is not more likely than not that the Company will be required to sell the investments before recovery of the investments’ amortized cost, which may be maturity. At December 31, 2013, management did not, and does not currently, believe such securities will be settled at a price less than the amortized cost of the investment. The Company did conclude in 2011 that it was probable that there had been an adverse change in estimated cash flows for two of the four securities (XXIII and XXVI in the table below) and recognized credit related impairment loss of $262. For the years ended 2012 and 2013, the Company determined the pooled trust preferred securities and their estimated cash flow were fairly valued and no additional impairment was recognized during the year ended December 31, 2013.

However, based on the qualitative factors discussed above, each of the four pooled trust preferred securities was classified as a nonaccruing asset at December 31, 2013. Investment interest is recorded on the cash-basis method until qualifying for return to accrual status.

The following table provides information regarding the Company’s investments in pooled trust preferred securities at December 31, 2013:



Name	Single/ Pooled	Class/ Tranche	Amortized Cost		Fair Value		Unrealized Gain (Loss)			Lowest Credit Rating	Issuers Currently in Deferral or Default
XIII	Pooled	B-2	$	1,141	$	1,214	$	73		Caa3	30%
XXIII	Pooled	B-2	8,746		5,554		(3,192		)	B1	20%
XXIV	Pooled	B-2	12,076		7,381		(4,695		)	Ca	35%
XXVI	Pooled	B-2	5,568		3,522		(2,046		)	Ca	31%
			$	27,531	$	17,671	$	(9,860	)

The following table provides a summary of the cumulative credit related losses recognized in earnings for which a portion of OTTI has been recognized in other comprehensive income:



	2013			2012
Balance at January 1	$	(3,337	)	$	(3,337	)
Additions related to credit losses for which OTTI was not previously recognized	—			—
Increases in credit loss for which OTTI was previously recognized	—			—
Balance at December 31	$	(3,337	)	$	(3,337	)