NOTE 4 — SECURITIES

The fair value of securities available for sale and related gross unrealized gains and losses recognized in accumulated other comprehensive income was as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value


As of December 31, 2013
Available for Sale
U. S. government agency	$	793	$	5	$	—		$	798
State and municpal		321,151		12,173		(2,212	)		331,112
Mortgage-backed securities-residential (Government Sponsored Entity)		186,054		3,175		(3,800	)		185,429
Collateralized mortgage obligations (Government Sponsored Entity)		372,896		1,642		(9,229	)		365,309
Equity securities		4,939		—		—			4,939
Other securities		3,527		—		(8	)		3,519


	$	889,360	$	16,995	$	(15,249	)	$	891,106




As of December 31, 2012
Available for Sale
U. S. government agency	$	1,600	$	38	$	—		$	1,638
State and municipal		310,552		27,484		(97	)		337,939
Mortgage-backed securities-residential (Government Sponsored Entity)		219,352		7,711		(8	)		227,055
Collateralized mortgage obligations (Government Sponsored Entity)		322,758		4,604		(139	)		327,223
Equity securities		4,939		—		—			4,939
Other securities		3,558		—		(11	)		3,547


Total available for sale	$	862,759	$	39,837	$	(255	)	$	902,341

Contractual maturities of securities at December 31, 2013 were as follows. Securities not due at a single maturity or with no maturity at year end are shown separately.

	Available for Sale

	Amortized Cost		Fair Value

Within one year	$	14,715	$	14,940
One through five years		54,799		56,864
Six through ten years		120,911		123,992
After ten years		135,046		139,633
Mortgage-backed securities-residential (Government Sponsored Entity)		186,054		185,429
Collateralized mortgage obligations (Government Sponsored Entity)		372,896		365,309
Equity securities		4,939		4,939


Total available for sale securities	$	889,360	$	891,106

Gross proceeds from sales of securities available for sale during 2013, 2012 and 2011 were $80,151, $64,176, and $366,559. Gross gains of $912, $1,944 and $11,440 and gross losses of $77, $77, and $83 were realized on those sales in 2013, 2012 and 2011, respectively. The tax provision related to these net realized gains was $284, $635, and $3,861 respectively.

Securities with a carrying value of $323,542 and $259,613 were pledged at December 31, 2013 and 2012 to secure certain deposits and repurchase agreements, secure future funding needs, and for other purposes as permitted or required by law.

At year end 2013 and 2012, there were no holdings of securities of any one issuer, other than the U.S. Government and its sponsored entities, in an amount greater than 10% of shareholders' equity.

Below is a summary of securities with unrealized losses as of year-end 2013 and 2012 presented by length of time the securities have been in a continuous unrealized loss position.

2013	Less than 12 months					12 months or longer					Total


Description of securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses

State and municipal	$	31,660	$	(1,791	)	$	4,153	$	(421	)	$	35,813	$	(2,212	)
Mortgage-backed securities-residential (Government Sponsored Entity)		114,036		(3,800	)		—		—			114,036		(3,800	)
Collateralized mortgage obligations (Government Sponsored Entity)		267,579		(9,040	)		4,100		(189	)		271,679		(9,229	)
Other securities		—		—			993		(8	)		993		(8	)


Total temporarily impaired	$	413,275	$	(14,631	)	$	9,246	$	(618	)	$	422,521	$	(15,249	)

2012	Less than 12 months					12 months or longer				Total


Description of securities	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses

State and municipal	$	6,646	$	(97	)	$	—	$	—	$	6,646	$	(97	)
Mortgage-backed securities-residential (Government Sponsored Entity)		12,766		(8	)		—		—		12,766		(8	)
Collateralized mortgage obligations (Government Sponsored Entity)		32,330		(139	)		—		—		32,330		(139	)
Other securities		990		(11	)		—		—		990		(11	)


Total temporarily impaired	$	52,732	$	(255	)	$	—	$	—	$	52,732	$	(255	)

Other-Than-Temporary-Impairment

Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under ASC 320. However, certain purchased beneficial interests, including non-agency mortgage-backed securities, asset-backed securities, and collateralized debt obligations, that had credit ratings at the time of purchase of below AA are evaluated using the model outlined in ASC 325-10 (formerly EITF Issue No. 99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests that Continue to be Held by a Transfer in Securitized Financial Assets). The Company holds no securities that fall within the scope of ASC 325-10.

In determining OTTI under ASC 320, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When OTTI occurs under either model, the amount of the OTTI recognized in earnings depends on whether the Company intends to sell the security or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current period credit loss. If an entity intends to sell or it is more likely than not it will be required to sell the security before recovery of its amortized cost basis, less any current period credit loss, the OTTI shall be recognized in earnings equal to the entire difference between the investment's amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current period loss, the OTTI shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total OTTI related to the credit loss is determined based on the present value of cash flows expected to be collected and is recognized in earnings. The amount of the total OTTI related to other factors is recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the OTTI recognized in earnings becomes the new amortized cost basis of the investment.

As of December 31, 2013, the Company's security portfolio consisted of 1,054 securities, 178 of which were in an unrealized loss position. Unrealized losses on state and municipal securities of $2,212 have not been recognized into income because management has the ability to hold for a period of time sufficient to allow for any anticipated recovery in fair value and it is unlikely that management will be required to sell the securities before their anticipated recovery. The decline in value is primarily attributable to temporary illiquidity and the financial crisis affecting these markets and not the expected cash flows of the individual securities. The fair value of these debt securities is expected to recover as the securities approach their maturity date.

At December 31, 2013, all of the mortgage-backed securities held by the Company were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support. Because the decline in fair value of approximately $3,800 is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities and it is unlikely that it will be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at December 31, 2013.

The Company's collateralized mortgage obligation securities portfolio includes agency collateralized mortgage obligations with a market value of $365,309 which had unrealized losses of approximately $9,229 at December 31, 2013. The Company monitors to insure it has adequate credit support and as of December 31, 2013, the Company believes there is no OTTI and does not have the intent to sell these securities and it is unlikely that it will be required to sell the securities before their anticipated recovery. All securities are investment grade.

The unrealized losses on other securities are related to one single issue trust preferred security and has not been recognized into income because management has the ability to hold for a period of time sufficient to allow for any anticipated recovery in fair value and it is unlikely that management will be required to sell the security before its anticipated recovery. The Company performs a quarterly review of this security and based on this review, no evidence of adverse changes in expected cash flows is anticipated. The decline in value is primarily attributable to temporary illiquidity and the financial crisis affecting these markets and not the expected cash flows of the individual security. Currently, the issuer has made all contractual payments and given no indication that they will not be able to make them into the future. The fair value of these debt securities is expected to recover as the securities approach their maturity date. As of December 31, 2013, the Company owned $993 of these securities with an unrealized loss of $8.

In 2012, there was a $500 impairment loss recognized on one equity security reducing its fair value to $250. This amount is shown as an impairment loss on the income statement.