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, 2014
Available for Sale
U. S. government agency	$	652	$	10	$	(1	)	$	661
State and municipal		316,048		18,603		(353	)		334,298
Mortgage-backed securities-residential (Government Sponsored Entity)		178,534		4,071		(433	)		182,172
Collateralized mortgage obligations (Government Sponsored Entity)		344,556		2,743		(3,862	)		343,437
Equity securities		4,689		—		—			4,689
Other securities		2,503		—		—			2,503

Total available for sale	$	846,982	$	25,427	$	(4,649	)	$	867,760

	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 municipal		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

Total available for sale	$	889,360	$	16,995	$	(15,249	)	$	891,106

Contractual maturities of securities available for sale at December 31, 2014 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	$	15,262	$	15,438
One through five years		53,948		55,735
Six through ten years		137,527		144,624
After ten years		112,466		121,665
Mortgage-backed securities-residential (Government Sponsored Entity)		178,534		182,172
Collateralized mortgage obligations (Government Sponsored Entity)		344,556		343,437
Equity securities		4,689		4,689

Total available for sale securities	$	846,982	$	867,760

Gross proceeds from sales of securities available for sale during 2014, 2013 and 2012 were $27,131, $80,151, and $64,176. Gross gains of $570, $912 and $1,944 and gross losses of $546, $77, and $77 were realized on those sales in 2014, 2013 and 2012, respectively. The tax provision related to these net realized gains was $8, $284, and $635 respectively.

Securities with a carrying value of $352,868 and $323,542 were pledged at December 31, 2014 and 2013 to secure certain deposits and repurchase agreements, secure future funding needs, and for other purposes as permitted or required by law.

At year end 2014 and 2013, 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 2014 and 2013 presented by length of time the securities have been in a continuous unrealized loss position.

2014	Less than 12 months					12 months or longer					Total

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

U. S. government agency	$	122	$	(1	)	$	—	$	—		$	122	$	(1	)
State and municipal		16,659		(147	)		13,340		(206	)		29,999		(353	)
Mortgage-backed securities-residential (Government Sponsored Entity)		24,925		(51	)		32,541		(382	)		57,466		(433	)
Collateralized mortgage obligations (Government Sponsored Entity)		21,775		(114	)		150,094		(3,748	)		171,869		(3,862	)
Other securities		—		—			—		—			—		—

Total temporarily impaired	$	63,481	$	(313	)	$	195,975	$	(4,336	)	$	259,456	$	(4,649	)

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	)

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, 2014, the Company's security portfolio consisted of 1,061 securities, 132 of which were in an unrealized loss position. Unrealized losses on state and municipal securities of $353 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 changes in interest rates. The fair value of these debt securities is expected to recover as the securities approach their maturity date.

At December 31, 2014, 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 $433 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, 2014.

The Company's collateralized mortgage obligation securities portfolio includes agency collateralized mortgage obligations which were issued by U.S. government-sponsored entities and agencies. The government has affirmed its commitment to support. These securities with an unrealized loss had a market value of $171,869 and unrealized losses of approximately $3,862 at December 31, 2014. The Company monitors to ensure it has adequate credit support and as of December 31, 2014, 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.

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. In 2014, this impairment loss of $500 was recovered.