NOTE D - SECURITIES

The amortized cost and fair value of securities available for sale at March 31, 2014 and December 31, 2013 are summarized as follows:

	March 31, 2014
	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollars in thousands)	Cost		Gains		Losses			Value
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	100	$	0	$	0		$	100
Mortgage-backed securities of U.S. Government Sponsored Entities		153,330		1,516		(3,536	)		151,310
Collateralized mortgage obligations of U.S. Government Sponsored Entities		369,042		680		(11,609	)		358,113
Private mortgage backed securities		29,838		0		(343	)		29,495
Private collateralized mortgage obligations		80,223		1,141		(331	)		81,033
Collateralized loan obligations		32,624		0		(409	)		32,215
Obligations of state and political subdivisions		5,894		357		(5	)		6,246
	$	671,051	$	3,694	$	(16,233	)	$	658,512

	December 31, 2013
	Gross		Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollars in thousands)	Cost		Gains		Losses			Value
SECURITIES AVAILABLE FOR SALE
U.S. Treasury securities and obligations of U.S. Government Sponsored Entities	$	100	$	0	$	0		$	100
Mortgage-backed securities of U.S. Government Sponsored Entities		129,468		1,456		(4,189	)		126,735
Collateralized mortgage obligations of U.S. Government Sponsored Entities		383,392		776		(14,747	)		369,421
Private mortgage backed securities		29,800		0		(226	)		29,574
Private collateralized mortgage obligations		76,520		731		(413	)		76,838
Collateralized loan obligations		32,592		0		(413	)		32,179
Obligations of state and political subdivisions		6,586		193		(15	)		6,764
	$	658,458	$	3,156	$	(20,003	)	$	641,611

Proceeds from sales of securities during the three month period ended March 31, 2014 were $4,061,000 with gross gains of $17,000 and no gross losses. Proceeds from sales of securities during the three month period ended March 31, 2013 were $11,836,000 with gross gains of $101,000 and gross losses of $76,000.

Securities with a carrying and fair value of $101,616,000 at March 31, 2014 were pledged as collateral for United States Treasury deposits, and other public and trust deposits. Securities with a carrying value and fair value of $185,857,000 were pledged as collateral for repurchase agreements.

The amortized cost and fair value of securities at March 31, 2014, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties.

	Available for Sale
	Amortized		Fair
(Dollars in thousands)	Cost		Value
Due in less than one year	$	100	$	100
Due after one year through five years		567		580
Due after five years through ten years		8,025		7,936
Due after ten years		29,926		29,945
		38,618		38,561
Mortgage-backed securities of Government Sponsored Entities		153,330		151,310
Collateralized mortgage obligations of Government Sponsored Entities		369,042		358,113
Private mortgage backed securities		29,838		29,495
Private collateralized mortgage obligations		80,223		81,033
No contractual maturity		0		0
	$	671,051	$	658,512

The estimated fair value of a security is determined based on market quotations when available or, if not available, by using quoted market prices for similar securities, pricing models or discounted cash flows analyses, using observable market data where available. The tables below indicate the amount of securities with unrealized losses and period of time for which these losses were outstanding at March 31, 2014 and December 31, 2013, respectively.

	March 31, 2014
	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
Mortgage-backed securities of U.S. Government Sponsored Entities	$	71,947	$	(1,871	)	$	28,370	$	(1,665	)	$	100,317	$	(3,536	)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		201,523		(6,782	)		102,894		(4,827	)		304,417		(11,609	)
Private mortage backed securities		29,495		(343	)		0		0			29,495		(343	)
Private collaterlized mortgage obligations		28,443		(331	)		0		0			28,443		(331	)
Collateralized loan obligations		32,215		(409	)		0		0			32,215		(409	)
Obligations of state and political subdivisions		512		(4	)		125		(1	)		637		(5	)
Total temporarily impaired securities	$	364,135	$	(9,740	)	$	131,389	$	(6,493	)	$	495,524	$	(16,233	)

	December 31, 2013
	Less than 12 months					12 months or longer					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Dollars in thousands)	Value		Losses			Value		Losses			Value		Losses
Mortgage-backed securities of U.S. Government Sponsored Entities	$	33,425	$	(2,045	)	$	35,043	$	(2,144	)	$	68,468	$	(4,189	)
Collateralized mortgage obligations of U.S. Government Sponsored Entities		287,312		(12,450	)		45,657		(2,297	)		332,969		(14,747	)
Private mortage backed securities		29,573		(226	)		0		0			29,573		(226	)
Private collateralized mortgage obligations		47,653		(413	)		0		0			47,653		(413	)
Collateralized loan obligations		32,179		(413	)		0		0			32,179		(413	)
Obligations of state and political subdivisions		502		(14	)		0		(1	)		502		(15	)
Total temporarily impaired securities	$	430,644	$	(15,561	)	$	80,700	$	(4,442	)	$	511,344	$	(20,003	)

At March 31, 2014, approximately $0.7 million of the unrealized losses pertain to private label securities secured by collateral originated in 2005 and prior. Their fair value is $57.9 million and is attributable to a combination of factors, including relative changes in interest rates since the time of purchase and decreased liquidity for these investment securities in general. The collateral underlying these mortgage investments are 30- and 15-year fixed and 10/1 adjustable rate mortgage loans with low loan to values, subordination and historically have had minimal foreclosures and losses. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest rate movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At March 31, 2014, the Company also had $15.1 million of unrealized losses on collateralized mortgage obligations and mortgage backed securities of government sponsored entities having a fair value of $404.7 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

At March 31, 2014, the Company also had $0.4 million of unrealized losses on collateralized loan obligations having a fair value of $32.2 million that were attributable to a combination of factors, including relative changes in interest rates since the time of purchase. Based on its assessment of these factors, management believes that the unrealized losses on these debt security holdings are a function of changes in investment spreads and interest movements and not changes in credit quality. Management expects to recover the entire amortized cost basis of these securities.

As of March 31, 2014, management does not intend to sell securities that are in unrealized loss positions and it is not more likely than not that the Company will be required to sell these securities before recovery of the amortized cost basis. Therefore, management does not consider any investment to be other-than-temporarily impaired at March 31, 2014.

Included in other assets is $11.8 million of Federal Home Loan Bank and Federal Reserve Bank stock stated at par value. At March 31, 2014, the Company has not identified events or changes in circumstances which may have a significant adverse effect on the fair value of the $11.8 million of cost method investment securities.