Note 4 – Investments

The amortized cost and fair value of investment securities at September 30, 2013 and December 31, 2012 were as follows (in thousands):

		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
September 30, 2013	Cost	Gains	Losses	Value
Available-for-sale securities:
U.S. agency securities	$ 146,649	$ 890	$ (1,607)	$ 145,932
U.S. treasury securities	11,850	-	(370)	11,480
Obligations of state and
political subdivisions	95,608	2,594	(1,038)	97,164
Corporate obligations	20,039	346	(476)	19,909
Mortgage-backed securities in
government sponsored entities	41,869	789	(190)	42,468
Equity securities in financial
institutions	803	696	-	1,499
Total available-for-sale securities	$ 316,818	$ 5,315	$ (3,681)	$ 318,452

December 31, 2012
Available-for-sale securities:
U.S. agency securities	$ 125,125	$ 2,150	$ (41)	$ 127,234
U.S. treasury securities	4,922	25	-	4,947
Obligations of state and
political subdivisions	95,288	5,721	(134)	100,875
Corporate obligations	21,699	452	(42)	22,109
Mortgage-backed securities in
government sponsored entities	52,072	1,728	(127)	53,673
Equity securities in financial institutions	912	502	-	1,414
Total available-for-sale securities	$ 300,018	$ 10,578	$ (344)	$ 310,252

The following table shows the Company’s gross unrealized losses and fair value of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time, which individual securities have been in a continuous unrealized loss position, at September 30, 2013 and December 31, 2012 (in thousands). As of September 30, 2013, the Company owned 75 securities whose fair value was less than their cost basis.

September 30, 2013	Less than Twelve Months		Twelve Months or Greater		Total
		Gross		Gross		Gross
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
	Value	Losses	Value	Losses	Value	Losses
U.S. agency securities	$ 80,162	$ (1,607)	$ -	$ -	$ 80,162	$ (1,607)
U.S. treasury securities	11,480	(370)	-	-	11,480	(370)
Obligations of state and
political subdivisions	20,396	(978)	1,642	(60)	22,038	(1,038)
Corporate obligations	12,009	(476)	-	-	12,009	(476)
Mortgage-backed securities in
government sponsored entities	14,672	(176)	827	(14)	15,499	(190)
Total securities	$ 138,719	$ (3,607)	$ 2,469	$ (74)	$ 141,188	$ (3,681)

December 31, 2012
U.S. agency securities	$ 6,016	$ (41)	$ -	$ -	$ 6,016	$ (41)
Obligations of states and
political subdivisions	7,981	(134)	-	-	7,981	(134)
Corporate obligations	10,972	(42)	-	-	10,972	(42)
Mortgage-backed securities in
government sponsored entities	8,651	(127)	-	-	8,651	(127)
Total securities	$ 33,620	$ (344)	$ -	$ -	$ 33,620	$ (344)

As of September 30, 2013, the Company’s investment securities portfolio contained unrealized losses on agency securities issued or backed by the full faith and credit of the United States government or are generally viewed as having the implied guarantee of the U.S. government, U.S treasuries, obligations of states and political subdivisions, corporate obligations and mortgage backed securities in government sponsored entities. For fixed maturity investments management considers whether the present value of cash flows expected to be collected are less than the security’s amortized cost basis (the difference defined as the credit loss), the magnitude and duration of the decline, the reasons underlying the decline and the Company’s intent to sell the security or whether it is more likely than not that the Company would be required to sell the security before its anticipated recovery in market value, to determine whether the loss in value is other than temporary. Once a decline in value is determined to be other than temporary, if the Company does not intend to sell the security, and it is more likely than not that it will not be required to sell the security before recovery of the security’s amortized cost basis, the charge to earnings is limited to the amount of credit loss. Any remaining difference between fair value and amortized cost (the difference defined as the non-credit portion) is recognized in other comprehensive income, net of applicable taxes. Otherwise, the entire difference between fair value and amortized cost is charged to earnings. For equity securities where the fair value has been significantly below cost for one year, the Company’s policy is to recognize an impairment loss unless sufficient evidence is available that the decline is not other than temporary and a recovery period can be predicted. The Company has concluded that any impairment of its investment securities portfolio outlined in the above table is not other than temporary and is the result of interest rate changes, sector credit rating changes, or company-specific rating changes that are not expected to result in the non-collection of principal and interest during the period.

Proceeds from sales of securities available-for-sale for the nine months ended September 30, 2013 and 2012 were $15,894,000 and $18,363,000, respectively. For the three months ended September 30, 2013 and 2012, there were sales of $121,000 and $1,709,000, respectively, of available-for-sale securities. The gross gains and losses were as follows (in thousands):

	Three Months Ended		Nine Months Ended
	September30,		September30,
	2013	2012	2013	2012
Gross gains	$ 91	$ 240	$ 525	$ 561
Gross losses	-	-	(140)	-
Net gains	$ 91	$ 240	$ 385	$ 561

Investment securities with an approximate carrying value of $205.6 million and $193.3 million at September 30, 2013 and December 31, 2012, respectively, were pledged to secure public funds and certain other deposits.

Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The amortized cost and fair value of debt securities at September 30, 2013, by contractual maturity, are shown below (in thousands):

	Amortized
	Cost	Fair Value
Available-for-sale debt securities:
Due in one year or less	$ 12,531	$ 12,626
Due after one year through five years	104,250	104,486
Due after five years through ten years	84,875	84,107
Due after ten years	114,359	115,734
Total	$ 316,015	$ 316,953