Note 5 — Investment Securities

The following is the amortized cost and fair value of investment securities held to maturity:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollars in thousands)	Cost		Gains		Losses			Value
September 30, 2013:
State and municipal obligations	$	12,426	$	579	$	(13	)	$	12,992

December 31, 2012:
State and municipal obligations	$	15,440	$	1,113	$	—		$	16,553

September 30, 2012:
State and municipal obligations	$	16,568	$	1,182	$	—		$	17,750

The following is the amortized cost and fair value of investment securities available for sale:

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(Dollars in thousands)	Cost		Gains		Losses			Value
September 30, 2013:
Government-sponsored entities debt *	$	107,906	$	282	$	(5,515	)	$	102,673
State and municipal obligations	144,359		2,161		(3,942		)	142,578
Mortgage-backed securities **	376,030		5,027		(2,431		)	378,626
Corporate stocks	2,661		263		(3		)	2,921
	$	630,956	$	7,733	$	(11,891	)	$	626,798
December 31, 2012:
Government-sponsored entities debt *	$	87,584	$	965	$	(31	)	$	88,518
State and municipal obligations	147,201		5,647		(49		)	152,799
Mortgage-backed securities **	285,800		7,489		(102		)	293,187
Corporate stocks	241		139		(1		)	379
	$	520,826	$	14,240	$	(183	)	$	534,883
September 30, 2012:
Government-sponsored entities debt *	$	70,654	$	892	$	(1	)	$	71,545
State and municipal obligations	134,813		5,264		(44		)	140,033
Mortgage-backed securities **	256,398		7,654		(82		)	263,970
FHLMC preferred stock***	148		—		(46		)	102
Corporate stocks	240		133		—			373
	$	462,253	$	13,943	$	(173	)	$	476,023

* - Government-sponsored entities holdings are comprised of debt securities offered by Federal Home Loan Mortgage Corporation (“FHLMC”) or Freddie Mac, Federal National Mortgage Association (“FNMA”) or Fannie Mae, FHLB, and Federal Farm Credit Banks (“FFCB”).

** - All of the mortgage-backed securities are issued by government-sponsored entities; there are no private-label holdings.

*** Securities issued by the Federal Home Loan Mortgage Corporation (“FHLMC” or “Freddie Mac”).

The following is the amortized cost and fair value of other investment securities:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gains		Losses		Value
September 30, 2013:
Federal Home Loan Bank stock	$	10,352	$	—	$	—	$	10,352
Investment in unconsolidated subsidiaries	3,034		—		—		3,034
	$	13,386	$	—	$	—	$	13,386
December 31, 2012:
Federal Home Loan Bank stock	$	8,126	$	—	$	—	$	8,126
Investment in unconsolidated subsidiaries	1,642		—		—		1,642
	$	9,768	$	—	$	—	$	9,768
September 30, 2012:
Federal Home Loan Bank stock	$	6,664	$	—	$	—	$	6,664
Investment in unconsolidated subsidiaries	1,332		—		—		1,332
	$	7,996	$	—	$	—	$	7,996

The Company has determined that the investment in FHLB stock is not other than temporarily impaired as of September 30, 2013 and ultimate recoverability of the par value of these investments is probable.

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

	Securities				Securities
	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
(Dollars in thousands)	Cost		Value		Cost		Value
Due in one year or less	$	750	$	762	$	5,411	$	5,437
Due after one year through five years	1,075		1,123		13,255		13,570
Due after five years through ten years	8,658		9,042		221,162		219,392
Due after ten years	1,943		2,065		391,128		388,399
	$	12,426	$	12,992	$	630,956	$	626,798

Information pertaining to the Company’s securities with gross unrealized losses at September 30, 2013, December 31, 2012 and September 30, 2012, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position is as follows:

	Less Than Twelve Months				Twelve Months or More
	Gross				Gross
	Unrealized		Fair		Unrealized		Fair
(Dollars in thousands)	Losses		Value		Losses		Value
September 30, 2013:
Securities Held to Maturity
State and municipal obligations	$	13	$	488	$	—	$	—

Securities Available for Sale
Government-sponsored entities debt	$	5,515	$	85,500	$	—	$	—
State and municipal obligations	3,942		88,497		—		—
Mortgage-backed securities	2,404		112,833		27		2,225
Corporate Stocks	3		7		—		—
	$	11,864	$	286,837	$	27	$	2,225

December 31, 2012:
Securities Held to Maturity
State and municipal obligations	$	—	$	—	$	—	$	—

Securities Available for Sale
Government-sponsored entities debt	$	31	$	4,963	$	—	$	—
State and municipal obligations	49		9,602		—		—
Mortgage-backed securities	102		13,709		—		—
Corporate stocks	1		9		—		—
	$	183	$	28,283	$	—	$	—

September 30, 2012:
Securities Held to Maturity
State and municipal obligations	$	—	$	—	$	—	$	—

Securities Available for Sale
Government-sponsored entities debt	$	1	$	3,979	$	—	$	—
State and municipal obligations	44		5,983		—		—
Mortgage-backed securities	82		18,849		—		—
FHLMC preferred stock	46		102		—		—
	$	173	$	28,913	$	—	$	—

Management evaluates securities for other-than-temporary impairment (“OTTI”) on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the financial condition and near-term prospects of the issuer, (2) the outlook for receiving the contractual cash flows of the investments, (3) the length of time and the extent to which the fair value has been less than cost, (4) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value or for a debt security whether it is more-likely-than-not that the Company will be required to sell the debt security prior to recovering its fair value, and (5) the anticipated outlook for changes in the general level of interest rates. All securities available for sale in an unrealized loss position as of September 30, 2013 continue to perform as scheduled. As part of the Company’s evaluation of its intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, the Company considers its investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. The Company does not currently intend to sell the securities within the portfolio and it is not more-likely-than-not that the Company will be required to sell the debt securities; therefore, management does not consider these investments to be other-than-temporarily impaired at September 30, 2013. Management continues to monitor all of these securities with a high degree of scrutiny. There can be no assurance that the Company will not conclude in future periods that conditions existing at that time indicate some or all of these securities may be sold or are other than temporarily impaired, which would require a charge to earnings in such periods.