Note 4 - Investment Securities

The amortized cost and estimated fair value of investment securities available for sale are as follows:

As of September 30, 2013


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
U.S. Treasury securities	$	102	$	—	$	(1	)	$	101
Obligations of U.S. government agencies		92,128		247		(1431	)		90,944
Obligations of state & political subdivisions		40,273		115		(323	)		40,065
Mortgage-backed securities		123,161		1,909		(787	)		124,283
Collateralized mortgage obligations		47,412		268		(357	)		47,323
Other investments		16,954		248		(1	)		17,201

Total	$	320,030	$	2,787	$	(2,900	)	$	319,917

As of December 31, 2012


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Obligations of U.S. government agencies	$	73,183	$	796	$	(107	)	$	73,872
Obligations of state & political subdivisions		30,244		199		(59	)		30,384
Mortgage-backed securities		128,537		3,302		(13	)		131,826
Collateralized mortgage obligations		62,116		622		(35	)		62,703
Other investments		17,667		162		—			17,829

Total	$	311,747	$	5,081	$	(214	)	$	316,614

The following tables detail the amount of investment securities available for sale that were in an unrealized loss position as of the dates indicated:

As of September 30, 2013:


(dollars in thousands)	Less than 12 Months					12 Months or Longer					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury securities	$	101	$	(1	)	$	—	$	—		$	101	$	(1	)
Obligations of U.S. Government agencies		53,631		(1,431	)		—		—			53,631		(1,431	)
Obligations of state & political subdivisions		19,108		(310	)		515		(13	)		19,623		(323	)
Mortgage-backed securities		43,210		(787	)		—		—			43,210		(787	)
Collateralized mortgage obligations		20,853		(353	)		1,091		(4	)		21,944		(357	)
Other investments		1,899		(1	)		—		—			1,899		(1	)

Total	$	138,802	$	(2,883	)	$	1,606	$	(17	)	$	140,408	$	(2,900	)

As of December 31, 2012:


(dollars in thousands)	Less than 12 Months					12 Months or Longer				Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Obligations of U.S. Government agencies	$	20,032	$	(107	)	$	—	$	—	$	20,032	$	(107	)
Obligations of state & political subdivisions		10,752		(59	)		—		—		10,752		(59	)
Mortgage-backed securities		12,602		(13	)		—		—		12,602		(13	)
Collateralized mortgage obligations		10,040		(35	)		—		—		10,040		(35	)

Total	$	53,426	$	(214	)	$	—	$	—	$	53,426	$	(214	)

Management evaluates the Corporation’s investment securities available for sale that are in an unrealized loss position in order to determine if the decline in market value is other than temporary. The available for sale investment portfolio includes debt securities issued by U.S. Government agencies, U.S. Government-sponsored agencies, state and local municipalities and other issuers. All fixed income investment securities in the Corporation’s available for sale investment portfolio are rated as investment grade. Factors considered in the evaluation include the current economic climate, the length of time and the extent to which the fair value has been below cost, interest rates and the bond rating of each security. The unrealized losses presented in the tables above are temporary in nature and are primarily related to market interest rates rather than the underlying credit quality of the issuers. The Corporation does not believe that these unrealized losses are other-than-temporary. The Corporation does not intend to sell these securities prior to their maturity or the recovery of their cost bases and believes that it is more likely than not that it will not have to sell these securities prior to their maturity or the recovery of their cost bases.

As of September 30, 2013 and December 31, 2012, securities having market values of $97.4 million and $108.7 million, respectively, were specifically pledged as collateral for public funds, trust deposits, the Federal Reserve Bank of Philadelphia discount window program, Federal Home Loan Bank of Pittsburgh (“FHLB”) borrowings and other purposes. The FHLB has a blanket lien on non-pledged, mortgage-related loans and securities as part of the Bank’s borrowing agreement with the FHLB.

The amortized cost and fair value of investment securities available for sale as of September 30, 2013 and December 31, 2012, by contractual maturity, are shown below:


	September 30, 2013				December 31, 2012
*(dollars in thousands)*	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	9,046	$	9,049	$	10,571	$	10,590
Due after one year through five years		53,240		53,248		38,056		38,171
Due after five years through ten years		59,537		58,144		40,635		40,714
Due after ten years		14,291		14,281		18,415		19,044
Mortgage-related securities*		170,573		171,606		190,653		194,529

Total maturing investments		306,687		306,328		298,330		303,048
Bond mutual funds and other non-maturity investments		13,343		13,589		13,417		13,566

Total	$	320,030	$	319,917	$	311,747	$	316,614

*	Expected maturities of mortgage-related securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

As of September 30, 2013 and December 31, 2012, the Corporation’s investment securities held in trading accounts were comprised of a deferred compensation trust which is invested in marketable securities whose diversification is at the discretion of the deferred compensation plan participants.