5. Securities

3 Months Ended

Mar. 31, 2014

Available-for-sale Securities [Abstract]

Securities

NOTE5. SECURITIES

The amortized cost, unrealized gains, unrealized losses and estimated fair values of securities at March 31, 2014, December 31, 2013, and March 31, 2013 are summarized as follows:

	March 31, 2014
	Amortized		Unrealized				Estimated
Dollars in thousands	Cost		Gains		Losses		Fair Value
Available for Sale
Taxable debt securities
U. S. Government agencies
and corporations	$	27,658	$	736	$	78	$	28,316
Residential mortgage-backed securities:
Government-sponsored agencies		142,644		2,230		1,060		143,814
Nongovernment-sponsored entities		10,429		377		19		10,787
State and political subdivisions
General obligations		5,681		7		209		5,479
Water and sewer revenues		2,389		8		60		2,337
Other revenues		3,021		-		106		2,915
Corporate debt securities		3,977		25		4		3,998
Total taxable debt securities		195,799		3,383		1,536		197,646
Tax-exempt debt securities
State and political subdivisions
General obligations		45,761		1,109		504		46,366
Water and sewer revenues		14,033		64		110		13,987
Lease revenues		9,079		47		168		8,958
Lottery/casino revenues		4,428		102		79		4,451
Other revenues		10,334		115		69		10,380
Total tax-exempt debt securities		83,635		1,437		930		84,142
Equity securities		77		-		-		77
Total available for sale securities	$	279,511	$	4,820	$	2,466	$	281,865

	December 31, 2013
	Amortized		Unrealized				Estimated
Dollars in thousands	Cost		Gains		Losses		Fair Value
Available for Sale
Taxable debt securities
U. S. Government agencies
and corporations	$	29,100	$	675	$	118	$	29,657
Residential mortgage-backed securities:
Government-sponsored agencies		155,270		2,019		1,573		155,716
Nongovernment-sponsored entities		11,519		321		21		11,819
State and political subdivisions
General obligations		9,317		-		475		8,842
Water and sewer revenues		3,229		-		114		3,115
Other revenues		4,051		4		142		3,913
Corporate debt securities		3,973		24		31		3,966
Total taxable debt securities		216,459		3,043		2,474		217,028
Tax-exempt debt securities
State and political subdivisions
General obligations		41,156		675		1,154		40,677
Water and sewer revenues		8,996		15		306		8,705
Lease revenues		7,956		-		391		7,565
Lottery/casino revenues		4,443		63		169		4,337
Other revenues		10,527		55		191		10,391
Total tax-exempt debt securities		73,078		808		2,211		71,675
Equity securities		77		-		-		77
Total available for sale securities	$	289,614	$	3,851	$	4,685	$	288,780

	March 31, 2013
	Amortized		Unrealized				Estimated
Dollars in thousands	Cost		Gains		Losses		Fair Value
Available for Sale
Taxable debt securities:
U. S. Government agencies
and corporations	$	30,782	$	1,035	$	-	$	31,817
Residential mortgage-backed securities:
Government-sponsored agencies		142,534		3,444		647		145,331
Nongovernment-sponsored agencies		13,691		483		83		14,091
State and political subdivisions		13,889		122		93		13,918
Corporate debt securities		2,962		33		18		2,977
Total taxable debt securities		203,858		5,117		841		208,134
Tax-exempt debt securities:
State and political subdivisions		68,945		3,527		271		72,201
Residential mortgage-backed securities:
Government-sponsored agencies		2,642		-		-		2,642
Total tax-exempt debt securities		71,587		3,527		271		74,843
Equity securities		77		-		-		77
Total available for sale securities	$	275,522	$	8,644	$	1,112	$	283,054

The below information is relative to the five states where issuers with the highest volume of state and political subdivision securities held in our portfolio are located. We own no such securities of any single issuer which we deem to be a concentration.

	March 31, 2014
	Amortized		Unrealized				Estimated
Dollars in thousands	Cost		Gains		Losses		Fair Value
California	$	16,625	$	207	$	119	$	16,713
West Virginia		13,642		203		109		13,736
Illinois		9,392		75		238		9,229
Texas		6,262		313		78		6,497
Pennsylvania		5,906		25		71		5,860

Management performs pre-purchase and ongoing analysis to confirm that all investment securities meet applicable credit quality standards. Prior to July 1, 2013, we principally used credit ratings from Nationally Recognized Statistical Rating Organizations (“NRSROs”) to support analyses of our portfolio of securities issued by state and political subdivisions, as we generally do not purchase securities that are rated below the six highest NRSRO rating categories. Beginning July 1, 2013, in addition to considering a security’s NRSRO rating, we now also assess or confirm through an internal review of an issuer’s financial information and other applicable information that: 1) the issuer’s risk of default is low; 2) the characteristics of the issuer’s demographics and economic environment are satisfactory; and 3) the issuer’s budgetary position and stability of tax or other revenue sources are sound.

The maturities, amortized cost and estimated fair values of securities at March 31, 2014, are summarized as follows:

		Available for Sale
		Amortized		Estimated
Dollars in thousands		Cost		Fair Value
Due in one year or less	$	51,630	$	52,344
Due from one to five years		95,253		96,145
Due from five to ten years		33,742		34,102
Due after ten years		98,809		99,197
Equity securities		77		77
	$	279,511	$	281,865

The proceeds from sales, calls and maturities of available for sale securities, including principal payments received on mortgage-backed obligations, and the related gross gains and losses realized, for the three months ended March 31, 2014 are as follows:

	Proceeds from						Gross realized
			Calls and		Principal
Dollars in thousands	Sales		Maturities		Payments		Gains		Losses
Securities available for sale	$	18,157	$	2,051	$	8,782	$	370	$	392

During the three months ended March 31, 2014 and 2013, we recorded other-than-temporary impairment losses on residential mortgage-backed nongovernment sponsored entity securities as follows:

	Three Months Ended March 31,
Dollars in thousands	2014		2013
Total other-than-temporary impairment losses	$	-	$	(91	)
Portion of loss recognized in
other comprehensive income		-		37
Net impairment losses recognized in earnings	$	-	$	(54	)

Activity related to the credit component recognized on debt securities available for sale for which a portion of other-than-temporary impairment was recognized in other comprehensive income for the three months ended March 31, 2014 is as follows:

	Three Months Ended
	March 31, 2014
Dollars in thousands	Total
Beginning Balance	$	(3,021	)
Additions for the credit component on debt securities in which
other-than-temporary impairment was not previously recognized		-
Securities sold during the period		-
Ending Balance	$	(3,021	)

We held 110 available for sale securities having an unrealized loss at March 31, 2014. We do not intend to sell these securities, and it is more likely than not that we will not be required to sell these securities before recovery of their amortized bases. We believe that this decline in value is primarily attributable to the lack of market liquidity and to changes in market interest rates and not due to credit quality. Accordingly, no additional other-than-temporary impairment charge to earnings is warranted at this time.

Provided below is a summary of securities available for sale which were in an unrealized loss position at March31, 2014 and December 31, 2013, including debt securities for which a portion of other-than-temporary impairment has been recognized in other comprehensive income.

	March 31, 2014
	Less than 12 months					12 months or more					Total
	Estimated		Unrealized			Estimated		Unrealized			Estimated		Unrealized
Dollars in thousands		Fair Value		Loss			Fair Value		Loss			Fair Value		Loss
Temporarily impaired securities
Taxable debt securities
U. S. Government agencies
and corporations	$	7,256	$	(78	)	$	-	$	-		$	7,256	$	(78	)
Residential mortgage-backed securities:
Government-sponsored agencies		33,536		(763	)		12,566		(297	)		46,102		(1,060	)
Nongovernment-sponsored entities		2,162		(10	)		409		(7	)		2,571		(17	)
State and political subdivisions:
General obligations		4,026		(135	)		1,162		(74	)		5,188		(209	)
Water and sewer revenues		250		(6	)		1,577		(54	)		1,827		(60	)
Other revenues		2,915		(106	)		-		-			2,915		(106	)
Corporate debt securities		1,996		(4	)		-		-			1,996		(4	)
Tax-exempt debt securities
State and political subdivisions:
General obligations		17,901		(346	)		3,423		(158	)		21,324		(504	)
Water and sewer revenues		6,301		(85	)		432		(25	)		6,733		(110	)
Lease revenues		5,121		(65	)		2,083		(103	)		7,204		(168	)
Lottery/casino revenues		-		-			1,659		(79	)		1,659		(79	)
Other revenues		3,072		(69	)		-		-			3,072		(69	)
Total temporarily impaired securities		84,536		(1,667	)		23,311		(797	)		107,847		(2,464	)
Other-than-temporarily impaired securities
Taxable debt securities
Residential mortgage-backed securities:
Nongovernment-sponsored entities		-		(2	)		-		-			-		(2	)
Total other-than-temporarily impaired securities		-		(2	)		-		-			-		(2	)
Total	$	84,536	$	(1,669	)	$	23,311	$	(797	)	$	107,847	$	(2,466	)

	December 31, 2013
	Less than 12 months					12 months or more					Total
	Estimated		Unrealized			Estimated		Unrealized			Estimated		Unrealized
Dollars in thousands	Fair Value		Loss			Fair Value		Loss			Fair Value		Loss
Temporarily impaired securities
Taxable debt securities
U. S. Government agencies
and corporations	$	10,868	$	(118	)	$	-	$	-		$	10,868	$	(118	)
Residential mortgage-backed securities:
Government-sponsored agencies		55,035		(1,385	)		13,249		(188	)		68,284		(1,573	)
Nongovernment-sponsored entities		2,407		(12	)		565		(7	)		2,972		(19	)
State and political subdivisions:
General obligations		4,505		(264	)		2,337		(211	)		6,842		(475	)
Water and sewer revenues		1,309		(31	)		1,554		(83	)		2,863		(114	)
Other revenues		3,142		(142	)		-		-			3,142		(142	)
Corporate debt securities		2,968		(31	)		-		-			2,968		(31	)
Tax-exempt debt securities
State and political subdivisions:
General obligations		19,603		(997	)		2,102		(157	)		21,705		(1,154	)
Water and sewer revenues		5,643		(224	)		983		(82	)		6,626		(306	)
Lease revenues		6,112		(349	)		958		(42	)		7,070		(391	)
Lottery/casino revenues		2,720		(132	)		554		(37	)		3,274		(169	)
Other revenues		8,815		(191	)		-		-			8,815		(191	)
Total temporarily impaired securities		123,127		(3,876	)		22,302		(807	)		145,429		(4,683	)
Other-than-temporarily impaired securities
Taxable debt securities
Residential mortgage-backed securities:
Nongovernment-sponsored entities		-		-			1		(2	)		1		(2	)
Total other-than-temporarily impaired securities		-		-			1		(2	)		1		(2	)
Total	$	123,127	$	(3,876	)	$	22,303	$	(809	)	$	145,430	$	(4,685	)