2. INVESTMENTS

Investment securities available for sale are summarized as follows (in thousands):

At June 30, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

State, county, and municipal securities	$	34,543	$	1,464	$	3	$	36,004
Mortgage-backed securities	102,846		591		2,298		101,139
Corporate securities	9,776		177		—		9,953
Totals	$	147,165	$	2,232	$	2,301	$	147,096

At December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

State, county, and municipal securities	$	36,977	$	2,887	$	—	$	39,864
Mortgage-backed securities	79,025		1,357		134		80,248
Corporate securities	9,746		135		127		9,754
Totals	$	125,748	$	4,379	$	261	$	129,866

Investment securities held to maturity are summarized as follows (in thousands):

At June 30, 2013	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

State, county, and municipal securities	$	510	$	7	$	—	$	517

At December 31, 2012	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

State, county, and municipal securities	$	1,356	$	24	$	—	$	1,380

The amortized costs and fair values of investment securities at June 30, 2013, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with and without call or prepayment penalties (in thousands).

	Available for Sale				Held to Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value

Due in one year or less	$	—	$	—	$	—	$	—
Due after one year through five years	11,751		12,011		510		517
Due after five years through ten years	27,746		28,536		—		—
Due after ten years	107,668		106,549		—		—

	$	147,165	$	147,096	$	510	$	517

Securities with carrying values of $106,612,000 and $82,428,000 as of June 30, 2013 and December 31, 2012, respectively, were pledged to secure public deposits, FHLB advances and a $13.8 million line of credit at the Federal Reserve Bank discount window and for other purposes as required by law.

Proceeds from the sale of securities were $2,268,000 and $3,955,000 for the six months ended June 30, 2013 and June 30, 2012, respectively. Gross realized gains on sales of securities were $244,000 and $335,000 for the six months ended June 30, 2013 and 2012, respectively. Proceeds from the sale of securities were $1,186,000 and $599,000 for the three months ended June 30, 2013 and June 30, 2012, respectively. For the three month period ended June 30, 2013 and 2012, gross realized gains on securities were $103,000 and $13,000, respectively. There were no gross realized losses on sales of securities for the three month and six month periods ended June 30, 2013 and 2012, respectively.

The Company’s investment portfolio consists principally of obligations of the United States, its agencies, or its corporations, general obligation and revenue municipals and corporate securities. In the opinion of management, there is no concentration of credit risk in its investment portfolio. The company places its deposits and correspondent accounts with and sells its federal funds to high quality institutions. Management believes credit risk associated with correspondent accounts is not significant.

The following tables show investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at June 30, 2013 and December 31, 2012. Except as explicitly identified below, all unrealized losses on investment securities are considered by management to be temporarily impaired given the credit ratings on these investment securities and the short duration of the unrealized loss (in thousands).

At June 30, 2013

Securities Available for Sale

	Securities in a loss position for					Securities in a loss position for
	less than twelve months					twelve months or more				Total
			Unrealized					Unrealized				Unrealized
	Fair value		losses			Fair value		losses		Fair value		losses
Mortgage-backed securities	$	69,278	$	(2,298	)	$	—	$	—	$	69,278	$	(2,298	)

Municipal securities	1,442		(3		)	—		—		1,442		(3		)

Total	$	70,720	$	(2,301	)	$	—	$	—	$	70,720	$	(2,301	)

Securities Held to Maturity

There were no securities classified as held to maturity in an unrealized loss position at June 30, 2013.

At December 31, 2012

Securities Available for Sale

	Securities in a loss position for					Securities in a loss position for
	less than twelve months					twelve months or more					Total
			Unrealized					Unrealized					Unrealized
	Fair value		losses			Fair value		losses			Fair value		losses

Mortgage-backed securities	$	17,834	$	(134	)	$	—	$	—		$	17,834	$	(134	)

Corporate	1,985		(16		)	3,889		(111		)	5,874		(127		)

Total	$	19,819	$	(150	)	$	3,889	$	(111	)	$	23,708	$	(261	)

Securities Held to Maturity

There were no securities classified as held to maturity in an unrealized loss position at December 31, 2012.

The Company’s available for sale portfolio had no investment securities at June 30, 2013 that were in an unrealized loss position for longer than twelve months. At December 31, 2012, the Company had two investment securities that were in an unrealized loss position for longer than twelve months. The Company reviews these securities for other-than-temporary impairment on a quarterly basis by monitoring their credit support and coverage, constant payment of the contractual principal and interest, loan to value and delinquencies ratios.

We use prices from third party pricing services and, to a lesser extent, indicative (non-binding) quotes from third party brokers, to measure fair value of our investment securities. Fair values of the investment securities portfolio could decline in the future if the underlying performance of the collateral for collateralized mortgage obligations or other securities deteriorates and the levels do not provide sufficient protection for contractual principal and interest. As a result, there is risk that an other-than-temporary impairment may occur in the future particularly in light of the current economic environment.

As of the date of its evaluation, the Company did not intend to sell and has the ability to hold these securities and it is more likely than not that the Company will not be required to sell those securities before recovery of its amortized cost or the security matures. The Company believes, based on industry analyst reports and credit ratings, that it will continue to receive scheduled interest payments as well as the entire principal balance, and the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary.