SECURITIES AVAILABLE FOR SALE

At September 30, 2014 and December 31, 2013, the investment securities portfolio was comprised exclusively of securities classified as “available for sale,” resulting in investment securities being carried at fair value. The amortized cost and fair values of investment securities available for sale at September 30, 2014 and December 31, 2013 were:



(Dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2014
U.S. Government Agencies	$	24,216	$	15	$	55	$	24,176
States and political subdivisions	52,658		726		1,370		52,014
U.S. Government Sponsored Enterprises (GSE) residential mortgage-backed securities	178,817		1,456		487		179,786
GSE residential collateralized mortgage obligations (CMOs)	81,584		788		388		81,984
GSE commercial CMOs	65,156		466		1,082		64,540
Total debt securities	402,431		3,451		3,382		402,500
Equity securities	50		13		0		63
Totals	$	402,481	$	3,464	$	3,382	$	402,563
December 31, 2013
U.S. Government Agencies	$	25,610	$	34	$	193	$	25,451
U.S. Government Sponsored Enterprises (GSE)	14,431		5		722		13,714
States and political subdivisions	75,494		417		4,367		71,544
GSE residential mortgage-backed securities	198,449		895		725		198,619
GSE residential collateralized mortgage obligations (CMOs)	40,502		251		221		40,532
GSE commercial CMOs	59,812		0		2,798		57,014
Total debt securities	414,298		1,602		9,026		406,874
Equity securities	50		19		0		69
Totals	$	414,348	$	1,621	$	9,026	$	406,943

The following table shows gross unrealized losses and fair value of the Company’s available for sale securities that are not deemed to be other-than-temporarily impaired, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position at September 30, 2014 and December 31, 2013:



	Less Than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
September 30, 2014
U.S. Government Agencies	$	3,743	$	5	$	15,195	$	50	$	18,938	$	55
States and political subdivisions	0		0		35,529		1,370		35,529		1,370
GSE residential mortgage-backed securities	80,161		487		0		0		80,161		487
GSE residential collateralized mortgage obligations (CMOs)	28,728		388		0		0		28,728		388
GSE commercial CMOs	9,862		82		29,651		1,000		39,513		1,082
Total temporarily impaired securities	$	122,494	$	962	$	80,375	$	2,420	$	202,869	$	3,382
December 31, 2013
U.S. Government Agencies	$	17,454	$	193	$	0	$	0	$	17,454	$	193
U.S. Government Sponsored Enterprises (GSE)	12,049		722		0		0		12,049		722
States and political subdivisions	53,606		4,367		0		0		53,606		4,367
GSE residential mortgage-backed securities	125,468		716		7,447		9		132,915		725
GSE residential collateralized mortgage obligations (CMOs)	14,033		220		44		1		14,077		221
GSE commercial CMOs	38,298		1,248		18,716		1,550		57,014		2,798
Total temporarily impaired securities	$	260,908	$	7,466	$	26,207	$	1,560	$	287,115	$	9,026

The Company had 47 securities and 77 securities at September 30, 2014 and December 31, 2013 in which the amortized cost exceeds their values, as discussed below.

U.S. Agencies and Government Sponsored Enterprises (GSE). Thirty-one U.S. Agencies and GSE securities, including mortgage-backed securities and collateralized mortgage obligations, have amortized costs which exceed their fair values, 22 of which are in the less than 12 months category at September 30, 2014. At December 31, 2013, the Company had 46 U.S. Government Agencies and GSE securities, including mortgage-backed and collateralized mortgage obligations with unrealized losses, 38 GSE securities have amortized costs which exceed their fair values for less than 12 months, and eight have amortized costs which exceed their fair values for more than 12 months. These unrealized losses have been caused by a rise in interest rates from the time the securities were purchased. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the par value basis of the investments. Because, at period end, the Company did not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2014 or at December 31, 2013.

State and Political Subdivisions. Sixteen state and political subdivision securities have amortized costs which exceeded their fair value for more than 12 months at September 30, 2014. At December 31, 2013, 31 state and political subdivision securities have an amortized cost which exceeds their fair value for less than 12 months. These unrealized losses have been caused by a rise in interest rates from the time the securities were purchased. Management considers the investment rating, the state of the issuer of the security and other credit support in determining whether the security is other-than-temporarily impaired. Because, at period end, the Company did not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired at September 30, 2014 or at December 31, 2013.

The amortized cost and fair values of securities available for sale at September 30, 2014 by contractual maturity are shown below. Contractual maturities will differ from expected maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	Available for Sale
(Dollars in thousands)	Amortized Cost		Fair Value
Due in one year or less	$	365	$	366
Due after one year through five years	15		15
Due after five years through ten years	16,953		16,854
Due after ten years	59,541		58,955
Mortgage-backed securities and collateralized mortgage obligations	325,557		326,310
Total debt securities	402,431		402,500
Equity securities	50		63
	$	402,481	$	402,563

Gross gains on the sales of securities were $515,000 and $160,000 for the three months ended September 30, 2014 and 2013. Gross losses on securities available for sale were $46,000 and $3,000 for the three months ended September 30, 2014 and 2013. Gross gains on the sales of securities were $2,034,000 and $419,000 for the nine months ended September 30, 2014 and 2013. Gross losses on securities available for sale were $366,000 and $140,000 for the nine months ended September 30, 2014 and 2013.

Securities with a fair value of $252,630,000 and $241,911,000 at September 30, 2014 and December 31, 2013 were pledged to secure public funds and for other purposes as required or permitted by law.