(3) Securities

The amortized cost, unrealized gains and losses, and fair value of securities available for sale follow:

	Amortized		Unrealized
(in thousands)	cost		gains		losses		Fair value
September 30, 2013
U.S. Treasury and other U.S. government obligations	$	40,000	$	—	$	—	$	40,000
Government sponsored enterprise obligations	124,621		1,937		1,484		125,074
Mortgage-backed securities	165,636		2,156		3,151		164,641
Obligations of states and political subdivisions	70,241		1,562		455		71,348

Total securities available for sale	$	400,498	$	5,655	$	5,090	$	401,063

December 31, 2012
U.S. Treasury and other U.S. government obligations	$	98,000	$	—	$	—	$	98,000
Government sponsored enterprise obligations	83,015		2,789		56		85,748
Mortgage-backed securities	137,407		3,594		120		140,881
Obligations of states and political subdivisions	57,961		2,844		12		60,793
Trust preferred securities of financial institutions	1,000		18		—		1,018

Total securities available for sale	$	377,383	$	9,245	$	188	$	386,440

In the second quarter of 2013, Bancorp sold obligations of state and political subdivisions with a total par value of $385,000, generating a loss of $5,000. These securities, acquired in the Oldham transaction, were sold in the ordinary course of investment management because they did not meet Bancorp’s current investment strategy. Management has the intent and ability to hold all remaining investment securities available for sale for the foreseeable future. No securities were sold in 2012.

There were no securities held to maturity as of September 30, 2013 or December 31, 2012.

In addition to the available for sale portfolio, investment securities held by Bancorp include certain securities which are not readily marketable, and are carried at cost. This category includes holdings of Federal Home Loan Bank of Cincinnati (FHLB) stock which are required for access to FHLB borrowing availability, and are classified as restricted securities. Other securities consist of a Community Reinvestment Act (CRA) investment which matures in 2014, which is fully collateralized with a government agency security of similar duration, and holdings of stock in a correspondent bank Bancorp utilizes for various services. Bancorp reviewed the investment in FHLB stock as of September 30, 2013, considering the FHLB equity position, its continuance of dividend payments, liquidity position, and positive year-to-date net income. Based on this review, Bancorp believes its investment in FHLB stock is not impaired.

A summary of available for sale investment securities by maturity groupings as of September 30, 2013 is shown below. Actual maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations. The investment portfolio includes mortgage-backed securities, all of which are guaranteed by agencies such as the FHLMC, FNMA, and GNMA. These securities differ from traditional debt securities primarily in that they may have uncertain principal payment dates and are priced based on estimated prepayment rates of the underlying collateral.

(in thousands)	Amortized cost		Fair value
Securities available for sale
Due within 1 year	$	62,177	$	62,213
Due after 1 but within 5 years	113,752		115,551
Due after 5 but within 10 years	36,039		36,470
Due after 10 years	22,894		22,188
Mortgage-backed securities	165,636		164,641

Total securities available for sale	$	400,498	$	401,063

Securities with unrealized losses at September 30, 2013 and December 31, 2012, not recognized in income are as follows:

	Less than 12 months				12 months or more					Total
	Fair		Unrealized		Fair		Unrealized			Fair				Unrealized
(in thousands)	value		losses		value		losses			value				losses
September 30, 2013
Government sponsored enterprise obligations	$	59,040	$	1,484	$	—	$	—		$		59,040		$		1,484
Mortgage-backed securities	83,927		3,151		—		—			83,927				3,151
Obligations of states and political subdivisions	23,443		455		—		—			23,443				455

Total temporarily impaired securities	$	166,410	$	5,090	$	—	$	—		$		166,410		$		5,090

December 31, 2012
Government sponsored enterprise obligations	$	29,996	$	56	$	—	$	—	$		29,996		$		56
Mortgage-backed securities	16,609		120		—		—		16,609				120
Obligations of states and political subdivisions	2,292		12		—		—		2,292				12

Total temporarily impaired securities	$	48,897	$	188	$	—	$	—	$		48,897		$		188

Unrealized losses on Bancorp’s investment securities portfolio have not been recognized in income because the securities are of high credit quality, and the decline in fair values is largely due to changes in the prevailing interest rate environment since the purchase date. The fair value is expected to recover as securities reach their maturity date and/or the interest rate environment returns to conditions similar to when these securities were purchased. These investments consist of 142 and 14 separate investment positions as of September 30, 2013 and December 31, 2012, respectively, which are not considered other-than-temporarily impaired. Because Bancorp does not intend to sell the investments, and it is not likely that Bancorp will be required to sell the investments before recovery of their amortized cost bases, which may be maturity, management does not consider these securities to be other-than-temporarily impaired at September 30, 2013.