(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

March 31, 2014
U.S. Treasury and other U.S. government obligations	$	40,000	$	—	$	—	$	40,000
Government sponsored enterprise obligations	156,246		1,665		1,554		156,357
Mortgage-backed securities - government agencies	175,020		1,523		3,263		173,280
Obligations of states and political subdivisions	68,082		1,634		211		69,505
Corporate equity securities	756		286		—		1,042

Total securities available for sale	$	440,104	$	5,108	$	5,028	$	440,184

	Amortized		Unrealized
(in thousands)	cost		Gains		Losses		Fair value

December 31, 2013
U.S. Treasury and other U.S. government obligations	$	110,000	$	—	$	—	$	110,000
Government sponsored enterprise obligations	138,094		1,623		1,872		137,845
Mortgage-backed securities - government agencies	176,524		1,391		5,222		172,693
Obligations of states and political subdivisions	68,448		1,473		428		69,493

Total securities available for sale	$	493,066	$	4,487	$	7,522	$	490,031

There are no securities classified as held to maturity as of March 31, 2014 or December 31, 2013.

Management has the intent and ability to hold all investment securities available for sale for the foreseeable future. No securities were sold in the first quarter of 2013 or 2014.

Corporate equity securities, included in the available for sale portfolio at March 31, 2014, consist of common stock in a public-traded business development company.

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 the second quarter of 2014, which is fully collateralized with a government agency security of similar duration, and holdings of stock in a correspondent bank Bancorp utilized for various services. Bancorp reviewed the investment in FHLB stock as of March 31, 2014, 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 the available for sale investment securities by maturity groupings as of March 31, 2014 is shown below.

(in thousands)


Securities available for sale	Amortized cost		Fair value

Due within 1 year	$	67,648	$	67,833
Due after 1 but within 5 years	127,055		128,435
Due after 5 but within 10 years	32,945		33,531
Due after 10 years	36,680		36,063
Mortgage-backed securities	175,020		173,280
Corporate equity securities	756		1,042
Total securities available for sale	$	440,104	$	440,184

Actual maturities may differ from contractual maturities because some issuers have the right to call or prepay obligations. In addition to equity securities, the investment portfolio includes agency mortgage-backed securities, 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 on the underlying collateral. Bancorp does not have exposure to subprime originated mortgage-backed or collateralized debt obligation instruments.

Securities with a carrying value of approximately $201.5 million at March 31, 2014 and $243.5 million at December 31, 2013 were pledged to secure accounts of commercial depositors in cash management accounts, public deposits, and cash balances for certain investment management and trust accounts.

Securities with unrealized losses at March 31, 2014 and December 31, 2013, 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

March 31, 2014
Government sponsored enterprise obligations	$	77,580	$	1,161	$	4,402	$	393	$	81,982	$	1,554
Mortgage-backed securities - government agencies	85,985		2,089		17,691		1,174		103,676		3,263
Obligations of states and political subdivisions	15,434		186		2,093		25		17,527		211

Total temporarily impaired securities	$	178,999	$	3,436	$	24,186	$	1,592	$	203,185	$	5,028

December 31, 2013
Government sponsored enterprise obligations	$	76,755	$	1,429	$	4,353	$	443	$	81,108	$	1,872
Mortgage-backed securities - government agencies	112,652		4,400		8,752		822		121,404		5,222
Obligations of states and political subdivisions	22,092		405		1,211		23		23,303		428

Total temporarily impaired securities	$	211,499	$	6,234	$	14,316	$	1,288	$	225,815	$	7,522

The applicable dates for determining when securities are in an unrealized loss position are March 31, 2014 and December 31, 2013. As such, it is possible that a security had a market value less than its amortized cost on other days during the past twelve months, but is not in the “Investments with an Unrealized Loss of less than 12 months” category above.

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. 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 123 and 155 separate investment positions as of March 31, 2014 and December 31, 2013, respectively. Because management 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, Bancorp does not consider these securities to be other-than-temporarily impaired at March 31, 2014.