4.	Securities

The following table summarizes the Corporation’s securities as of September 30, 2013 and December 31, 2012:

(Dollar amounts in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for sale:
September 30, 2013:
U.S. Treasury and federal agency	$	4,465	$	-	$	(217)	$	4,248
U.S. government sponsored entities and agencies		23,636		-		(592)		23,044
Mortgage-backed securities: residential		12,373		486		-		12,859
Collateralized mortgage obligations: residential		44,403		-		(1,851)		42,552
State and political subdivisions		39,820		962		(847)		39,935
Corporate debt securities		250		-		(10)		240
Equity securities		2,356		103		(12)		2,447
	$	127,303	$	1,551	$	(3,529)	$	125,325
December 31, 2012:
U.S. Treasury and federal agency	$	3,959	$	8	$	-	$	3,967
U.S. government sponsored entities and agencies		28,030		132		-		28,162
Mortgage-backed securities: residential		21,137		1,587		-		22,724
Collateralized mortgage obligations: residential		22,508		47		(80)		22,475
State and political subdivisions		34,904		1,862		(1)		36,765
Corporate debt securities		3,728		34		(1)		3,761
Equity securities		2,356		4		(8)		2,352
	$	116,622	$	3,674	$	(90)	$	120,206

The following table summarizes scheduled maturities of the Corporation’s debt securities as of September 30, 2013. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities and collateralized mortgage obligations are not due at a single maturity and are shown separately.

(Dollar amounts in thousands)	Available for sale
	Amortized		Fair
	Cost		Value
Due in one year or less	$	1,001	$	1,014
Due after one year through five years		19,688		19,609
Due after five through ten years		42,394		42,056
Due after ten years		5,088		4,788
Mortgage-backed securities: residential		12,373		12,859
Collateralized mortgage obligations: residential		44,403		42,552
	$	124,947	$	122,878

Information pertaining to securities with gross unrealized losses at September 30, 2013 and December 31, 2012, aggregated by investment category and length of time that individual securities have been in a continuous loss position are included in the table below:

(Dollar amounts in thousands)	Less than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss

September 30, 2013:
U.S. Treasury and federal agency	$	4,248	$	(217)	$	-	$	-	$	4,248	$	(217)
U.S. government sponsored entities and agencies		23,044		(592)		-		-		23,044		(592)
Collateralized mortgage obligations: residential		42,552		(1,851)		-		-		42,552		(1,851)
State and political subdivisions		15,286		(847)		-		-		15,286		(847)
Corporate debt securities		241		(10)		-		-		241		(10)
Equity securities		954		(12)		-		-		954		(12)
	$	86,325	$	(3,529)	$	-	$	-	$	86,325	$	(3,529)
December 31, 2012:
Collateralized mortgage obligations: residential	$	10,698	$	(80)	$	-	$	-	$	10,698	$	(80)
State and political subdivisions		521		(1)		-		-		521		(1)
Corporate debt securities		500		(1)		-		-		500		(1)
Equity securities		493		(8)		-		-		493		(8)
	$	12,212	$	(90)	$	-	$	-	$	12,212	$	(90)

Gains on sales of available for sale securities for the three and nine months ended September 30 were as follows:

(Dollar amounts in thousands)	For the three months				For the nine months
	ended September 30,				ended September 30,
	2013		2012		2013		2012
Proceeds	$	17,701	$	6,043	$	21,015	$	11,639
Gains		107		390		291		1,352
Tax provision related to gains		36		133		99		460

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic, market or other conditions warrant such evaluation. Consideration is given to: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions and (4) whether the Corporation has the intent to sell the debt security or more likely than not will be required to sell the debt security before recovery of its amortized cost basis. If the Corporation intends to sell an impaired security, or if it is more likely than not the Corporation will be required to sell the security before its anticipated recovery, the Corporation records an other-than-temporary loss in an amount equal to the entire difference between fair value and amortized cost. Otherwise, only the credit portion of the estimated loss on debt securities is recognized in earnings, with the other portion of the loss recognized in other comprehensive income. For equity securities determined to be other-than-temporarily impaired, the entire amount of impairment is recognized through earnings.

There were two equity securities in an unrealized loss position as of September 30, 2013. These securities have been in an unrealized loss position for less than 12 months and were valued at 94% and 99% of their cost basis, respectively. Equity securities owned by the Corporation consist of common stock of various financial service providers. The investment securities are in an unrealized loss position as a result of recent market volatility. The Corporation does not invest in these securities with the intent to sell them for a profit in the near term. For investments in equity securities, in addition to the general factors mentioned above for determining whether the decline in market value is other-than-temporary, the analysis of whether an equity security is other-than-temporarily impaired includes a review of the profitability and capital adequacy and other relevant information available to determine the financial position and near term prospects of each issuer. The results of analyzing the aforementioned metrics and financial fundamentals suggest recovery of amortized cost as the sector improves. Based on that evaluation, and given that the Corporation’s current intention is not to sell any impaired security and it is more likely than not it will not be required to sell these securities before the recovery of their amortized cost basis, the Corporation does not consider the equity securities with an unrealized loss as of September 30, 2013 to be other-than-temporarily impaired.

There were 119 debt securities in an unrealized loss position as of September 30, 2013, all of which were in an unrealized loss position for less than 12 months. Of these securities, eight were U.S. Treasury securities, 17 were U.S. agency securities, 29 were government-backed collateralized mortgage obligations, 64 were state and political subdivision securities and one was a corporate debt security. The unrealized losses associated with these securities were not due to the deterioration in the credit quality of the issuer that would likely result in the failure to collect contractual principal and interest, but rather have been caused by a rise in interest rates from the time the securities were purchased. Based on that evaluation and other general considerations, and given that the Corporation’s current intention is not to sell any impaired securities and it is more likely than not it will not be required to sell these securities before the recovery of its amortized cost basis, the Corporation does not consider the debt securities with unrealized losses as of September 30, 2013 to be other-than-temporarily impaired.