2.	Securities Available for Sale

The Company’s securities available for sale portfolio is summarized as follows:


(Dollar amounts in thousands)	Amortized cost		Unrealized gains		Unrealized losses			Fair value

June 30, 2014:
Trust preferred securities	$	45,399	$	331	$	(6,876	)	$	38,854
Municipal securities		172,249		8,746		(683	)		180,312
Equity securities - financial institutions		677		776		—			1,453
Corporate bonds		181,854		4,764		—			186,618
Mortgage-backed securities
U.S. sponsored entities		663,756		23,192		(2,403	)		684,545
Private label		1,547		25		—			1,572

Subtotal mortgage-backed securities		665,303		23,217		(2,403	)		686,117

Total securities	$	1,065,482	$	37,834	$	(9,962	)	$	1,093,354


December 31, 2013:
Trust preferred securities	$	45,589	$	225	$	(6,908	)	$	38,906
Municipal securities		178,579		5,310		(4,149	)		179,740
Equity securities - financial institutions		953		968		—			1,921
Corporate bonds		201,268		5,313		(361	)		206,220
Mortgage-backed securities
U.S. sponsored entities		623,134		18,397		(7,107	)		634,424
Private label		1,788		21		(4	)		1,805

Subtotal mortgage-backed securities		624,922		18,418		(7,111	)		636,229

Total securities	$	1,051,311	$	30,234	$	(18,529	)	$	1,063,016

The following table shows the Company’s investments gross unrealized losses and fair value aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 2014:


As of June 30, 2014
(Dollar amounts in thousands)	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses

Trust preferred securities		—	$	—	$	—		8	$	37,055	$	6,876		8	$	37,055	$	6,876

Municipal securities		4		3,742		27		18		15,850		656		22		19,592		683

Mortgage-backed securities

U.S. sponsored entities		1		3,152		16		41		138,506		2,387		42		141,658		2,403


Total		5	$	6,894	$	43		67	$	191,411	$	9,919		72	$	198,305	$	9,962


As of December 31, 2013
(Dollar amounts in thousands)	Less than 12 Months						12 Months or more						Total
	# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses		# of Securities		Fair Value		Unrealized losses

Trust preferred securities		—	$	—	$	—		8	$	37,016	$	6,908		8	$	37,016	$	6,908

Municipal securities		44		37,243		3,129		6		5,518		1,020		50		42,761		4,149

Corporate bonds		6		20,869		109		3		11,474		252		9		32,343		361

Mortgage-backed securities

U.S. sponsored entities		69		229,223		6,363		4		16,878		744		73		246,101		7,107

Private label		1		502		4		—		—		—		1		502		4


Subtotal mortgage-backed securities		70		229,725		6,367		4		16,878		744		74		246,603		7,111


Total		120	$	287,837	$	9,605		21	$	70,886	$	8,924		141	$	358,723	$	18,529

The Company primarily invests in mortgage-backed securities, variable and fixed rate corporate bonds, municipal bonds, government bonds and to a lesser extent equity securities. The policy of the Company is to recognize other than temporary impairment (OTTI) on equity securities where the fair value has been significantly below cost for three consecutive quarters. Declines in the fair value of the debt securities that can be attributed to specific adverse conditions affecting the credit quality of the investment would be recorded as OTTI and charged to earnings. In order to determine if a decline in fair value is other than temporary, the Company reviews corporate ratings of the investment, analyst reports and SEC filings of the issuers. For fixed maturity investments with unrealized losses due to interest rates where the Company expects to recover the entire amortized cost basis of the security, declines in value below cost are not assumed to be other than temporary. The Company reviews its position quarterly and has asserted that at June 30, 2014, the declines outlined in the above table represent temporary declines due to changes in interest rates and are not reflections of impairment in the credit quality of the securities. Additionally, the Company does not intend to sell the investment and it is not more likely than not that the Company will be required to sell the investment before recovery of its amortized cost basis.

The Company reviews investment debt securities on an ongoing basis for the presence of OTTI with formal reviews performed quarterly. Credit-related OTTI losses on individual securities are recognized in earnings while noncredit-related OTTI on securities not expected to be sold is recognized in accumulated other comprehensive income. The $193,000 credit-related OTTI recognized during 2014 consisted of a pooled trust preferred security with no remaining book value. There was no noncredit-related OTTI on this security recognized in OCI during the first six months of 2014.

The Company holds one pooled trust preferred security that has previously been determined to be other than temporarily impaired by approximately $2.3 million, due solely to credit related factors. As stated at December 31, 2013, the Company’s intention was to sell this investment. The security was written down to its fair value at that time. During the first quarter of 2014, the Company attempted to liquidate this security but was unsuccessful due to the extreme illiquid market for this type of investment. The Company decided that due to the extreme illiquid market, this security has no value and therefore recorded an additional OTTI charge of $193,000, the remaining carrying value of this security.

Because of the subprime crisis, current markets for variable rate corporate trust preferred securities are illiquid. This includes the Company’s eight stand-alone trust preferred securities and the Company’s one pooled trust preferred security. The Company used a discounted cash flow method to price these securities due to a lack of liquidity for resale of this investment type and the absence of reliable pricing information. This method is described more fully in footnote 9, “Fair Value.”

The following table summarizes scheduled maturities of the Company’s securities as of June 30, 2014 and December 31, 2013 excluding equity securities which have no maturity dates:


As of June 30, 2014
(Dollar amounts in thousands)	Available for sale
	Weighted Average Yield			Amortized cost		Fair value

Due in one year or less		3.74	%	$	39,789	$	40,436
Due from one year to five years		2.79	%		151,769		156,561
Due from five to ten years		3.42	%		95,929		99,642
Due after ten years		3.06	%		777,318		795,262

		3.08	%	$	1,064,805	$	1,091,901


As of December 31, 2013
(Dollar amounts in thousands)	Available for sale
	Weighted Average Yield			Amortized cost		Fair value

Due in one year or less		2.79	%	$	41,074	$	41,497
Due from one year to five years		2.97	%		163,785		169,767
Due from five to ten years		3.37	%		106,115		107,917
Due after ten years		3.14	%		739,384		741,914

		3.12	%	$	1,050,358	$	1,061,095

For purposes of the maturity table, mortgage backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on weighted-average contractual maturities of underlying collateral. The mortgage-backed securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

The proceeds from the sale of securities for the six month period ended June 30, 2014 was $563,000 resulting in gross realized gains of $288,000. The proceeds from the sale of securities for the six month period ended June 30, 2013 was $1.8 million resulting in gross realized gains of $467,000. There were no gross realized losses for the six months ended June 30, 2014 and June 30, 2013, respectively.