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## NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(Dollar Amounts in Thousands) 

NOTE 8— Securities Available For Sale 

2001 2000 Below is an analysis of the amortized cost and approximate fair values of securities available for sale at December 31, 2001 and 2000: 

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Mortgage backed securities include mortgage backed obligations of U.S. Government agencies and corporations, mortgage backed securities issued by other organizations and other asset backed securities. These obligations have contractual maturities ranging from less than one year to 30 years and have an anticipated average life to maturity ranging from less than one year to 17 years. All mortgage backed securities contain a certain amount of risk related to the uncertainty of prepayments of the underlying mortgages. Interest rate changes have a direct impact upon prepayment speeds, therefore the Corporation uses computer simulation models to test the average life and yield volatility of all mortgage backed securities under various interest rate scenarios to insure that volatility falls within acceptable limits. At December 31, 2001 and 2000, the Corporation owned no high risk mortgage backed securities as defined by the Federal Financial Institutions Examination Council’ s Supervisory Policy Statement on Securities Activities. 

The amortized cost and estimated market value of debt securities at December 31, 2001, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or repay obligations with or without call or prepayment penalties. 

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Proceeds from the sales of securities available for sale were $85,737, $22,391 and $39,282 during 2001, 2000 and 1999 respectively. Gross gains of $3,419, $1,752 and $541 and gross losses of $224, $18 and $-0- were realized on those sales during 2001, 2000 and 1999, respectively. 

Securities available for sale with an approximate fair value of $637,915 and $626,719 were pledged at December 31, 2001 and 2000, respectively, to secure public deposits and for other purposes required or permitted by law. 

