5.	SECURITIES

Securities available for sale at September 30, 2016 and December 31, 2015 are as follows:


	September 30, 2016									December 31, 2015
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Gov’t sponsored entities	$	136,945	$	2,958	$	(1	)	$	139,902	$	141,300	$	1,579	$	(1,128	)	$	141,751
State & political subdivisions		153,762		7,643		(195	)		161,210		165,828		6,234		(243	)		171,819
Residential & multi-family mortgage		137,639		1,894		(511	)		139,022		160,316		1,060		(3,394	)		157,982
Corporate notes & bonds		18,299		177		(1,197	)		17,279		19,794		165		(1,271	)		18,688
Pooled trust preferred		800		902		0			1,702		800		2,613		0			3,413
Pooled SBA		45,964		793		(122	)		46,635		51,556		760		(907	)		51,409
Other equity securities		1,020		0		(26	)		994		1,020		0		(39	)		981

Total	$	494,429	$	14,367	$	(2,052	)	$	506,744	$	540,614	$	12,411	$	(6,982	)	$	546,043

At September 30, 2016 and December 31, 2015, there were no holdings of securities of any one issuer, other than the U.S. Government sponsored entities, in an amount greater than 10% of shareholders’ equity. The Corporation’s residential and multi-family mortgage securities are issued by government sponsored entities.

Trading securities at September 30, 2016 and December 31, 2015 are as follows:


	September 30, 2016		December 31, 2015
Corporate equity securities	$	3,148	$	3,389
Mutual funds		965		750
Certificates of deposit		255		253
Corporate notes and bonds		221		130
U.S. Government sponsored entities		55		54

Total	$	4,644	$	4,576

Securities with unrealized losses at September 30, 2016 and December 31, 2015, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

September 30, 2016


	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Gov’t sponsored entities	$	0	$	0		$	3,001	$	(1	)	$	3,001	$	(1	)
State & political subdivisions		1,669		(2	)		272		(193	)		1,941		(195	)
Residential & multi-family mortgage		10,975		(78	)		40,280		(433	)		51,255		(511	)
Corporate notes & bonds		1,977		(23	)		8,251		(1,174	)		10,228		(1,197	)
Pooled SBA		0		0			22,441		(122	)		22,441		(122	)
Other equity securities		0		0			994		(26	)		994		(26	)

	$	14,621	$	(103	)	$	75,239	$	(1,949	)	$	89,860	$	(2,052	)

December 31, 2015


	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Gov’t sponsored entities	$	65,675	$	(640	)	$	31,923	$	(488	)	$	97,598	$	(1,128	)
State & political subdivisions		9,103		(234	)		2,478		(9	)		11,581		(243	)
Residential & multi-family mortgage		69,631		(1,562	)		50,351		(1,832	)		119,982		(3,394	)
Corporate notes & bonds		5,027		(2	)		8,144		(1,269	)		13,171		(1,271	)
Pooled SBA		2,908		(28	)		27,127		(879	)		30,035		(907	)
Other equity securities		0		0			981		(39	)		981		(39	)

	$	152,344	$	(2,466	)	$	121,004	$	(4,516	)	$	273,348	$	(6,982	)

The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the three and nine months ended September 30, 2016 and 2015 is as follows:


	2016			2015
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$	4,054		$	4,054
Credit losses previously recognized on securities sold during the period		(1,983	)		0
Additional credit loss for which other-than-temporary impairment was not previously recognized		0			0
Additional credit loss for which other-than-temporary impairment was previously recognized		0			0

Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$	2,071		$	4,054

During the quarter ended June 30, 2016 the Corporation sold two structured pooled trust preferred securities which had been charged off in their entirety in prior periods. The original cost basis of these securities was $1,983 and the proceeds received totaled $922, which is reported in net realized gains on available-for-sale securities for the three and nine months ended September 30, 2016. Due to the insignificance of the Corporation’s adjusted amortized cost balance of the remaining structured pooled trust securities, no further disclosures are required.

For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for other-than-temporary impairment. For financial institution issuers, management monitors information from quarterly “call” report filings that are used to generate Uniform Bank Performance Reports. All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed, as appropriate given the following considerations. When reviewing securities for other-than-temporary impairment, management considers the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred. Management also considers the length of time and extent to which fair value has been less than cost, and whether management does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

As of September 30, 2016 and December 31, 2015, management concluded that the securities described in the previous paragraph were not other-than-temporarily impaired for the following reasons:

•

There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.

•

All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.

The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis.

Information pertaining to security sales on available for sale securities is as follows:


	Proceeds		Gross Gains		Gross Losses
Three months ended September 30, 2016	$	0	$	0	$	0
Nine months ended September 30, 2016		4,420		1,005		0
Three months ended September 30, 2015		38,025		244		(171	)
Nine months ended September 30, 2015		86,554		852		(288	)

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at September 30, 2016:


	Amortized		Fair
	Cost		Value
1 year or less	$	41,920	$	41,532
1 year – 5 years		179,919		186,380
5 years – 10 years		70,832		73,920
After 10 years		17,135		18,261

		309,806		320,093
Residential and multi-family mortgage		137,639		139,022
Pooled SBA		45,964		46,635

Total debt securities	$	493,409	$	505,750

Mortgage and asset backed securities and pooled SBA securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

On September 30, 2016 and December 31, 2015, securities carried at $347,196 and $312,669, respectively, were pledged to secure public deposits and for other purposes as provided by law.