4. Securities

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


	December 31, 2016								December 31, 2015
	Amortized Cost		Unrealized				Fair Value		Amortized Cost		Unrealized					Fair Value
	Amortized Cost		Gains		Losses		Fair Value		Amortized Cost		Gains		Losses			Fair Value
U.S. Gov’t sponsored entities		$139,823		$1,107		$(579)		$140,351		$141,300		$1,579	$	(1,128	)		$141,751
State & political subdivisions		153,492		4,194		(649)		157,037		165,828		6,234		(243	)		171,819
Residential & multi-family mortgage		136,807		551		(2,382)		134,976		160,316		1,060		(3,394	)		157,982
Corporate notes & bonds		18,299		77		(962)		17,414		19,794		165		(1,271	)		18,688
Pooled trust preferred		800		1,249		0		2,049		800		2,613		0			3,413
Pooled SBA		43,450		505		(918)		43,037		51,556		760		(907	)		51,409
Other equity securities		1,020		0		(49)		971		1,020		0		(39	)		981

Total		$493,691		$7,683		$(5,539)		$495,835		$540,614		$12,411		$(6,982)			$546,043

At December 31, 2016 and 2015, there were no holdings of securities by any one issuer, other than 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, and the Corporation holds one commercial mortgage security that is private label.

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


	2016		2015

Corporate equity securities	$	3,312	$	3,389
Mutual Funds		1,037		750
Cerfiticates of deposit		202		253
Corporate notes and bonds		254		130
U.S. Government sponsored entities		53		54

Total	$	4,858	$	4,576

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


December 31, 2016	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	90,380	$	(579	)	$	0	$	(0	)	$	90,380	$	(579	)
State & political subdivisions		32,353		(448	)		264		(201	)		32,617		(649	)
Residential & multi-family mortgage		65,598		(1,255	)		34,611		(1,127	)		100,209		(2,382	)
Corporate notes & bonds		2,089		(11	)		8,476		(951	)		10,565		(962	)
Pooled SBA		6,481		(126	)		20,560		(792	)		27,041		(918	)
Other equity securities		0		(0	)		971		(49	)		971		(49	)

	$	196,901	$	(2,419	)	$	64,882	$	(3,120	)	$	261,783	$	(5,539	)

	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
December 31, 2015
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 and 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.

The following table provides detailed information related to the Corporation’s structured pooled trust preferred securities as of December 31, 2016 and for the years ended December 31, 2016, 2015, and 2014:


	As of December 31, 2016						Credit Losses Realized in Earnings
	Adjusted Amortized		Unrealized		Fair		Year Ended December 31,
	Cost		Gain (Loss)		Value		2016		2015		2014
ALESCO Preferred Funding V, Ltd.	$	800	$	330	$	1,130	$	0	$	0	$	0
ALESCO Preferred Funding XII, Ltd.		0		919		919		0		0		0
US Capital Funding VI, Ltd.		0		0		0		0		0		0

Total	$	800	$	1,249	$	2,049	$	0	$	0	$	0

At December 31, 2016, the Corporation evaluated the pooled trust preferred securities for other than-temporary impairment by estimating the cash flows expected to be received, taking into account future estimated levels of deferrals and defaults by the underlying issuers and discounting those cash flows at the appropriate accounting yield.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the years ended December 31, 2016, 2015 and 2014 is as follows:


	2016			2015		2014

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	$	4,054
Credit losses previously recognized on securities sold during the period		(1,983	)		0		0
Additional credit loss for which other-than-temporary impairment was not previously recognized		0			0		0
Additional credit loss for which other-than-temporary impairment was previously recognized		0			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	$	4,054

The adjusted amortized cost of structured pooled trust preferred securities as of December 31, 2016 and 2015, is insignificant.

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 December 31, 2016 and 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.

On December 31, 2016 and 2015, securities carried at $329,379 and $312,669, respectively, were pledged to secure public deposits and for other purposes as provided by law.

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at December 31, 2016:


	December 31, 2016
	Amortized Cost		Fair Value
1 year or less	$	59,801	$	59,592
1 year – 5 years		169,546		172,767
5 years – 10 years		67,851		68,257
After 10 years		15,216		16,235

		312,414		316,851
Residential and multi-family mortgage		136,807		134,976
Pooled SBA		43,450		43,037

Total debt securities	$	492,671		494,864

Mortgage 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.

Information pertaining to security sales is as follows:


Year ended December 31	Proceeds		Gross Gains		Gross Losses

2016	$	4,420	$	1,005	$	0
2015		105,066		1,032		366
2014		61,236		606		177

The tax provision related to these net realized gains was $352, $233, and $150, respectively.

During 2016, 2015 and 2014, the Corporation sold trading securities. Proceeds were $540 in 2016, $2,129 in 2015, and $248 in 2014, resulting in net gains (losses) of $70 in 2016, ($211) in 2015, and $10 in 2014.