4. Securities

Securities available-for-sale at December 31, 2017 and 2016 are as follows:


	December 31, 2017									December 31, 2016
	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		$108,578	$	478	$	(908	)		$108,148		$139,823		$1,107	$	(579	)		$140,351
State & political subdivisions		134,428		3,609		(314)			137,723		153,492		4,194		(649	)		157,037
Residential & multi-family mortgage		111,214		304		(1,882)			109,636		136,807		551		(2,382	)		134,976
Corporate notes & bonds		17,610		52		(462)			17,200		18,299		77		(962	)		17,414
Pooled trust preferred		0		0		0			0		800		1,249		0			2,049
Pooled SBA		36,260		355		(575)			36,040		43,450		505		(918	)		43,037
Other equity securities		1,020		0		(58)			962		1,020		0		(49	)		971

Total		$409,110	$	4,798	$	(4,199	)		$409,709		$493,691		$7,683		$(5,539)			$495,835

At December 31, 2017 and 2016, 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, 2017 and 2016 are as follows:


	2017		2016

Corporate equity securities	$	5,125	$	3,312
Mutual Funds		1,499		1,037
Certificates of deposit		220		202
Corporate notes and bonds		254		254
U.S. Government sponsored entities		52		53

Total	$	7,150	$	4,858

Securities with unrealized losses at December 31, 2017 and 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows:


December 31, 2017	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	$	55,696	$	(540	)	$	34,754	$	(368	)	$	90,450	$	(908	)
State & political subdivisions		15,890		(69	)		4,104		(245	)		19,994		(314	)
Residential & multi-family mortgage		30,144		(153	)		63,699		(1,729	)		93,843		(1,882	)
Corporate notes & bonds		5,005		(9	)		9,042		(453	)		14,047		(462	)
Pooled SBA		0		(0	)		22,270		(575	)		22,270		(575	)
Other equity securities		0		(0	)		962		(58	)		962		(58	)

	$	106,735	$	(771	)	$	134,831	$	(3,428	)	$	241,566	$	(4,199	)


	Less than 12 Months					12 Months or More					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
December 31, 2016
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 and 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	)

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.

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. During 2017, two structured pooled trust preferred securities with an adjusted amortized cost of $800 were sold, resulting in a gain of $1,383. During 2016, two structured pooled trust preferred securities with an adjusted amortized cost of $0 were sold, resulting in a gain of $922.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the years ended December 31, 2017, 2016, and 2015 is as follows:


	2017			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	$	2,071		$	4,054		$	4,054
Credit losses previously recognized on securities sold during the period		(2,071	)		(1,983	)		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	$	0		$	2,071		$	4,054

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, 2017 and 2016, 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, 2017 and 2016, securities carried at $319,575 and $329,379, 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, 2017:


	December 31, 2017
	Amortized Cost		Fair Value
1 year or less	$	50,368	$	50,139
1 year – 5 years		153,512		155,075
5 years – 10 years		50,552		51,753
After 10 years		6,184		6,104

		260,616		263,071
Residential and multi-family mortgage		111,214		109,636
Pooled SBA		36,260		36,040

Total debt securities	$	408,090	$	408,747

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

2017	$	16,340	$	1,614	$	71
2016		4,420		1,005		0
2015		105,066		1,032		366

The tax provision related to these net realized gains was $540, $352 and $233, respectively.

During 2017, 2016, and 2015, the Corporation sold trading securities. Proceeds were $1,091 in 2017, $540 in 2016 and $2,129 in 2015, resulting in net realized gains (losses) of $93 in 2017, $70 in 2016, and ($211) in 2015.