INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 3 — INVESTMENT SECURITIES

The amortized cost, related estimated fair value, and unrealized gains and losses for investment securities classified as “Available-For-Sale” or “Held-to-Maturity” were as follows at December 31, 2014 and 2013:

	Available-for-Sale Securities
(Dollars in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2014:	Cost		Gains		Losses		Value
U.S. Treasury securities	$	11,356	$	24	$	(2)	$	11,378
Obligations of U.S. Government Corporations and Agencies:
Mortgage-backed		112,146		1,055		(487)		112,714
Other		26,246		270		(6)		26,510
Obligations of state and political subdivisions		151,565		6,127		(469)		157,223
Corporate debt securities		38,499		112		(825)		37,786
Marketable equity securities		1,208		867		(20)		2,055
Total	$	341,020	$	8,455	$	(1,809)	$	347,666

	Held-to-Maturity Securities
(Dollars in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2014:	Cost		Gains		Losses		Value
Obligations of U.S. Government Corporations and Agencies:
Mortgage-backed	$	56	$	2	$	—	$	58
Other		1,000		2		—		1,002
Total	$	1,056	$	4	$	—	$	1,060

	Available-for-Sale Securities
(Dollars in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2013:	Cost		Gains		Losses		Value
U.S. Treasury securities	$	—	$	—	$	—	$	—
Obligations of U.S. Government Corporations and Agencies:
Mortgage-backed		122,661		598		(2,035)		121,224
Other		32,107		238		(60)		32,285
Obligations of state and political subdivisions		147,112		4,136		(2,859)		148,389
Corporate debt securities		50,266		416		(1,417)		49,265
Marketable equity securities		1,533		1,004		(2)		2,535
Total	$	353,679	$	6,392	$	(6,373)	$	353,698

	Held-to-Maturity Securities
(Dollars in thousands)			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2013:	Cost		Gains		Losses		Value
Obligations of U.S. Government Corporations and Agencies:
Mortgage-backed	$	72	$	3	$	—	$	75
Other		1,000		8		—		1,008
Total	$	1,072	$	11	$	—	$	1,083

Securities Available-for-Sale with an aggregate fair value of $222,847,000 at December 31, 2014 and $242,839,000 at December 31, 2013, and securities Held-to-Maturity with an aggregate book value of $1,056,000 at December 31, 2014 and $1,072,000 at December 31, 2013, were pledged to secure public funds, trust funds, securities sold under agreements to repurchase, FHLB advances and other balances of $155,895,000 at December 31, 2014 and $178,814,000 at December 31, 2013.

The amortized cost and fair value of securities, by contractual maturity, are shown below at December 31, 2014. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

(Dollars in thousands)

	Available-for-Sale				Held-to-Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
1 year or less	$	3,002	$	3,037	$	1,000	$	1,002
Over 1 year through 5 years		25,650		26,130		—		—
Over 5 years through 10 years		103,919		103,826		—		—
Over 10 years		95,095		99,904		—		—
Mortgage-backed securities		112,146		112,714		56		58
Marketable equity securities		1,208		2,055		—		—
	$	341,020	$	347,666	$	1,056	$	1,060

There were no aggregate investments with a single issuer (excluding the U.S. Government and its political subdivisions and agencies) which exceeded ten percent of consolidated stockholders’ equity at December 31, 2014. The quality rating of the obligations of state and political subdivisions are generally investment grade, as rated by Moody’s, Standard and Poor’s or Fitch. The typical exceptions are local issues which are not rated, but are secured by the full faith and credit obligations of the communities that issued these securities.

Proceeds from sales of investments in Available-for-Sale debt and equity securities during 2014, 2013 and 2012 were $195,847,000, $79,981,000 and $49,235,000, respectively. Gross gains realized on these sales were $3,354,000, $3,546,000 and $1,762,000, respectively. Gross losses on these sales were $598,000, $646,000 and $949,000, respectively. There were no other-than-temporary impairment losses during 2014, 2103 and 2012.

There were no proceeds from sales of investments in Held-to-Maturity debt and equity securities during 2014, 2013 and 2012. Therefore, there were no gains or losses realized during these periods.

Management evaluates securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. Investment securities classified as available-for-sale or held-to-maturity are generally evaluated for OTTI under FASB ASC 320, Investments - Debt and Equity Securities. In determining OTTI under the FASB ASC 320 model, management considers many factors, including (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

When other-than-temporary impairment occurs on debt securities, the amount of the other-than-temporary impairment recognized in earnings depends on whether an entity intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If an entity intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary impairment shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If an entity does not intend to sell the security and it is not more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the other-than-temporary impairment shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total other-than-temporary impairment related to the credit loss is determined based on the present value of cash flows expected to be collected, and the realized loss is recognized in net investment securities gains on the Consolidated Statements of Income. The amount of the total other-than-temporary impairment related to the other factors shall be recognized in other comprehensive income, net of applicable taxes. The previous amortized cost basis less the other-than-temporary impairment recognized in earnings shall become the new amortized cost basis of the investment.

The fair market value of the equity securities tends to fluctuate with the overall equity markets as well as the trends specific to each institution. The equity securities portfolio is reviewed in a similar manner as that of the debt securities with greater emphasis placed on the length of time the market value has been less than the carrying value and the financial sector outlook. The Corporation also reviews dividend payment activities, levels of non-performing assets and loan loss reserves. The starting point for the equity analysis is the length and severity of market value decline. The realized loss is recognized in net investment securities gains on the Consolidated Statements of Income. The amount of the total other-than-temporary impairment is recognized in other comprehensive income, net of applicable taxes.

The Corporation and its investment advisors monitor the entire portfolio monthly with particular attention given to securities in a continuous loss position of at least ten percent for over twelve months. Based on the factors described above, management did not consider any securities to be other-than-temporarily impaired at December 31, 2014, 2013 and 2012.

In accordance with disclosures required by FASB ASC 320-10-50, Investments - Debt and Equity Securities, the summary below shows the gross unrealized losses and fair value of the Corporation’s investments, aggregated by investment category, that individual securities have been in a continuous unrealized loss position for less than 12 months or 12 months or more as of December 31, 2014 and 2013:

December 31, 2014

(Dollars in thousands)	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale:	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury securities	$	6,030	$	(2)	$	—	$	—	$	6,030	$	(2)
Obligations of U.S. Government Corporations and Agencies:
Mortgage-backed		19,823		(230)		17,099		(257)		36,922		(487)
Other		7,154		(6)		—		—		7,154		(6)
Obligations of state and political subdivisions		21,459		(94)		18,273		(375)		39,732		(469)
Corporate debt securities		22,227		(542)		12,066		(283)		34,293		(825)
Marketable equity securities		30		(20)		—		—		30		(20)
	$	76,723	$	(894)	$	47,438	$	(915)	$	124,161	$	(1,809)

December 31, 2013

(Dollars in thousands)	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Available-for-Sale:	Value		Loss		Value		Loss		Value		Loss
U.S. Treasury securities	$	—	$	—	$	—	$	—	$	—	$	—
Obligations of U.S. Government Corporations and Agencies:
Mortgage-backed		98,760		(2,035)		—		—		98,760		(2,035)
Other		4,956		(60)		—		—		4,956		(60)
Obligations of state and political subdivisions		48,853		(2,859)		—		—		48,853		(2,859)
Corporate debt securities		26,099		(1,417)		—		—		26,099		(1,417)
Marketable equity securities		21		(2)		—		—		21		(2)
	$	178,689	$	(6,373)	$	—	$	—	$	178,689	$	(6,373)

The Corporation invests in various forms of agency debt including mortgage backed securities and callable debt. The mortgage backed securities are issued by FHLMC (“Federal Home Loan Mortgage Corporation”) or FNMA (“Federal National Mortgage Association”). The municipal securities consist of general obligations and revenue bonds. The marketable equity securities consist of stocks in other bank holding companies. The fair market value of the above securities is influenced by market interest rates, prepayment speeds on mortgage securities, bid-offer spreads in the market place and credit premiums for various types of agency debt. These factors change continuously and therefore the market value of these securities may be higher or lower than the Corporation’s carrying value at any measurement date. Management does not believe any of their 39 securities with a one year or less unrealized loss position or any of their 29 securities with a greater than one year unrealized loss position as of December 31, 2014, represent an other-than-temporary impairment, as these unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.