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Note 7 - Securities
 12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]
7.
SECURITIES
 
Amortized cost and fair value of available-for-sale securities at
December
31,
2016
and
2015
are summarized as follows:
 
 
 
 
 
 
 
December 31, 2016
 
 
 
 
 
 
 
 
 
 
 
Gross
 
 
Gross
 
 
 
 
 
 
 
 
 
 
 
Unrealized
 
 
Unrealized
 
 
 
 
 
 
 
Amortized
 
 
Holding
 
 
Holding
 
 
Fair
 
(In Thousands)
 
Cost
 
 
Gains
 
 
Losses
 
 
Value
 
                                 
Obligations of U.S. Government agencies
   $
9,671
    $
5
    $
(135
 )   $
9,541
 
Obligations of states and political subdivisions:
                                
Tax-exempt
    
118,140
     
2,592
     
(1,695
 )    
119,037
 
Taxable
    
30,073
     
303
     
(79
 )    
30,297
 
Mortgage-backed securities issued or guaranteed
by U.S. Government agencies or sponsored
agencies:
                                
Residential pass-through securities
    
58,922
     
306
     
(824
 )    
58,404
 
Residential collateralized mortgage obligations
    
147,915
     
408
     
(1,715
 )    
146,608
 
Commercial mortgage-backed securities
    
30,817
     
0
     
(598
 )    
30,219
 
Total debt securities
    
395,538
     
3,614
     
(5,046
 )    
394,106
 
Marketable equity securities
    
1,000
     
0
     
(29
 )    
971
 
Total
   $
396,538
    $
3,614
    $
(5,075
 )   $
395,077
 
 
 
 
 
 
 
 
 
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
Gross
 
 
Gross
 
 
 
 
 
 
 
 
 
 
 
Unrealized
 
 
Unrealized
 
 
 
 
 
 
 
Amortized
 
 
Holding
 
 
Holding
 
 
Fair
 
(In Thousands)
 
Cost
 
 
Gains
 
 
Losses
 
 
Value
 
                                 
Obligations of U.S. Government agencies
   $
10,663
    $
12
    $
(192
 )   $
10,483
 
Obligations of states and political subdivisions:
                                
Tax-exempt
    
103,414
     
4,365
     
(22
 )    
107,757
 
Taxable
    
34,317
     
381
     
(101
 )    
34,597
 
Mortgage-backed securities issued or guaranteed
by U.S. Government agencies or sponsored
agencies:
                                
Residential pass-through securities
    
73,227
     
486
     
(370
 )    
73,343
 
Residential collateralized mortgage obligations
    
193,145
     
623
     
(2,053
 )    
191,715
 
Collateralized debt obligations:
    
9
     
0
     
0
     
9
 
Total debt securities
    
414,775
     
5,867
     
(2,738
 )    
417,904
 
Marketable equity securities
    
1,680
     
706
     
0
     
2,386
 
Total
   $
416,455
    $
6,573
    $
(2,738
 )   $
420,290
 
 
The following table presents gross unrealized losses and fair value of available-for-sale securities with unrealized loss positions that are not deemed to be other-than-temporarily impaired, aggregated by length of time that individual securities have been in a continuous unrealized loss position at
December
31,
2016
and
2015:
 
December 31, 2016
 
Less Than 12 Months
 
 
12 Months or More
 
 
Total
 
(In Thousands)
 
Fair
 
 
Unrealized
 
 
Fair
 
 
Unrealized
 
 
Fair
 
 
Unrealized
 
 
 
Value
 
 
Losses
 
 
Value
 
 
Losses
 
 
Value
 
 
Losses
 
                                                 
Obligations of U.S. Government agencies
   $
7,899
    $
(135
 )   $
0
    $
0
    $
7,899
    $
(135
 )
Obligations of states and political subdivisions:
                                                
Tax-exempt
    
54,479
     
(1,676
 )    
1,278
     
(19
 )    
55,757
     
(1,695
 )
Taxable
    
9,594
     
(79
 )    
0
     
0
     
9,594
     
(79
 )
Mortgage-backed securities issued or guaranteed
by U.S. Government agencies or sponsored
agencies:
                                                
Residential pass-through securities
    
48,674
     
(824
 )    
0
     
0
     
48,674
     
(824
 )
Residential collateralized mortgage obligations
    
85,198
     
(1,124
 )    
16,073
     
(591
 )    
101,271
     
(1,715
 )
Commercial mortgage-backed securities
    
30,219
     
(598
 )    
0
     
0
     
30,219
     
(598
 )
Total debt securities
    
236,063
     
(4,436
 )    
17,351
     
(610
 )    
253,414
     
(5,046
 )
Marketable equity securities
    
1,000
     
(29
 )    
0
     
0
     
1,000
     
(29
 )
Total temporarily impaired available-for-sale securities
   $
237,063
    $
(4,465
 )   $
17,351
    $
(610
 )   $
254,414
    $
(5,075
 )
 
December 31, 2015
 
Less Than 12 Months
 
 
12 Months or More
 
 
Total
 
(In Thousands)
 
Fair
 
 
Unrealized
 
 
Fair
 
 
Unrealized
 
 
Fair
 
 
Unrealized
 
 
 
Value
 
 
Losses
 
 
Value
 
 
Losses
 
 
Value
 
 
Losses
 
                                                 
Obligations of U.S. Government agencies
   $
0
    $
0
    $
7,850
    $
(192
 )   $
7,850
    $
(192
 )
Obligations of states and political subdivisions:
                                                
Tax-exempt
    
5,200
     
(19
 )    
216
     
(3
 )    
5,416
     
(22
 )
Taxable
    
10,605
     
(60
 )    
2,910
     
(41
 )    
13,515
     
(101
 )
Mortgage-backed securities issued or guaranteed
by U.S. Government agencies or sponsored
agencies:
                                                
Residential pass-through securities
    
38,764
     
(295
 )    
3,503
     
(75
 )    
42,267
     
(370
 )
Residential collateralized mortgage obligations
    
88,355
     
(648
 )    
49,273
     
(1,405
 )    
137,628
     
(2,053
 )
Total temporarily impaired available-for-sale securities
   $
142,924
    $
(1,022
 )   $
63,752
    $
(1,716
 )   $
206,676
    $
(2,738
 )
 
Gross realized gains and losses from available-for-sale securities and the related income tax provision were as follows:
 
(In Thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2016
 
 
2015
 
 
2014
 
Gross realized gains from sales
   $
1,392
    $
2,972
    $
1,328
 
Gross realized losses from sales
    
(234
 )    
(111
 )    
(224
 )
Net realized gains
   $
1,158
    $
2,861
    $
1,104
 
Income tax provision related to net realized gains
   $
406
     $
1,002
    $
386
 
 
The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of
December
31,
2016.
Actual maturities
may
differ from contractual maturities because counterparties
may
have the right to call or prepay obligations with or without call or prepayment penalties.
 
 
 
December 31, 2016
 
 
 
Amortized
 
 
Fair
 
(In Thousands)
 
Cost
 
 
Value
 
                 
Due in one year or less
   $
18,678
    $
18,832
 
Due from one year through five years
    
69,558
     
70,657
 
Due from five years through ten years
    
44,527
     
43,979
 
Due after ten years
    
25,121
     
25,407
 
Sub-total
    
157,884
     
158,875
 
Mortgage-backed securities issued or guaranteed
by U.S. Government agencies or sponsored
agencies:
                
Residential pass-through securities
    
58,922
     
58,404
 
Residential collateralized mortgage obligations
    
147,915
     
146,608
 
Commercial mortgage-backed securities
    
30,817
     
30,219
 
Total
   $
395,538
    $
394,106
 
 
The Corporation’s mortgage-backed securities and collateralized mortgage obligations have stated maturities that
may
differ from actual maturities due to borrowers’ ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. In the table above, mortgage-backed securities and collateralized mortgage obligations are shown in
one
period.
 
Investment securities carried at
$230,803,000
at
December
31,
2016
and
$228,616,000
at
December
31,
2015
were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note
12
for information concerning securities pledged to secure borrowing arrangements.
 
Management evaluates securities for OTTI at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to
(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, and
(3)
whether the Corporation intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery.
 
The Corporation recognized
no
net impairment losses in earnings for the years ended
December
31,
2016,
2015
and
2014.
 
A summary of information management considered in evaluating debt and equity securities for OTTI at
December
31,
2016
is provided below.
 
Debt Securities
 
At
December
31,
2016
and
2015,
management performed an assessment for possible OTTI of the Corporation’s debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security depended on the size of the Corporation’s investment, as well as management’s perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of these debt securities at
December
31,
2016
to be temporary.
 
Equity Securities
 
The Corporation’s marketable equity securities at
December
31,
2016
consisted exclusively of
one
mutual fund. At
December
31,
2015,
the Corporation’s marketable equity securities consisted of stocks of banking companies. The Corporation recognized
no
other-than-temporary impairment losses related to equities in
2016,
2015
or
2014.
At
December
31,
2016,
the mutual fund held by the Corporation had an unrealized loss of
$29,000
for which management determined an OTTI charge was not required.
 
Realized gains from sales of equity securities (bank stocks) totaled
$1,125,000
in
2016,
$2,220,000
in
2015
and
$363,000
in
2014.
 
C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is
one
of
11
regional Federal Home Loan Banks. As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh. There is no active market for FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated. C&N Bank’s investment in FHLB-Pittsburgh stock, included in Other Assets in the consolidated balance sheets, was
$4,296,000
at
December
31,
2016
and
$4,527,000
at
December
31,
2015.
The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to
not
be impaired at
December
31,
2016
and
December
31,
2015.
In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. The decision was based on review of financial information that FHLB-Pittsburgh has made publicly available.