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Note 6 - Securities
 9 Months Ended
Sep. 30, 2017
Notes to Financial Statements  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]
6
. SECURITIES
 
Amortized cost and fair value of
available-for-sale securities at
September 30, 2017
and
December 31, 2016
are summarized as follows:
 
   
 
 
 
  
September
3
0
, 201
7
    
 
 
 
   
 
 
 
  
Gross
    
Gross
    
 
 
 
   
 
 
 
  
Unrealized
    
Unrealized
    
 
 
 
   
Amortized
    
Holding
    
Holding
    
Fair
  
(In Thousands)
  
Cost
    
Gains
    
Losses
    
Value
  
                                 
Obligations of U.S. Government agencies
   $
8,028
     $
0
     $
(82
 )   $
7,946
  
Obligations of states and political subdivisions:
                                
Tax-exempt
    
108,521
      
2,678
      
(642
 )    
110,557
  
Taxable
    
27,538
      
316
      
(38
 )    
27,816
  
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
                                
Residential pass-through securities
    
55,247
      
113
      
(443
 )    
54,917
  
Residential collateralized mortgage obligations
    
130,375
      
323
      
(1,455
 )    
129,243
  
Commercial mortgage-backed securities
    
34,028
      
31
      
(430
 )    
33,629
  
Total debt securities
    
363,737
      
3,461
      
(3,090
 )    
364,108
  
Marketable equity securities
    
1,000
      
0
      
(22
 )    
978
  
Total
   $
364,737
     $
3,461
     $
(3,112
 )   $
365,086
  
 
   
 
 
 
  
 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
  
 
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
September 30, 2017
and
December 31, 2016:
 
 
September
3
0
, 2017
  
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
   $
7,946
     $
(82
 )   $
0
     $
0
     $
7,946
     $
(82
 )
Obligations of states and political subdivisions:
                                                
Tax-exempt
    
21,028
      
(238
 )    
14,890
      
(404
 )    
35,918
      
(642
 )
Taxable
    
7,073
      
(38
 )    
0
      
0
      
7,073
      
(38
 )
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
                                                
Residential pass-through securities
    
47,572
      
(443
 )    
0
      
0
      
47,572
      
(443
 )
Residential collateralized mortgage obligations
    
64,948
      
(747
 )    
25,718
      
(708
 )    
90,666
      
(1,455
 )
Commercial mortgage-backed securities
    
24,890
      
(275
 )    
4,760
      
(155
 )    
29,650
      
(430
 )
Total debt securities
    
173,457
      
(1,823
 )    
45,368
      
(1,267
 )    
218,825
      
(3,090
 )
Marketable equity securities
    
1,000
      
(22
 )    
0
      
0
      
1,000
      
(22
 )
Total temporarily impaired available-for-sale securities
   $
174,457
     $
(1,845
 )   $
45,368
     $
(1,267
 )   $
219,825
     $
(3,112
 )
 
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
 )
 
Gross realized gains and losses from available-for-sale securities were as follows:
 
(In Thousands)
 
3 Months Ended
    
9 Months Ended
  
   
Sept. 30,
    
Sept. 30,
    
Sept. 30,
    
Sept. 30,
  
   
2017
    
2016
    
2017
    
2016
  
Gross realized gains from sales
   $
47
     $
584
     $
315
     $
1,090
  
Gross realized losses from sales
    
(42
 )    
0
      
(58
 )    
(1
 )
Net realized gains
   $
5
     $
584
     $
257
     $
1,089
  
 
The amortized cost and fair value of
available-for-sale debt securities by contractual maturity are shown in the following table as of
September 30, 2017.
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.
 
   
Amortized
    
Fair
  
(In Thousands)
  
Cost
    
Value
  
                 
Due in one year or less
   $
12,478
     $
12,491
  
Due from one year through five years
    
71,673
      
73,134
  
Due from five years through ten years
    
36,361
      
36,517
  
Due after ten years
    
23,575
      
24,177
  
Sub-total
    
144,087
      
146,319
  
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
                
Residential pass-through securities
    
55,247
      
54,917
  
Residential collateralized mortgage obligations
    
130,375
      
129,243
  
Commercial mortgage-backed securities
    
34,028
      
33,629
  
Total
   $
363,737
     $
364,108
  
 
The Corporation
’s mortgage-backed securities 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 $
224,612,000
at
September 30, 2017
and
$230,803,000
at
December 31, 2016
were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note
8
for information concerning securities pledged to secure borrowing arrangements.
 
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 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.
 
A summary of information management considered in evaluating debt and equity securities for
other-than-temporary impairment (“OTTI”) at
September 30, 2017
is provided below.
 
Debt Securities
 
At
September 30, 2017,
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 debt securities at
September 30, 2017
to be temporary.
 
Equity Securities
 
The Corporation
’s marketable equity securities at
September 30, 2017
and
December 31, 2016
consisted exclusively of
one
mutual fund. At
September 30, 2017,
there was an unrealized loss on the mutual fund of
$22,000,
and at
December 31, 2016
there was an unrealized loss of
$29,000.
Management determined an OTTI charge was
not
required on this security at
September 30, 2017
and
December 31, 2016.
 
The Corporation had
no
realized gains or losses from the sale of equity securities in the
first
nine
months of
2017.
The Corporation realized gains from sales of bank stocks totaling
$560,000
in the
three
-month period ended
September 30, 2016
and
$837,000
during the
first
nine
months of
2016.
 
C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is
one
of
1
1
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 sheet, was
$3,534,000
at
September 30, 2017
and
$4,296,000
at
December 31, 2016.
The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to
not
be impaired at
September 30, 2017
and
December 31, 2016.
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.