NOTE 2 – SECURITIES

Securities consisted of the following at December 31:


(Dollars in thousands)	Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value

2016

Available-for-sale
U.S. Treasury security		$	1,001		$	–		$	–		$	1,001
U.S. Government agencies			6,500			–			98			6,402
Mortgage-backed securities of government agencies			56,187			239			589			55,837
Other mortgage-backed securities			65			–			–			65
Asset-backed securities of government agencies			1,312			–			46			1,266
State and political subdivisions			30,007			140			439			29,708
Corporate bonds			9,632			28			144			9,516
Equity securities			53			27			–			80

Total available-for-sale			104,757			434			1,316			103,875

Held-to-maturity
U.S. Government agencies			9,472			17			396			9,093
Mortgage-backed securities of government agencies			14,411			141			201			14,351

Total held-to-maturity			23,883			158			597			23,444

Restricted stock			4,614			–			–			4,614


Total securities		$	133,254		$	592		$	1,913		$	131,933


2015
Available-for-sale
U.S. Treasury security		$	1,002		$	–		$	2		$	1,000
U.S. Government agencies			18,239			5			126			18,118
Mortgage-backed securities of government agencies			62,930			527			278			63,179
Other mortgage-backed securities			104			–			–			104
Asset-backed securities of government agencies			1,464			–			72			1,392
State and political subdivisions			24,924			418			41			25,301
Corporate bonds			18,912			7			108			18,811
Equity securities			53			11			–			64

Total available-for-sale			127,628			968			627			127,969

Held-to-maturity
U.S. Government agencies			15,586			312			46			15,852
Mortgage-backed securities of government agencies			18,233			81			155			18,159

Total held-to-maturity			33,819			393			201			34,011

Restricted stock			4,614			–			–			4,614


Total securities		$	166,061		$	1,361		$	828		$	166,594

The amortized cost and fair value of debt securities at December 31, 2016, by contractual maturity, are shown below. Actual maturities may 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)	Amortized Cost		Fair Value

Available-for-sale
Due in one year or less	$	4,313	$	4,315
Due after one through five years		22,039		22,037
Due after five through ten years		23,715		23,452
Due after ten years		54,637		53,991

Total debt securities available-for-sale	$	104,704	$	103,795


Held-to-maturity
Due in one year or less	$	–	$	–
Due after one through five years		–		–
Due after five through ten years		3,474		3,334
Due after ten years		20,409		20,110

Total debt securities held-to-maturity	$	23,883	$	23,444

Securities with a carrying value of approximately $94.8 million and $100.5 million were pledged at December 31, 2016 and 2015, respectively, to secure public deposits, as well as other deposits and borrowings as required or permitted by law.

Restricted stock primarily consists of investments in FHLB and Federal Reserve Bank stock. The Bank’s investment in FHLB stock amounted to $4.1 million at December 31, 2016 and 2015, respectively. Federal Reserve Bank stock was $471 thousand at December 31, 2016 and 2015.

The following table shows the proceeds from sales of available-for-sale securities and the gross realized gains and losses on the sales of those securities that have been included in earnings as a result of the sales in 2016, 2015, and 2014.


(Dollars in thousands)	2016		2015		2014

Proceeds	$	1	$	1,576	$	2,483

Realized gains	$	1	$	56	$	133
Realized losses		–		–		–

Net securities gains	$	1	$	56	$	133

The following table presents gross unrealized losses, fair value of securities, aggregated by investment category, and length of time that individual securities have been in a continuous unrealized loss position, at December 31:

Securities in a Continuous Unrealized Loss Position


	Less Than 12 Months						12 Months Or More						Total
(Dollars in thousands)	Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value			Gross Unrealized Losses			Fair Value

2016

Available-for-sale
U.S. Government agencies		$	98		$	6,402		$	–		$	–		$	98		$	6,402
Mortgage-backed securities of government agencies			589			27,243			–			–			589			27,243
Asset-backed securities of government agencies			–			–			46			1,266			46			1,266
State and political subdivisions			439			19,328			–			–			439			19,328
Corporate bonds			33			3,593			111			1,889			144			5,482
Held-to-maturity
U.S. Government agencies			396			8,602			–			–			396			8,602
Mortgage-backed securities of government agencies			28			2,018			173			3,621			201			5,639


Total temporarily impaired securities		$	1,583		$	67,186		$	330		$	6,776		$	1,913		$	73,962


2015

Available-for-sale
U.S. Treasury security		$	2		$	1,000		$	–		$	–		$	2		$	1,000
U.S. Government agencies			67			9,172			59			4,941			126			14,113
Mortgage-backed securities of government agencies			278			20,231			–			–			278			20,231
Asset-backed securities of government agencies			72			1,392			–			–			72			1,392
State and political subdivisions			33			2,652			8			1,120			41			3,772
Corporate bonds			108			15,282			–			–			108			15,282
Held-to-maturity
U.S. Government agencies			46			5,954			–			–			46			5,954
Mortgage-backed securities of government agencies			155			12,994			–			–			155			12,994


Total temporarily impaired securities		$	761		$	68,677		$	67		$	6,061		$	828		$	74,738

There were 93 securities in an unrealized loss position at December 31, 2016, five of which were in a continuous loss position for twelve or more months. At least quarterly, the Company conducts a comprehensive security-level impairment assessment. The assessments are based on the nature of the securities, the extent and duration of the securities, the extent and duration of the loss, and management’s intent to sell or if it is more likely than not that management will be required to sell a security before recovery of its amortized cost basis, which may be maturity. Management believes the Company will fully recover the cost of these securities and it does not intend to sell these securities and likely will not be required to sell them before the anticipated recovery of the remaining amortized cost basis, which may be maturity. As a result, management concluded that these securities were not other-than-temporarily impaired at December 31, 2016.