NOTE

2—SECURITIES

The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at

June 30, 2017

and

2016

and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses:

Available-for-sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2017
Obligations of U.S. government-sponsored entities and agencies	$	12,571	$	90	$	(74	)	$	12,587
Obligations of state and political subdivisions		56,824		890		(254	)		57,460
U.S. Government-sponsored mortgage-backed securities - residential		64,092		184		(438	)		63,838
U.S. Government-sponsored mortgage-backed securities - commercial		1,459		—		(1	)		1,458
U.S. Government-sponsored collateralized mortgage obligations - residential		6,310		1		(100	)		6,211
Pooled trust preferred security		155		377		—			532
Total available-for-sale securities	$	141,411	$	1,542	$	(867	)	$	142,086

Held-to-maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses			Fair Value
June 30, 2017
Obligations of state and political subdivisions	$	4,259	$	73	$	(3	)	$	4,329
Total held-to-maturity securities	$	4,259	$	73	$	(3	)	$	4,329

Available-for-sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2016
Obligations of U.S. government-sponsored entities and agencies	$	9,682	$	362	$	—		$	10,044
Obligations of state and political subdivisions		53,952		2,010		(8	)		55,954
U.S. Government-sponsored mortgage-backed securities - residential		58,702		920		(26	)		59,596
U.S. Government-sponsored mortgage-backed securities - commercial		1,485		41		—			1,526
U.S. Government-sponsored collateralized mortgage obligations - residential		5,774		49		(3	)		5,820
Pooled trust preferred security		153		276		—			429
Total available-for-sale securities	$	129,748	$	3,658	$	(37	)	$	133,369

Held-to-maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
June 30, 2016
Obligations of state and political subdivisions	$	3,494	$	125	$	—	$	3,619
Total held-to-maturity securities	$	3,494	$	125	$	—	$	3,619

Proceeds from sales and calls of available-for-sale securities during fiscal year

2017

and fiscal year

2016

were as follows:

	2017		2016
Proceeds from sales and calls	$	14,255	$	10,596
Gross realized gains		213		202
Gross realized losses		4		—

The income tax provision related to these net realized gains and losses amounted to

$71

in fiscal year

2017

and

$69

in fiscal year

2016.

The amortized cost and fair values of debt securities at

June

30,

2017

by expected maturity are shown below. 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. Securities

not

due at a single maturity date, primarily mortgage-backed securities, collateralized mortgage obligations and the pooled trust preferred security are shown separately.

Available-for-sale	Amortized Cost		Fair Value
Due in one year or less	$	1,552	$	1,555
Due after one year through five years		17,428		17,727
Due after five years through ten years		28,024		28,367
Due after ten years		22,391		22,398
Total		69,395		70,047
U.S. Government-sponsored mortgage-backed and related securities		71,861		71,507
Pooled trust preferred security		155		532
Total	$	141,411	$	142,086

Held-to-maturity	Amortized Cost		Fair Value
Due after five years through ten years	$	601	$	620
Due after ten years		3,658		3,709
Total	$	4,259	$	4,329

Securities with a carrying value of approximately

$55,932

and

$55,140

were pledged at

June 30, 2017

and

2016,

respectively, to secure public deposits and commitments as required or permitted by law. At

June 30, 2017

and

2016,

there were

holdings of securities of any

one

issuer, other than the U.S. government and its agencies, with an aggregate book value greater than

10%

of shareholders’ equity.

The following table summarizes the securities with unrealized and unrecognized losses at

June 30, 2017

and

2016,

aggregated by investment category and length of time the individual securities have been in a continuous unrealized loss position:

	Less than 12 Months					12 Months or more					Total
Available-for-sale	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
June 30, 2017
Obligations of US government-sponsored entities and agencies	$	4,336	$	(74	)	$	—	$	—		$	4,336	$	(74	)
Obligations of states and political subdivisions		13,881		(241	)		834		(13	)		14,715		(254	)
Mortgage-backed securities - residential		42,071		(391	)		2,805		(47	)		44,876		(438	)
Mortgage-backed securities - commercial		1,458		(1	)		—		—			1,458		(1	)
Collateralized mortgage obligations - residential		5,417		(88	)		654		(12	)		6,071		(100	)
Total available-for-sale	$	67,163	$	(795	)	$	4,293	$	(72	)	$	71,456	$	(867	)

	Less than 12 Months					12 Months or more				Total
Held-to-Maturity	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
June 30, 2017
Obligations of states and political subdivisions	$	933	$	(3	)	$	—	$	—	$	933	$	(3	)

	Less than 12 Months					12 Months or more					Total
Available-for-sale	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss

June 30, 2016
Obligations of states and political subdivisions	$	572	$	(6	)	$	641	$	(2	)	$	1,213	$	(8	)
Mortgage-backed securities - residential		4,899		(12	)		4,836		(14	)		9,735		(26	)
Collateralized mortgage obligations - residential		—		—			1,212		(3	)		1,212		(3	)
Total available-for-sale	$	5,471	$	(18	)	$	6,689	$	(19	)	$	12,160	$	(37	)

Management evaluates securities for other-than-temporary impairment (OTTI) on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The securities portfolio is evaluated for OTTI by segregating the portfolio into

two

general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under FASB ASC Topic

320,

Accounting for Certain Investments in Debt and Equity Securities

In determining OTTI under the ASC Topic

320

model, management considers many factors, including: (

) the length of time and the extent to which the fair value has been less than cost, (

) the financial condition and near-term prospects of the issuer, (

) whether the market decline was affected by macroeconomic conditions, and (

) 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.

As of

June 30, 2017,

the Corporation’s securities portfolio consisted of

252

available-for-sale securities. There were

100

securities in an unrealized loss position at

June 30, 2017,

seven

of which were in a continuous loss position for

twelve

or more months. The unrealized losses within the securities portfolio were primarily attributed to a change in market rates. At

June 30, 2017,

all of the mortgage-backed securities and collateralized mortgage obligations held by the Corporation were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support. Also, management monitors the financial condition of the individual municipal securities to ensure they meet minimum credit standards. Since

the Corporation does

not

intend to sell these securities and it is

not

likely the Corporation will be required to sell these securities at an unrealized loss position prior to any anticipated recovery in fair value, which

may

be maturity, management does

not

believe there is any other-than-temporary impairment related to these securities at

June 30, 2017.

Also, there was

other-than-temporary impairment recognized at

June 30, 2016.