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, 2018

and

2017

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, 201 8
Obligations of U.S. government-sponsored entities and agencies	$	16,488	$	6	$	(372	)	$	16,122
Obligations of state and political subdivisions		56,964		339		(713	)		56,590
U.S. Government-sponsored mortgage-backed securities - residential		65,062		6		(1,660	)		63,408
U.S. Government-sponsored mortgage-backed securities - commercial		1,432		—		(17	)		1,415
U.S. Government-sponsored collateralized mortgage obligations - residential		5,973		9		(216	)		5,766
Pooled trust preferred security		178		549		—			727
Total available-for-sale securities	$	146,097	$	909	$	(2,978	)	$	144,028

Held-to-maturity	Amortized Cost		Gross Unrecognized Gains		Gross Unrecognized Losses		Fair Value
June 30, 201 8
Obligations of state and political subdivisions	$	4,024	$	24	$	—	$	4,048
Total held-to-maturity securities	$	4,024	$	24	$	—	$	4,048

Available-for-sale	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 201 7
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, 201 7
Obligations of state and political subdivisions	$	4,259	$	73	$	(3	)	$	4,329
Total held-to-maturity securities	$	4,259	$	73	$	(3	)	$	4,329

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

2018

and fiscal year

2017

were as follows:

	201 8		201 7
Proceeds from sales and calls	$	2,644	$	14,255
Gross realized gains		40		213
Gross realized losses		7		4

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

$12

in fiscal year

2018

and

$71

in fiscal year

2017.

During the

first

quarter of fiscal year

2019,

the pooled trust preferred security was sold for gross proceeds of

$771.

The amortized cost and fair values of debt securities at

June

30,

2018

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	$	3,087	$	3,097
Due after one year through five years		20,787		20,645
Due after five years through ten years		27,462		27,235
Due after ten years		22,115		21,735
Total		73,451		72,712
U.S. Government-sponsored mortgage-backed and related securities		72,468		70,589
Pooled trust preferred security		178		727
Total	$	146,097	$	144,028

Held-to-maturity	Amortized Cost		Fair Value
Due after five years through ten years	$	527	$	527
Due after ten years		3,497		3,521
Total	$	4,024	$	4,048

Securities with a carrying value of approximately

$71,673

and

$55,932

were pledged at

June 30, 2018

and

2017,

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

June 30, 2018

and

2017,

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, 2018

and

2017,

aggregated by investment category and length of time that 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, 201 8
Obligations of U.S. government-sponsored entities and agencies	$	12,400	$	(224	)	$	2,747	$	(148	)	$	15,147	$	(372	)
Obligations of states and political subdivisions		26,775		(369	)		7,975		(344	)		34,750		(713	)
Mortgage-backed securities - residential		31,038		(581	)		29,716		(1,079	)		60,754		(1,660	)
Mortgage-backed securities - commercial		1,415		(17	)		—		—			1,415		(17	)
Collateralized mortgage obligations - residential		—		—			4,821		(216	)		4,821		(216	)
Total temporarily impaired	$	71,628	$	(1,191	)	$	45,259	$	(1,787	)	$	116,887	$	(2,978	)

	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, 201 7
Obligations of U.S. 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 temporarily impaired	$	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	)
Total temporarily impaired	$	933	$	(3	)	$	—	$	—	$	933	$	(3	)

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, 2018,

the Corporation’s securities portfolio consisted of

264

available-for-sale and

three

held-to-maturity securities. There were

189

securities in an unrealized loss position at

June 30, 2018,

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, 2018,

all 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 that 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 OTTI related to these securities at

June 30, 2018.

Also, there was

OTTI recognized at

June 30, 2017.