Securities Available for Sale

6 Months Ended

Jun. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Securities Available for Sale

2.       Securities Available for Sale

The amortized cost, gross unrealized gains and losses, and fair value of securities held at June 30, 2018, and December 31, 2017, are as follows:        

			Gross		Gross
(DOLLARS IN THOUSANDS)		Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	$		$		$			$
June 30, 2018
U.S. government agencies		35,089		—		(1,390	)		33,699
U.S. agency mortgage-backed securities		48,039		—		(1,936	)		46,103
U.S. agency collateralized mortgage obligations		58,120		19		(1,868	)		56,271
Asset-backed securities		7,768		—		(32	)		7,736
Corporate bonds		62,929		5		(1,582	)		61,352
Obligations of states and political subdivisions		103,888		105		(1,901	)		102,092
Total debt securities available for sale		315,833		129		(8,709	)		307,253
December 31, 2017
U.S. government agencies		35,101		—		(749	)		34,352
U.S. agency mortgage-backed securities		52,981		8		(916	)		52,073
U.S. agency collateralized mortgage obligations		55,493		46		(898	)		54,641
Corporate bonds		61,334		24		(589	)		60,769
Obligations of states and political subdivisions		114,047		243		(2,047	)		112,243
Total debt securities		318,956		321		(5,199	)		314,078
Equity securities		5,547		36		—			5,583
Total securities available for sale		324,503		357		(5,199	)		319,661

The amortized cost and fair value of debt securities available for sale at June 30, 2018, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities due to certain call or prepayment provisions.

CONTRACTUAL MATURITY OF DEBT SECURITIES
(DOLLARS IN THOUSANDS)
	Amortized
	Cost		Fair Value
	$		$
Due in one year or less		13,125		12,726
Due after one year through five years		131,284		127,386
Due after five years through ten years		54,955		52,891
Due after ten years		116,469		114,250
Total debt securities		315,833		307,253

Securities available for sale with a par value of $65,568,000 and $64,580,000 at June 30, 2018, and December 31, 2017, respectively, were pledged or restricted for public funds, borrowings, or other purposes as required by law. The fair value of these pledged securities was $65,500,000 at June 30, 2018, and $66,157,000 at December 31, 2017.

Proceeds from active sales of securities available for sale, along with the associated gross realized gains and gross realized losses, are shown below. Realized gains and losses are computed on the basis of specific identification.

PROCEEDS FROM SALES OF SECURITIES AVAILABLE FOR SALE

(DOLLARS IN THOUSANDS)

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
	$		$		$		$
Proceeds from sales		23,660		26,398		32,235		40,085
Gross realized gains		58		216		109		388
Gross realized losses		120		109		137		141

Management evaluates all of the Corporation’s securities for other than temporary impairment (OTTI) on a periodic basis. No securities in the portfolio had other-than-temporary impairment recorded in the first six months of 2018 or 2017.

Information pertaining to securities with gross unrealized losses at June 30, 2018, and December 31, 2017, aggregated by investment category and length of time that individual securities have been in a continuous loss position follows:

TEMPORARY IMPAIRMENTS OF SECURITIES

(DOLLARS IN THOUSANDS)              

	Less than 12 months					More than 12 months					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	$		$			$		$			$		$
As of June 30, 2018
U.S. government agencies		9,768		(232	)		23,931		(1,158	)		33,699		(1,390	)
U.S. agency mortgage-backed securities		13,266		(372	)		32,837		(1,564	)		46,103		(1,936	)
U.S. agency collateralized mortgage obligations		28,434		(783	)		19,773		(1,085	)		48,207		(1,868	)
Asset-backed securities		7,736		(32	)		—		—			7,736		(32	)
Corporate bonds		41,687		(893	)		16,641		(689	)		58,328		(1,582	)
Obligations of states & political subdivisions		31,739		(420	)		53,149		(1,481	)		84,888		(1,901	)
Total temporarily impaired securities		132,630		(2,732	)		146,331		(5,977	)		278,961		(8,709	)
As of December 31, 2017
U.S. government agencies		9,941		(59	)		24,411		(690	)		34,352		(749	)
U.S. agency mortgage-backed securities		10,326		(78	)		37,123		(838	)		47,449		(916	)
U.S. agency collateralized mortgage obligations		29,551		(280	)		20,980		(618	)		50,531		(898	)
Corporate bonds		38,543		(282	)		15,019		(307	)		53,562		(589	)
Obligations of states & political subdivisions		15,188		(142	)		68,278		(1,905	)		83,466		(2,047	)
Total temporarily impaired securities		103,549		(841	)		165,811		(4,358	)		269,360		(5,199	)

In the debt security portfolio there were 190 positions that were carrying unrealized losses as of June 30, 2018. There were no instruments considered to be other-than-temporarily impaired at June 30, 2018.

The Corporation evaluates fixed maturity positions for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic and market concerns warrant such evaluation. U.S. generally accepted accounting principles provide for the bifurcation of OTTI into two categories: (a) the amount of the total OTTI related to a decrease in cash flows expected to be collected from the debt security (the credit loss), which is recognized in earnings, and (b) the amount of total OTTI related to all other factors, which is recognized, net of taxes, as a component of accumulated other comprehensive income.