NOTE 3 - SECURITIES AVAILABLE FOR SALE

The following table summarizes the amortized cost and fair value of the available-for-sale securities portfolio at December 31, 2017 and 2016 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:

				Gross		Gross
		Amortized		Unrealized		Unrealized
	2017	Cost		Gains		Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities		$	8,986	$	0	$	(69	)	$	8,917
State and political subdivisions			188,032		3,614		(643	)		191,003
Corporate bonds			1,238		4		(8	)		1,234
Mortgage-backed securities - residential			161,635		419		(1,604	)		160,450
Collateralized mortgage obligations			17,898		0		(777	)		17,121
Small Business Administration			14,608		0		(396	)		14,212
Equity securities			179		216		(1	)		394
Totals		$	392,576	$	4,253	$	(3,498	)	$	393,331

				Gross		Gross
		Amortized		Unrealized		Unrealized
	2016	Cost		Gains		Losses			Fair Value
U.S. Treasury and U.S. government sponsored entities		$	5,970	$	5	$	(54	)	$	5,921
State and political subdivisions			157,014		1,049		(2,760	)		155,303
Corporate bonds			1,343		4		(8	)		1,339
Mortgage-backed securities - residential			171,215		1,019		(2,552	)		169,682
Collateralized mortgage obligations			21,397		1		(705	)		20,693
Small Business Administration			17,236		0		(530	)		16,706
Equity securities			168		185		(2	)		351
Totals		$	374,343	$	2,263	$	(6,611	)	$	369,995

The proceeds from sales of available-for-sale securities and the associated gains and losses were as follows:

		2017			2016			2015
Proceeds	$	54,497		$	11,493		$	102,257
Gross gains		727			389			908
Gross losses		(723	)		(316	)		(814	)

The tax provision related to these net realized gains was $2 thousand, $26 thousand and $33 thousand respectively.

The amortized cost and fair value of the debt securities portfolio are shown by expected maturity. Expected maturities may differ from contractual maturities if issuers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

Available for sale		December 31, 2017
		Amortized
Maturity		Cost		Fair Value
Within one year		$	19,061	$	19,030
One to five years			47,277		47,585
Five to ten years			119,195		121,866
Beyond ten years			12,723		12,673
Mortgage-backed securities, collateralized mortgage obligations and Small Business Administration			194,141		191,783
	Totals	$	392,397	$	392,937

Securities with a carrying amount of $269 million at December 31, 2017 and $242 million at December 31, 2016 were pledged to secure public deposits and repurchase agreements. Trust had securities, with a carrying amount of $100 thousand, at year-end 2017 and 2016, pledged to qualify as a fiduciary in the State of Ohio.

In each year, there were no holdings of any other issuer that exceeded 10% of stockholders’ equity, other than the U.S. Government, its agencies and its sponsored entities.

The following table summarizes the investment securities with unrealized losses at December 31, 2017 and 2016 aggregated by major security type and length of time in a continuous unrealized loss position.

2017
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and U.S. government
sponsored entities	$	3,970	$	(34	)	$	1,912	$	(35	)	$	5,882	$	(69	)
State and political subdivisions		33,188		(220	)		25,721		(423	)		58,909		(643	)
Corporate bonds		397		(3	)		383		(5	)		780		(8	)
Mortgage-backed securities - residential		40,072		(400	)		53,760		(1,204	)		93,832		(1,604	)
Collateralized mortgage obligations		1,701		(22	)		15,420		(755	)		17,121		(777	)
Small Business Administration		0		0			14,182		(396	)		14,182		(396	)
Equity securities		22		(1	)		0		0			22		(1	)
Total temporarily impaired	$	79,350	$	(680	)	$	111,378	$	(2,818	)	$	190,728	$	(3,498	)

2016
	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
U.S. Treasury and U.S. government
sponsored entities	$	4,015	$	(54	)	$	502	$	0		$	4,517	$	(54	)
State and political subdivisions		92,560		(2,745	)		286		(15	)		92,846		(2,760	)
Corporate bonds		786		(8	)		0		0			786		(8	)
Mortgage-backed securities - residential		98,348		(1,823	)		29,743		(729	)		128,091		(2,552	)
Collateralized mortgage obligations		7,956		(108	)		10,972		(597	)		18,928		(705	)
Small Business Administration		8,770		(205	)		7,890		(325	)		16,660		(530	)
Equity securities		44		(2	)		0		0			44		(2	)
Total temporarily impaired	$	212,479	$	(4,945	)	$	49,393	$	(1,666	)	$	261,872	$	(6,611	)

The Company’s equity securities include local and regional bank holdings. No other-than-temporary impairments were recognized during 2017, 2016 or 2015. If an other-than-temporary impairment were to occur, the amount of the impairment recognized in earnings depends on whether an entity intends to sell the security or it is more likely than not it would be required to sell the security before recovery of its amortized cost basis. The previous amortized cost basis less the impairment recognized in earnings becomes the new amortized cost basis of the investment.

As of December 31, 2017, the Company’s security portfolio consisted of 550 securities, 184 of which were in an unrealized loss position. The majority of unrealized losses are related to the Company’s holdings in securities issued by state and political subdivisions, mortgage-backed securities - residential, collateralized mortgage obligations and Small Business Administration, as discussed below:

Securities issued by State and Political subdivisions

Unrealized losses on debt securities issued by state and political subdivisions have not been recognized into income. At December 31, 2017 and 2016 all securities issued by state and political subdivisions have investment grade ratings and management does not have the intent and does not expect to be required to sell these securities before their anticipated recovery. The fair value is expected to recover as the securities approach their maturity date.

Mortgage-backed securities - residential

All of the Company’s holdings of mortgage-backed securities—residential at year end 2017 and 2016 were issued by U.S. Government sponsored enterprises. Unrealized losses on mortgage-backed securities—residential have not been recognized into income. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not have the intent to sell these mortgage-backed securities—residential and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at December 31, 2017 and 2016.

Collateralized mortgage obligations

The Company’s portfolio includes collateralized mortgage obligations issued by U.S. Government sponsored enterprises. The decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality. The Company does not have the intent to sell these collateralized mortgage obligations and it is likely that it will not be required to sell the securities before their anticipated recovery. The Company monitors all securities to ensure adequate credit support and as of December 31, 2017 and 2016, the Company believes there is no other-than-temporary impairment.

Small Business Administration

The Company’s holdings of Small Business Administration securities are issued and backed by the full faith and credit of the U.S. Government. Unrealized losses on these Small Business Administration securities have not been recognized into income. The Company does not consider these securities to be other-than-temporarily impaired at December 31, 2017 and 2016 because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.