SECURITIES

Amortized cost and fair value at December 31, 2015 and 2014, were as follows:



In thousands	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
SECURITIES AVAILABLE FOR SALE
December 31, 2015
U.S. Government and agencies	$	46,218	$	124	$	313	$	46,029
Mortgage-backed securities, residential	41,528		1,336		25		42,839
State and municipal	27,437		642		1		28,078
Corporate bonds	7,000		20		65		6,955
CRA mutual fund	1,044		9		—		1,053
Stock in other banks	702		49		12		739
	$	123,929	$	2,180	$	416	$	125,693
December 31, 2014
U.S. Government and agencies	$	16,980	$	337	$	—	$	17,317
Mortgage-backed securities, residential	51,076		2,187		1		53,262
State and municipal	34,378		1,072		5		35,445
Corporate bonds	10,001		82		—		10,083
CRA mutual fund	1,044		14		—		1,058
Stock in other banks	627		208		—		835
	$	114,106	$	3,900	$	6	$	118,000
SECURITIES HELD TO MATURITY
December 31, 2015
U.S. Government and agencies	$	31,044	$	27	$	176	$	30,895
Mortgage-backed securities, residential	40,498		232		262		40,468
	$	71,542	$	259	$	438	$	71,363
December 31, 2014
U.S. Government and agencies	$	24,497	$	11	$	348	$	24,160
Mortgage-backed securities, residential	$	48,849	$	305	$	257	$	48,897
	$	73,346	$	316	$	605	$	73,057

The following table shows the Corporation’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2015 and 2014:



	Less than 12 Months				12 Months or More				Total
In thousands	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
SECURITIES AVAILABLE FOR SALE
December 31, 2015
U.S. Government and agencies	$	31,992	313		—		—		$	31,992	$	313
Mortgage-backed securities, residential	4,855		25		—		—		4,855		25
State and municipal	909		1		—		—		909		1
Corporate bonds	4,935		65						4,935		65
Stock in other banks	191		12						191		12
	$	42,882	$	416	$	—	$	—	$	42,882	$	416
December 31, 2014
Mortgage-backed securities, residential	$	2,038	$	1	$	—	$	—	$	2,038	$	1
State and municipal	—		—		1,059		5		1,059		5
	$	2,038	$	1	$	1,059	$	5	$	3,097	$	6
SECURITIES HELD TO MATURITY
December 31, 2015
U.S. Government and agencies	$	18,959	$	83	$	6,907	$	93	$	25,866	$	176
Mortgage-backed securities, residential	3,109		13		15,420		249		18,529		262
	$	22,068	$	96	$	22,327	$	342	$	44,395	$	438

December 31, 2014
U.S. Government and agencies	$	—	$	—	$	21,149	$	348	$	21,149	$	348
Mortgage-backed security, residential	—		—		21,666		257		21,666		257
	$	—	$	—	$	42,815	$	605	$	42,815	$	605

All mortgage-backed security investments are government sponsored enterprise (GSE) pass-through instruments issued by the Federal National Mortgage Association (FNMA), Government National Mortgage Association (GNMA) or Federal Home Loan Mortgage Corporation (FHLMC), which guarantee the timely payment of principal on these investments.

At December 31, 2015, nineteen available for sale U.S. Government and agency securities had unrealized losses that individually did not exceed 3% of amortized cost. These securities have not been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

At December 31, 2015, four available for sale residential mortgage-backed securities had an unrealized loss that did not exceed 1% of amortized cost. These securities have not been in a continuous loss position for 12 months or more. This unrealized loss relates principally to changes in interest rates subsequent to the acquisition of the security.

At December 31, 2015, two available for sale state and municipal securities had unrealized losses that individually did not exceed 1% of amortized cost. These securities have not been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

At December 31, 2015, one available for sale corporate bond had an unrealized loss and has not been in a continuous loss position for 12 months or more. This unrealized loss relates principally to changes in interest rates subsequent to the acquisition of the specific security. This security had an unrealized loss of less than 2% of amortized cost.

At December 31, 2015, one available for sale stock in other banks had an unrealized loss and has not been in a continuous loss position for 12 months or more. This unrealized loss relates principally to daily market changes. This security had an unrealized loss of less than 6% of amortized cost.

At December 31, 2015, fifteen held to maturity U.S. Government and agency securities had unrealized losses that individually did not exceed 2% of amortized cost. Three of these securities have been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

At December 31, 2015, sixteen held to maturity residential mortgage-backed securities had unrealized losses that individually did not exceed 3% of amortized cost. Thirteen of these securities have been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

In analyzing the issuer’s financial condition, management considers industry analysts’ reports, financial performance, and projected target prices of investment analysts within a one-year time frame. Based on the above information, management has determined that none of these investments are other-than-temporarily impaired.

The fair values of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the security’s relationship to other benchmark quoted prices. The Corporation uses independent service providers to provide matrix pricing.

Management routinely sells securities from its available for sale portfolio in an effort to manage and allocate the portfolio. At December 31, 2015, management had not identified any securities with an unrealized loss that it intends to sell or will be required to sell. In estimating other-than-temporary impairment losses on debt securities, management considers (1) whether management intends to sell the security, or (2) if it is more likely than not that management will be required to sell the security before recovery, or (3) if management does not expect to recover the entire amortized cost basis. In assessing potential other-than-temporary impairment for equity securities, consideration is given to management’s intention and ability to hold the securities until recovery of unrealized losses.

Amortized cost and fair value at December 31, 2015, by contractual maturity, where applicable, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay with or without penalties.



	Available for Sale				Held to Maturity
In thousands	Amortized Cost		Fair Value		Amortized Cost		Fair Value
1 year or less	$	12,385	$	12,485	$	—	$	—
Over 1 year through 5 years	41,878		42,064		31,044		30,895
Over 5 years through 10 years	26,227		26,346		—		—
Over 10 years	165		167		—		—
Mortgage-backed securities, residential	41,528		42,839		40,498		40,468
CRA mutual fund	1,044		1,053		—		—
Stock in other banks	702		739		—		—
	$	123,929	$	125,693	$	71,542	$	71,363

The Corporation realized gross gains of $262,000 during 2015, $72,000 during 2014, and $0 during 2013 and gross losses of $1,000 during 2015, $10,000 during 2014, and $0 during 2013 on sales of securities available for sale.

At December 31, 2015 and 2014, securities with a carrying value of $117,646,000 and $128,710,000, respectively, were pledged as collateral as required by law on public and trust deposits, repurchase agreements, and for other purposes.