Investment Securities

The amortized cost, gross unrealized gains and losses, and fair values of investment securities available for sale at March 31, 2017 and December 31, 2016 are as follows:



	March 31, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(In Thousands)	Cost		Gains		Losses			Value
Available for sale (AFS):
Mortgage-backed securities	$	5,057	$	128	$	(113	)	$	5,072
Asset-backed securities	56		—		—			56
State and political securities	64,809		758		(237		)	65,330
Other debt securities	56,883		120		(1,700		)	55,303
Total debt securities	126,805		1,006		(2,050		)	125,761
Financial institution equity securities	9,231		667		—			9,898
Non-financial institution equity securities	1,300		—		(49		)	1,251
Total equity securities	10,531		667		(49		)	11,149
Total investment securities AFS	$	137,336	$	1,673	$	(2,099	)	$	136,910



	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
(In Thousands)	Cost		Gains		Losses			Value
Available for sale (AFS):
Mortgage-backed securities	$	9,295	$	182	$	(164	)	$	9,313
Asset-backed securities	109		—		—			109
State and political securities	60,777		666		(509		)	60,934
Other debt securities	53,046		137		(2,065		)	51,118
Total debt securities	123,227		985		(2,738		)	121,474
Financial institution equity securities	9,566		969		—			10,535
Non-financial institution equity securities	1,667		—		(184		)	1,483
Total equity securities	11,233		969		(184		)	12,018
Total investment securities AFS	$	134,460	$	1,954	$	(2,922	)	$	133,492

The amortized cost and fair values of trading investment securities at March 31, 2017 and December 31, 2016 are as follows.

March 31, 2017

Gross

Amortized

Unrealized

Fair

(In Thousands)

Cost

Gains

Losses

Value

Trading:

Non-financial institution equity securities

—

Total trading securities

—



	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In Thousands)	Cost		Gains		Losses		Value
Trading:
Non-financial institution equity securities	$	56	$	2	$	—	$	58
Total trading securities	$	56	$	2	$	—	$	58

Total net realized trading gains of $2,000 for the three month period ended March 31, 2017 compared to the net realized trading gain of $40,000 for the three month period ended March 31, 2016 were included in the Consolidated Statement of Income.

The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time, that the individual securities have been in a continuous unrealized loss position, at March 31, 2017 and December 31, 2016.



	March 31, 2017
	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In Thousands)	Value		Losses			Value		Losses			Value		Losses
Available for sale (AFS):
Mortgage-backed securities	$	3,480	$	(113	)	$	—	$	—		$	3,480	$	(113	)
Asset-backed securities	—		—			—		—			—		—
State and political securities	18,292		(237		)	—		—			18,292		(237		)
Other debt securities	29,664		(983		)	13,391		(717		)	43,055		(1,700		)
Total debt securities	51,436		(1,333		)	13,391		(717		)	64,827		(2,050		)
Financial institution equity securities	—		—			—		—			—		—
Non-financial institution equity securities	1,251		(49		)	—		—			1,251		(49		)
Total equity securities	1,251		(49		)	—		—			1,251		(49		)
Total investment securities AFS	$	52,687	$	(1,382	)	$	13,391	$	(717	)	$	66,078	$	(2,099	)



	December 31, 2016
	Less than Twelve Months					Twelve Months or Greater					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(In Thousands)	Value		Losses			Value		Losses			Value		Losses
Available for sale (AFS):
Mortgage-backed securities	$	3,572	$	(106	)	$	3,627	$	(58	)	$	7,199	$	(164	)
Asset-backed securities	—		—			—		—			—		—
State and political securities	26,113		(509		)	—		—			26,113		(509		)
Other debt securities	28,140		(1,179		)	12,240		(886		)	40,380		(2,065		)
Total debt securities	57,825		(1,794		)	15,867		(944		)	73,692		(2,738		)
Financial institution equity securities	—		—			—		—			—		—
Non-financial institution equity securities	727		(140		)	756		(44		)	1,483		(184		)
Total equity securities	727		(140		)	756		(44		)	1,483		(184		)
Total investment securities AFS	$	58,552	$	(1,934	)	$	16,623	$	(988	)	$	75,175	$	(2,922	)

At March 31, 2017 there were a total of 55 securities in a continuous unrealized loss position for less than twelve months and 8 individual securities that were in a continuous unrealized loss position for twelve months or greater.

The Company reviews its position quarterly and has determined that, at March 31, 2017, the declines outlined in the above table represent temporary declines and the Company does not intend to sell and does not believe it will be required to sell these securities before recovery of their cost basis, which may be at maturity. The Company has concluded that the unrealized losses disclosed above are not other than temporary but are the result of interest rate changes, sector credit ratings changes, or company-specific ratings changes that are not expected to result in the non-collection of principal and interest during the period.

The amortized cost and fair value of debt securities at March 31, 2017, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities since borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



(In Thousands)	Amortized Cost		Fair Value
Due in one year or less	$	661	$	661
Due after one year to five years	40,528		40,234
Due after five years to ten years	68,969		68,020
Due after ten years	16,647		16,846
Total	$	126,805	$	125,761

Total gross proceeds from sales of securities available for sale were $2,652,000 and $19,839,000 for the three months ended March 31, 2017 and 2016, respectively.

The following table represents gross realized gains and losses within the available for sale portfolio:



	Three Months Ended March 31,
(In Thousands)	2017		2016
Gross realized gains:
Mortgage-backed securities	$	45	$	—
State and political securities	14		299
Other debt securities	—		32
Financial institution equity securities	288		82
Non-financial institution equity securities	—		144
Total gross realized gains	$	347	$	557

Gross realized losses:
Mortgage-backed securities	$	—	$	—
Asset-backed securities	—		—
State and political securities	—		—
Other debt securities	—		81
Financial institution equity securities	—		—
Non-financial institution equity securities	150		41
Total gross realized losses	$	150	$	122

The following table represents gross realized gains and losses within the trading portfolios:



	Three Months Ended March 31,
(In Thousands)	2017		2016
Gross realized gains:
Financial institution equity securities	$	—	$	6
Non-financial institution equity securities	2		59
Total gross realized gains	$	2	$	65

Gross realized losses:
Financial institution equity securities	$	—	$	13
Non-financial institution equity securities	—		12
Total gross realized losses	$	—	$	25

There were no impairment charges included in gross realized losses for the three months ended March 31, 2017 and 2016, respectively.

Investment securities with a carrying value of approximately $91,100,000 and $95,199,000 at March 31, 2017 and December 31, 2016, respectively, were pledged to secure certain deposits, repurchase agreements, and for other purposes as required by law.