Note 6 - Securities

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

6. SECURITIES

Amortized cost and fair value of available-for-sale securities at June 30, 2015 and December 31, 2014 are summarized as follows:

		June 30, 2015
		Gross	Gross
		Unrealized	Unrealized
	Amortized	Holding	Holding		Fair
(In Thousands)	Cost	Gains	Losses		Value
Obligations of U.S. Government agencies	$27,189	$39	$(357	)	$26,871
Obligations of states and political subdivisions:
Tax-exempt	115,908	4,147	(306	)	119,749
Taxable	34,872	394	(131	)	35,135
Mortgage-backed securities	76,323	754	(287	)	76,790
Collateralized mortgage obligations, Issued by U.S. Government agencies	231,148	1,308	(1,662	)	230,794
Collateralized debt obligations	34	0	0		34
Total debt securities	485,474	6,642	(2,743	)	489,373
Marketable equity securities	5,365	2,383	(10	)	7,738
Total	$490,839	$9,025	$(2,753	)	$497,111

		December 31, 2014
		Gross	Gross
		Unrealized	Unrealized
	Amortized	Holding	Holding		Fair
(In Thousands)	Cost	Gains	Losses		Value
Obligations of U.S. Government agencies	$27,221	$38	$(583	)	$26,676
Obligations of states and political subdivisions:
Tax-exempt	120,086	5,134	(381	)	124,839
Taxable	33,637	415	(174	)	33,878
Mortgage-backed securities	82,479	1,493	(69	)	83,903
Collateralized mortgage obligations, Issued by U.S. Government agencies	239,620	1,239	(2,036	)	238,823
Collateralized debt obligations:	34	0	0		34
Total debt securities	503,077	8,319	(3,243	)	508,153
Marketable equity securities	5,605	3,058	(9	)	8,654
Total	$508,682	$11,377	$(3,252	)	$516,807

The following table presents gross unrealized losses and fair value of available-for-sale securities with unrealized loss positions that are not deemed to be other-than-temporarily impaired, aggregated by length of time that individual securities have been in a continuous unrealized loss position at June 30, 2015 and December 31, 2014:

June 30, 2015	Less Than 12 Months			12 Months or More			Total
(In Thousands)	Fair	Unrealized		Fair	Unrealized		Fair	Unrealized
	Value	Losses		Value	Losses		Value	Losses
Obligations of U.S. Government agencies	$10,033	$(62	)	$14,180	$(295	)	$24,213	$(357	)
Obligations of states and political subdivisions:
Tax-exempt	24,310	(283	)	744	(23	)	25,054	(306	)
Taxable	9,581	(61	)	4,777	(70	)	14,358	(131	)
Mortgage-backed securities	20,022	(213	)	3,889	(74	)	23,911	(287	)
Collateralized mortgage obligations, Issued by U.S. Government agencies	62,196	(341	)	55,754	(1,321	)	117,950	(1,662	)
Total debt securities	126,142	(960	)	79,344	(1,783	)	205,486	(2,743	)
Marketable equity securities	59	(10	)	0	0		59	(10	)
Total temporarily impaired available-for-sale securities	$126,201	$(970	)	$79,344	$(1,783	)	$205,545	$(2,753	)

December 31, 2014	Less Than 12 Months			12 Months or More			Total
(In Thousands)	Fair	Unrealized		Fair	Unrealized		Fair	Unrealized
	Value	Losses		Value	Losses		Value	Losses
Obligations of U.S. Government agencies	$0	$0		$24,020	$(583	)	$24,020	$(583	)
Obligations of states and political subdivisions:
Tax-exempt	11,898	(289	)	6,991	(92	)	18,889	(381	)
Taxable	4,240	(22	)	9,159	(152	)	13,399	(174	)
Mortgage-backed securities	0	0		4,160	(69	)	4,160	(69	)
Collateralized mortgage obligations, Issued by U.S. Government agencies	58,812	(396	)	60,897	(1,640	)	119,709	(2,036	)
Total debt securities	74,950	(707	)	105,227	(2,536	)	180,177	(3,243	)
Marketable equity securities	134	(9	)	0	0		134	(9	)
Total temporarily impaired available-for-sale securities	$75,084	$(716	)	$105,227	$(2,536	)	$180,311	$(3,252	)

Gross realized gains and losses from available-for-sale securities were as follows:

(In Thousands)	3 Months Ended			6 Months Ended
	June 30,	June 30,		June 30,	June 30,
	2015	2014		2015	2014
Gross realized gains from sales	$932	$140		$1,006	$342
Gross realized losses from sales	0	(37	)	0	(208	)
Net realized gains	$932	$103		$1,006	$134

The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of June 30, 2015. Actual maturities may differ from contractual maturities because counterparties may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Fair
(In Thousands)	Cost	Value
Due in one year or less	$10,599	$10,741
Due from one year through five years	62,421	63,102
Due from five years through ten years	60,873	61,305
Due after ten years	44,110	46,641
Subtotal	178,003	181,789
Mortgage-backed securities	76,323	76,790
Collateralized mortgage obligations, Issued by U.S. Government agencies	231,148	230,794
Total	$485,474	$489,373

The Corporation’s mortgage-backed securities and collateralized mortgage obligations have stated maturities that may differ from actual maturities due to borrowers’ ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. In the table above, mortgage-backed securities and collateralized mortgage obligations are shown in one period.

Investment securities carried at $363,533,000 at June 30, 2015 and $369,945,000 at December 31, 2014 were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note 8 for information concerning securities pledged to secure borrowing arrangements.

Management evaluates securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) whether the Corporation intends to sell the security or more likely than not will be required to sell the security before its anticipated recovery.

A summary of information management considered in evaluating debt and equity securities for OTTI at June 30, 2015 is provided below.

Debt Securities

At June 30, 2015, management performed an assessment for possible OTTI of the Corporation’s debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security depended on the size of the Corporation’s investment, as well as management’s perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of debt securities at June 30, 2015 to be temporary.

Equity Securities

The Corporation’s marketable equity securities at June 30, 2015 and December 31, 2014 consisted exclusively of stocks of banking companies. At June 30, 2015, the Corporation held two stocks with an unrealized loss of $10,000 for which management determined an OTTI charge was not required.

Realized gains from sales of bank stocks totaled $476,000 in the three-month and six-month periods ended June 30, 2015. The Corporation realized gains from sales of bank stocks totaling $74,000 in the three-month and six-month periods ended June 30, 2014.

C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is one of 12 regional Federal Home Loan Banks. As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh. There is no active market for FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated. C&N Bank’s investment in FHLB-Pittsburgh stock, included in Other Assets in the consolidated balance sheet, was $2,372,000 at June 30, 2015 and $1,454,000 at December 31, 2014. The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to not be impaired at June 30, 2015 and December 31, 2014. In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. The decision was based on review of financial information that FHLB-Pittsburgh has made publicly available.