Note 2 - Securities

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

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

( 2 ) Securities

The amortized cost, unrealized gains and losses, and fair value of securities available

-for-sale follow:

(in thousands)	Amortized		Unrealized
September 30, 2017	cost		Gains		Losses		Fair value
Government sponsored enterprise obligations	$	372,596	$	846	$	778	$	372,664
Mortgage-backed securities - government agencies		147,604		697		1,581		146,720
Obligations of states and political subdivisions		51,100		611		89		51,622
Corporate equity securities		653		-		137		516
Total securities available for sale	$	571,953	$	2,154	$	2,585	$	571,522
December 31, 2016
U.S. Treasury and other U.S. Government obligations	$	74,997	$	1	$	-	$	74,998
Government sponsored enterprise obligations		268,784		800		1,494		268,090
Mortgage-backed securities - government agencies		170,344		735		2,236		168,843
Obligations of states and political subdivisions		57,158		682		396		57,444
Corporate equity securities		653		46		-		699
Total securities available for sale	$	571,936	$	2,264	$	4,126	$	570,074

Corporate equity securities consist of common stock in a publicly-traded business development

company.

There were

no

securities classified as held to maturity as of

September 30, 2017

or

December 31, 2016.

Bancorp sold

no

securities

during the

three

or

nine

month periods ending

September 30, 2016

or

2017.

One security was called prior to maturity in the

third

quarter of

2017

resulting in the receipt of a pre-payment penalty. The penalty income was classified as a realized gain on the call of available for sale securities.

A summary of the

available-for-sale investment securities by contractual maturity groupings as of

September 30, 2017

is shown below.

(in thousands)
Securities available-for-sale	Amortized cost		Fair value
Due within 1 year	$	216,651	$	216,696
Due after 1 but within 5 years		74,383		74,529
Due after 5 but within 10 years		14,085		14,031
Due after 10 years		118,577		119,030
Mortgage-backed securities  - government agencies		147,604		146,720
Corporate equity securities		653		516
Total securities available-for-sale	$	571,953	$	571,522

Actual maturities

may

differ from contractual maturities because some issuers have the right to call or prepay obligations. In addition to equity securities, the investment portfolio includes agency mortgage-backed securities, which are guaranteed by agencies such as the FHLMC, FNMA, and GNMA. These securities differ from traditional debt securities primarily in that they

may

have uncertain principal payment dates and are priced based on estimated prepayment rates on underlying collateral.

Bancorp pledges portions of its investment securities portfolio to secure public fund deposits, cash balances of certain wealth management and trust accounts, and securities sold under agreements to repurchase.

The carrying value of these pledged securities was approximately

$329.7

million at

September 30, 2017

and

$380.4

million at

December 31, 2016.

Securities with unrealized losses at

September 30, 2017

and

December 31, 2016,

not

recognized in the statements of income are as follows:

(in thousands)	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
September 30, 2017	value		losses		value		losses		value		losses
Government sponsored enterprise obligations	$	190,462	$	135	$	70,176	$	643	$	260,638	$	778
Mortgage-backed securities - government agencies		13,227		117		65,781		1,464		79,008		1,581
Obligations of states and political subdivisions		9,307		13		6,287		76		15,594		89
Corporate equity securities		516		137		-		-		516		137
Total temporarily impaired securities	$	213,512	$	402	$	142,244	$	2,183	$	355,756	$	2,585
December 31, 2016
Government sponsored enterprise obligations	$	154,951	$	1,344	$	3,485	$	150	$	158,436	$	1,494
Mortgage-backed securities - government agencies		115,374		1,873		9,914		363		125,288		2,236
Obligations of states and political subdivisions		29,893		380		1,478		16		31,371		396
Total temporarily impaired securities	$	300,218	$	3,597	$	14,877	$	529	$	315,095	$	4,126

Applicable dates for determining when securities are in an unrealized loss position are

September 30, 2017

and

December 31, 2016.

As such, it is possible that a security had a market value lower than its amortized cost on other days during the past

twelve

months, but is

not

in the “investments with an unrealized loss of less than

12

months” category above.

Unrealized losses on Bancorp

’s investment securities portfolio have

not

been recognized as an expense because the securities are of high credit quality, and the decline in fair values is due to changes in the prevailing interest rate environment since the purchase date. Fair value is expected to recover as securities reach their maturity date and/or the interest rate environment returns to conditions similar to when these securities were purchased. Because management does

not

intend to sell the investments, and it is

not

likely that Bancorp will be required to sell the investments before recovery of their amortized cost bases, which

may

be maturity, Bancorp does

not

consider these securities to be other-than-temporarily impaired at

September 30, 2017.

FHLB stock and other securities are investments held by Bancorp which are

not

readily marketable and are carried at cost. This category includes Federal Home Loan Bank of Cincinnati (FHLB) stock which

is required for access to FHLB borrowing.