Securities

The following table summarizes the Corporation’s securities as of December 31:



	Amortized		Gross Unrealized		Gross Unrealized			Fair
(Dollar amounts in thousands)	Cost		Gains		Losses			Value
Available for sale:
December 31, 2017:
U.S. Treasury	$	4,541	$	—	$	(69	)	$	4,472
U.S. government sponsored entities and agencies	14,136		2		(212		)	13,926
U.S. agency mortgage-backed securities: residential	20,904		7		(153		)	20,758
U.S. agency collateralized mortgage obligations: residential	22,607		25		(708		)	21,924
State and political subdivision	29,249		87		(96		)	29,240
Corporate debt securities	9,009		38		(17		)	9,030
Equity securities	1,580		255		(18		)	1,817
	$	102,026	$	414	$	(1,273	)	$	101,167
December 31, 2016:
U.S. Treasury	$	4,550	$	—	$	(50	)	$	4,500
U.S. government sponsored entities and agencies	9,186		—		(188		)	8,998
U.S. agency mortgage-backed securities: residential	25,790		32		(196		)	25,626
U.S. agency collateralized mortgage obligations: residential	25,367		23		(684		)	24,706
State and political subdivision	27,853		17		(262		)	27,608
Corporate debt securities	8,012		5		(85		)	7,932
Equity securities	1,829		373		(12		)	2,190
	$	102,587	$	450	$	(1,477	)	$	101,560

Securities with carrying values of $21.8 million and $24.6 million as of December 31, 2017 and 2016, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

Gains on sales of available for sale securities for the years ended December 31 were as follows:



(Dollar amounts in thousands)	2017			2016
Proceeds	$	18,360		$	6,618
Gains	350			108
Losses	(4		)	(26		)
Tax provision related to gains	118			28

During 2017, management determined that an other than temporary impairment existed on a corporate debt security due to deterioration in the credit quality of the issuer that would likely result in the non-collection of contractual principal and interest. This security was written down to its fair market value and the resulting impairment loss of $508,000 was recognized in earnings.


2.	Securities (continued)

The following table summarizes scheduled maturities of the Corporation’s debt securities as of December 31, 2017. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities and collateralized mortgage obligations are not due at a single maturity and are shown separately.



	Available for sale
	Amortized		Fair
(Dollar amounts in thousands)	Cost		Value
Due in one year or less	$	1,851	$	1,849
Due after one year through five years	32,578		32,291
Due after five through ten years	18,512		18,526
Due after ten years	3,994		4,002
U.S. agency mortgage-backed securities: residential	20,904		20,758
U.S. agency collateralized mortgage obligations: residential	22,607		21,924
	$	100,446	$	99,350

Information pertaining to securities with gross unrealized losses at December 31, 2017 and 2016 aggregated by investment category and length of time that individual securities have been in a continuous loss position are included in the table below:



(Dollar amounts in thousands)	Less than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities	Value		Loss			Value		Loss			Value		Loss
December 31, 2017:
U.S. Treasury	$	—	$	—		$	4,472	$	(69	)	$	4,472	$	(69	)
U.S. government sponsored entities and agencies	3,447		(42		)	8,975		(170		)	12,422		(212		)
U.S. agency mortgage-backed securities: residential	9,659		(48		)	6,581		(105		)	16,240		(153		)
U.S. agency collateralized mortgage obligations: residential	954		(16		)	19,147		(692		)	20,101		(708		)
State and political subdivision	10,510		(60		)	3,487		(36		)	13,997		(96		)
Corporate debt securities	2,992		(16		)	999		(1		)	3,991		(17		)
Equity securities	—		—			231		(18		)	231		(18		)
	$	27,562	$	(182	)	$	43,892	$	(1,091	)	$	71,454	$	(1,273	)

December 31, 2016:
U.S. Treasury	$	4,500	$	(50	)	$	—	$	—		$	4,500	$	(50	)
U.S. government sponsored entities and agencies	8,998		(188		)	—		—			8,998		(188		)
U.S. agency mortgage-backed securities: residential	23,279		(196		)	—		—			23,279		(196		)
U.S. agency collateralized mortgage obligations: residential	13,568		(438		)	9,317		(246		)	22,885		(684		)
State and political subdivision	21,924		(262		)	—		—			21,924		(262		)
Corporate debt securities	3,927		(85		)	—		—			3,927		(85		)
Equity securities	—		—			237		(12		)	237		(12		)
	$	76,196	$	(1,219	)	$	9,554	$	(258	)	$	85,750	$	(1,477	)


2.	Securities (continued)

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic, market or other 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, (3) whether the market decline was affected by macroeconomic conditions and (4) whether the Corporation has the intent to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. If the Corporation intends to sell an impaired security, or if it is more likely than not the Corporation will be required to sell the security before its anticipated recovery, the Corporation records an other-than-temporary loss in an amount equal to the entire difference between fair value and amortized cost. Otherwise, only the credit portion of the estimated loss on debt securities is recognized in earnings, with the other portion of the loss recognized in other comprehensive income. For equity securities determined to be other-than-temporarily impaired, the entire amount of impairment is recognized through earnings.

There was one equity security in an unrealized loss position for more than 12 months as of December 31, 2017. Equity securities owned by the Corporation consist of common stock of various financial service providers. This investment security is in unrealized loss positions as a result of the illiquid nature of the stock. The Corporation does not invest in these securities with the intent to sell them for a profit in the near term. For investments in equity securities, in addition to the general factors mentioned above for determining whether the decline in market value is other-than-temporary, the analysis of whether an equity security is other-than-temporarily impaired includes a review of the profitability, capital adequacy and other relevant information available to determine the financial position and near term prospects of each issuer. The results of analyzing the aforementioned metrics and financial fundamentals suggest recovery of amortized cost in the near future. Based on that evaluation, and given that the Corporation’s current intention is not to sell any impaired security and it is more likely than not it will not be required to sell this security before the recovery of its amortized cost basis, the Corporation does not consider the equity security with an unrealized loss as of December 31, 2017 to be other-than-temporarily impaired.

There were 101 debt securities in an unrealized loss position as of December 31, 2017, of which 55 were in an unrealized loss position for more than 12 months. Of these 101 securities, 41 were state and political subdivisions securities, 25 were collateralized mortgage obligations (issued by U.S. government sponsored entities), 12 were U.S. government sponsored entities and agencies securities, 10 were mortgage-backed securities, 8 were corporate securities and 5 were U.S. Treasury securities. The unrealized losses associated with these securities were not due to the deterioration in the credit quality of the issuer that is likely to result in the non-collection of contractual principal and interest, but rather have been caused by a rise in interest rates from the time the securities were purchased. Based on that evaluation and other general considerations, and given that the Corporation’s current intention is not to sell any impaired securities and it is more likely than not it will not be required to sell these securities before the recovery of its amortized cost basis, the Corporation does not consider the debt securities with unrealized losses as of December 31, 2017 to be other-than-temporarily impaired.