Securities

Equity Securities

The Corporation held equity securities with fair values of $474,000 and $1.8 million at June 30, 2018 and December 31, 2017, respectively. Beginning January 1, 2018, with the adoption of ASU 2016-01, changes in the fair value of these securities are included in other income on the consolidated statements of net income as opposed to accumulated other comprehensive loss on the consolidated balance sheets. During the three and six months ended June 30, 2018, the Corporation recognized a gain of $67,000 and $62,000, respectively, on the equity securities held at June 30, 2018. During the three and six months ended June 30, 2018, the Corporation sold $266,000 and $1.2 million of equity securities, respectively, with a realized net loss of $2,000 and $25,000, respectively.

Debt Securities - Available for Sale

The following table summarizes the Corporation’s debt securities as of June 30, 2018 and December 31, 2017:



(Dollar amounts in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2018:
U.S. Treasury and federal agency	$	4,536	$	—	$	(125	)	$	4,411
U.S. government sponsored entities and agencies	21,007		20		(437		)	20,590
U.S. agency mortgage-backed securities: residential	23,236		—		(692		)	22,544
U.S. agency collateralized mortgage obligations: residential	21,168		32		(946		)	20,254
State and political subdivisions	25,112		12		(464		)	24,660
Corporate debt securities	7,507		6		(86		)	7,427
	$	102,566	$	70	$	(2,750	)	$	99,886
December 31, 2017:
U.S. Treasury and federal agency	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 subdivisions	29,249		87		(96		)	29,240
Corporate debt securities	9,009		38		(17		)	9,030
	$	100,446	$	159	$	(1,255	)	$	99,350

The following table summarizes scheduled maturities of the Corporation’s debt securities as of June 30, 2018. 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.



(Dollar amounts in thousands)	Available for sale
	Amortized Cost		Fair Value
Due in one year or less	$	3,120	$	3,108
Due after one year through five years	34,277		33,640
Due after five through ten years	18,018		17,672
Due after ten years	2,747		2,668
Mortgage-backed securities: residential	23,236		22,544
Collateralized mortgage obligations: residential	21,168		20,254
	$	102,566	$	99,886


4.	Securities (continued)

Information pertaining to debt securities with gross unrealized losses at June 30, 2018 and December 31, 2017, 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
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
June 30, 2018:
U.S. Treasury and federal agency	$	—	$	—		$	4,411	$	(125	)	$	4,411	$	(125	)
U.S. government sponsored entities and agencies	5,838		(154		)	8,840		(283		)	14,678		(437		)
U.S. agency mortgage-backed securities: residential	16,542		(455		)	6,002		(237		)	22,544		(692		)
U.S. agency collateralized mortgage obligations: residential	1,700		(6		)	16,724		(940		)	18,424		(946		)
State and political subdivisions	16,528		(367		)	3,364		(97		)	19,892		(464		)
Corporate debt securities	2,935		(69		)	486		(17		)	3,421		(86		)
	$	43,543	$	(1,051	)	$	39,827	$	(1,699	)	$	83,370	$	(2,750	)

December 31, 2017:
U.S. Treasury and federal agency	$	—	$	—		$	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 subdivisions	10,510		(60		)	3,487		(36		)	13,997		(96		)
Corporate debt securities	2,992		(16		)	999		(1		)	3,991		(17		)
	$	27,562	$	(182	)	$	43,661	$	(1,073	)	$	71,223	$	(1,255	)

Gains/losses on sales of securities for the three and six months ended June 30 were as follows:



(Dollar amounts in thousands)	For the three months ended June 30,					For the six months ended June 30,
	2018			2017		2018			2017
Proceeds	$	264		$	18,195	$	6,795		$	18,195
Gains (losses)	(2		)	350		(31		)	350
Tax (benefit) provision related to gains	—			119		(6		)	119

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.


4.	Securities (continued)

There were 120 debt securities in an unrealized loss position as of June 30, 2018, of which 53 were in an unrealized loss position for more than 12 months. Of these 53 securities, 24 were government-backed collateralized mortgage obligations, nine were state and political subdivision securities, eight were U.S. government sponsored entity and agency securities, six were mortgage-backed securities, five were U.S. Treasury securities and one was a corporate security. The unrealized losses associated with these securities were not due to the deterioration in the credit quality of the issuer that would likely 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 these debt securities with unrealized losses as of June 30, 2018 to be other-than-temporarily impaired.