NOTE 2: Securities

The Corporation’s debt and equity securities, all of which are classified as available for sale, at June 30, 2017 and December 31, 2016 are summarized as follows:


	June 30, 2017
			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	17,012	$	—	$	(270)	$	16,742
Mortgage-backed securities		84,355		297		(354)		84,298
Obligations of states and political subdivisions		108,973		3,181		(158)		111,996
	$	210,340	$	3,478	$	(782)	$	213,036


	December 31, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	16,526	$	—	$	(414)	$	16,112
Mortgage-backed securities		77,210		228		(622)		76,816
Obligations of states and political subdivisions		114,157		3,265		(324)		117,098
	$	207,893	$	3,493	$	(1,360)	$	210,026

The amortized cost and estimated fair value of securities at June 30, 2017, by the earlier of contractual maturity or expected maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.


	June 30, 2017
	Amortized
(Dollars in thousands)	Cost		Fair Value
Due in one year or less	$	28,819	$	28,952
Due after one year through five years		155,537		157,423
Due after five years through ten years		18,265		18,521
Due after ten years		7,719		8,140
	$	210,340	$	213,036

Proceeds from the maturities, calls and payments on available for sale securities for the three months ended June 30, 2017 and 2016 were $10.12 million and $18.34 million, respectively, resulting in gross realized gains of $11,000 and gross realized losses of $4,000 for the three months ended June 30, 2017 and gross realized gains of $8,000 for the three months ended June 30, 2016. There were no securities sales during the second quarter of 2017. Proceeds from the sales of available for sale securities for the second quarter of 2016 were $970,000, resulting in gross realized gains of $62,000 and gross realized losses of $26,000.

Proceeds from the maturities, calls and payments on available for sale securities for the first six months of 2017 and 2016 were $21.49 million and $20.52 million, respectively, resulting in gross realized gains of $12,000 and gross realized losses of $4,000 for the first six months of 2017 and gross realized gains of $9,000 for the first six months of 2016. There were no securities sales during the first half of 2017. Proceeds from the sales of available for sale securities for the first half of 2016 were $970,000, resulting in gross realized gains of $62,000 and gross realized losses of $26,000.

The Corporation pledges securities to primarily secure public deposits and repurchase agreements. Securities with an aggregate amortized cost of $103.49 million and an aggregate fair value of $104.65 million were pledged at June 30, 2017. Securities with an aggregate amortized cost of $113.07 million and an aggregate fair value of $114.16. million were pledged at December 31, 2016.

Securities in an unrealized loss position at June 30, 2017, by duration of the period of the unrealized loss, are shown below.


	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. government agencies and corporations	$	15,241	$	270	$	—	$	—	$	15,241	$	270
Mortgage-backed securities		44,247		354		—		—		44,247		354
Obligations of states and political subdivisions		13,517		120		2,995		38		16,512		158
Total temporarily impaired securities	$	73,005	$	744	$	2,995	$	38	$	76,000	$	782

There were 117 debt securities totaling $76.00 million considered temporarily impaired at June 30, 2017. The primary cause of the temporary impairments in the Corporation's investments in debt securities was fluctuations in interest rates. At June 30, 2017, approximately 97 percent of the Corporation's obligations of states and political subdivisions, as measured by market value, were rated “A” or better by Standard & Poor's or Moody's Investors Service. Of those in a net unrealized loss position, approximately 97 percent were rated “A” or better, as measured by market value, at June 30, 2017. The Corporation considers all of its debt securities to meet regulatory credit quality standards, meaning that the securities have low risk of default by the obligor, and the full and timely repayment of principal and interest is expected over the expected life of the investment. Because the Corporation intends to hold these investments in debt securities to maturity and it is more likely than not that the Corporation will not be required to sell these investments before a recovery of unrealized losses, the Corporation does not consider these investments to be other-than-temporarily impaired at June 30, 2017 and no other-than-temporary impairment has been recognized.

Securities in an unrealized loss position at December 31, 2016, by duration of the period of the unrealized loss, are shown below.


	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
U.S. government agencies and corporations	$	16,111	$	414	$	—	$	—	$	16,111	$	414
Mortgage-backed securities		54,227		621		671		1		54,898		622
Obligations of states and political subdivisions		21,835		283		1,891		41		23,726		324
Total temporarily impaired securities	$	92,173	$	1,318	$	2,562	$	42	$	94,735	$	1,360

The Corporation’s investment in restricted stocks totaled $3.44 million at June 30, 2017 and consisted of both Federal Home Loan Bank (FHLB) stock and Community Bankers Bank (CBB) stock. Restricted stocks are generally viewed as long-term investments, which are carried at cost because there is no market for the stock other than the FHLBs with respect to FHLB stock, or member institutions with respect to CBB stock. Therefore, when evaluating restricted stock for impairment, their respective values are based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Corporation does not consider its investment in restricted stocks to be other-than-temporarily impaired at June 30, 2017 and no impairment has been recognized. Total restricted stocks is shown as a separate line item on the balance sheet and is not a part of the available for sale securities portfolio.