NOTE 2: Securities

Debt and equity securities, all of which are classified as available for sale are summarized as follows:


	September 30, 2016
			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	14,032	$	22	$	(2)	$	14,052
Mortgage-backed securities		68,870		1,493		(3)		70,360
Obligations of states and political subdivisions		115,776		5,113		(69)		120,820
	$	198,678	$	6,628	$	(74)	$	205,232


	December 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized
(Dollars in thousands)	Cost		Gains		Losses		Fair Value
U.S. government agencies and corporations	$	18,759	$	—	$	(258)	$	18,501
Mortgage-backed securities		76,957		513		(443)		77,027
Obligations of states and political subdivisions		118,389		5,640		(81)		123,948
	$	214,105	$	6,153	$	(782)	$	219,476

The amortized cost and estimated fair value of securities at September 30, 2016, 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.


	September 30, 2016
	Amortized
(Dollars in thousands)	Cost		Fair Value
Due in one year or less	$	26,880	$	27,169
Due after one year through five years		137,448		142,067
Due after five years through ten years		24,905		25,817
Due after ten years		9,445		10,179
	$	198,678	$	205,232

Proceeds from maturities and calls of securities available for sale for the three and nine months ended September 30, 2016 were $16.77 million and $47.40 million, respectively, resulting in gross realized gains of $3,000 and $13,000, respectively, for the three and nine months ended September 30, 2016. Proceeds from sales of securities available for sale for the nine months ended September 30, 2016 were $897,000, resulting in gross realized gains of $61,000 and gross realized losses of $26,000. There were no securities sold during the third quarter of 2016. Proceeds from maturities and calls of securities available for sale for the three and nine months ended September 30, 2015 were $7.52 million and $24.40 million, respectively, resulting in gross realized gains of $22,000 and $25,000, respectively. There were no securities sold during either the three or nine months ended September 30, 2015.

The Corporation pledges securities to primarily secure public deposits and repurchase agreements. Securities with an aggregate amortized cost of $83.53 million and an aggregate fair value of $86.80 million were pledged at September 30, 2016. Securities with an aggregate amortized cost of $91.93 million and an aggregate fair value of $95.13 million were pledged at December 31, 2015.

Securities in an unrealized loss position at September 30, 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	$	3,076	$	2	$	—	$	—	$	3,076	$	2
Mortgage-backed securities		903		1		703		2		1,606		3
Obligations of states and political subdivisions		8,092		52		1,926		17		10,018		69
Total temporarily impaired securities	$	12,071	$	55	$	2,629	$	19	$	14,700	$	74

There were 35 debt securities totaling $14.70 million considered temporarily impaired at September 30, 2016. The primary cause of the temporary impairments in the Corporation's investments in debt securities was fluctuations in interest rates. At September 30, 2016, approximately 98 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, each debt security was rated “A” or better, as measured by market value, at September 30, 2016. 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 September 30, 2016 and no other-than-temporary impairment has been recognized.

Securities in an unrealized loss position at December 31, 2015, 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	$	9,530	$	69	$	8,971	$	189	$	18,501	$	258
Mortgage-backed securities		27,085		397		2,252		46		29,337		443
Obligations of states and political subdivisions		5,157		32		4,666		49		9,823		81
Total temporarily impaired securities	$	41,772	$	498	$	15,889	$	284	$	57,661	$	782

The Corporation’s investment in restricted stocks totaled $3.40 million at September 30, 2016 and consisted of $3.26 million of Federal Home Loan Bank (FHLB) stock and $145,000 of Community Bankers Bank (CBB) stock. Restricted stocks are generally viewed as long-term investments and as restricted investment securities, which are carried at cost, because there is no market for the stock, other than the FHLBs or member institutions. 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 September 30, 2016, 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.