Securities

This table provides the major components of securities available for sale ("AFS") and held to maturity ("HTM") at amortized cost and estimated fair value at March 31, 2017 and December 31, 2016:



	March 31, 2017									December 31, 2016
(In thousands)	Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value		Amortized cost		Gross unrealized gains		Gross unrealized losses			Estimated fair value
Available for sale:
U.S. Government sponsored entities	$	3,745	$	2	$	(26	)	$	3,721	$	3,744	$	2	$	(30	)	$	3,716
State and political subdivisions	5,919		21		(77		)	5,863		5,545		19		(62		)	5,502
Residential mortgage-backed securities	32,864		311		(381		)	32,794		21,547		339		(255		)	21,631
Corporate and other securities	10,133		3		(268		)	9,868		10,003		—		(284		)	9,719
Total securities available for sale	$	52,661	$	337	$	(752	)	$	52,246	$	40,839	$	360	$	(631	)	$	40,568
Held to maturity:
U.S. Government sponsored entities	$	3,530	$	—	$	(116	)	$	3,414	$	3,530	$	—	$	(128	)	$	3,402
State and political subdivisions	2,304		175		—			2,479		2,306		181		(1		)	2,486
Residential mortgage-backed securities	4,629		80		(36		)	4,673		4,799		98		(25		)	4,872
Commercial mortgage-backed securities	3,768		—		(179		)	3,589		3,796		—		(148		)	3,648
Corporate and other securities	6,545		43		(14		)	6,574		6,548		12		—			6,560
Total securities held to maturity	$	20,776	$	298	$	(345	)	$	20,729	$	20,979	$	291	$	(302	)	$	20,968

This table provides the remaining contractual maturities and yields of securities within the investment portfolios. The carrying value of securities at March 31, 2017 is distributed by contractual maturity. Mortgage-backed securities and other securities, which may have principal prepayment provisions, are distributed based on contractual maturity. Expected maturities will differ materially from contractual maturities as a result of early prepayments and calls.



	Within one year				After one through five years				After five through ten years				After ten years				Total carrying value
(In thousands, except percentages)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
Available for sale at fair value:
U.S. Government sponsored entities	$	—	—	%	$	3,721	1.61	%	$	—	—	%	$	—	—	%	$	3,721	1.61	%
State and political subdivisions	—		—		769		3.13		2,382		2.78		2,712		2.80		5,863		2.84
Residential mortgage-backed securities	7		3.97		425		2.39		4,324		2.28		28,038		2.91		32,794		2.82
Corporate and other securities	400		1.89		64		1.72		6,640		2.31		2,764		4.58		9,868		2.92
Total securities available for sale	$	407	1.93	%	$	4,979	1.91	%	$	13,346	2.38	%	$	33,514	3.04	%	$	52,246	2.75	%
Held to maturity at cost:
U.S. Government sponsored entities	$	—	—	%	$	—	—	%	$	—	—	%	$	3,530	1.97	%	$	3,530	1.97	%
State and political subdivisions	213		0.99		—		—		493		5.07		1,598		4.65		2,304		4.40
Residential mortgage-backed securities	24		4.26		34		5.63		678		2.83		3,893		3.47		4,629		3.40
Commercial mortgage-backed securities	—		—		—		—		—		—		3,768		2.76		3,768		2.76
Corporate and other securities	—		—		—		—		4,533		5.72		2,012		8.80		6,545		6.67
Total securities held to maturity	$	237	1.32	%	$	34	5.63	%	$	5,704	5.32	%	$	14,801	3.78	%	$	20,776	4.18	%

The fair value of securities with unrealized losses by length of time that the individual securities have been in a continuous unrealized loss position at March 31, 2017 and December 31, 2016 are as follows:



	March 31, 2017
		Less than 12 months					12 months and greater					Total
(In thousands, except number in a loss position)	Total number in a loss position	Estimated fair value		Unrealized loss			Estimated fair value		Unrealized loss			Estimated fair value		Unrealized loss
Available for sale:
U.S. Government sponsored entities	1	$	1,966	$	(26	)	$	—	$	—		$	1,966	$	(26	)
State and political subdivisions	4	3,797		(77		)	—		—			3,797		(77		)
Residential mortgage-backed securities	20	18,727		(261		)	2,675		(120		)	21,402		(381		)
Corporate and other securities	6	3,098		(82		)	1,863		(186		)	4,961		(268		)
Total temporarily impaired securities	31	$	27,588	$	(446	)	$	4,538	$	(306	)	$	32,126	$	(752	)
Held to maturity:
U.S. Government sponsored entities	2	$	3,413	$	(116	)	$	—	$	—		$	3,413	$	(116	)
Residential mortgage-backed securities	4	897		(22		)	426		(14		)	1,323		(36		)
Commercial mortgage-backed securities	2	3,589		(179		)	—		—			3,589		(179		)
Corporate and other securities	1	1,519		(14		)	—		—			1,519		(14		)
Total temporarily impaired securities	9	$	9,418	$	(331	)	$	426	$	(14	)	$	9,844	$	(345	)



	December 31, 2016
		Less than 12 months					12 months and greater					Total
(In thousands, except number in a loss position)	Total number in a loss position	Estimated fair value		Unrealized loss			Estimated fair value		Unrealized loss			Estimated fair value		Unrealized loss
Available for sale:
U.S. Government sponsored entities	1	$	1,962	$	(30	)	$	—	$	—		$	1,962	$	(30	)
State and political subdivisions	4	3,833		(62		)	—		—			3,833		(62		)
Residential mortgage-backed securities	13	7,813		(139		)	2,983		(116		)	10,796		(255		)
Corporate and other securities	6	822		(67		)	5,376		(217		)	6,198		(284		)
Total temporarily impaired securities	24	$	14,430	$	(298	)	$	8,359	$	(333	)	$	22,789	$	(631	)
Held to maturity:
U.S. Government sponsored entities	2	$	3,402	$	(128	)	$	—	$	—		$	3,402	$	(128	)
State and political subdivisions	1	212		(1		)	—		—			212		(1		)
Residential mortgage-backed securities	2	776		(15		)	441		(10		)	1,217		(25		)
Commercial mortgage-backed securities	2	3,648		(148		)	—		—			3,648		(148		)
Total temporarily impaired securities	7	$	8,038	$	(292	)	$	441	$	(10	)	$	8,479	$	(302	)

Unrealized Losses

The unrealized losses in each of the categories presented in the tables above are discussed in the paragraphs that follow:

U.S. government sponsored entities and state and political subdivision securities: The unrealized losses on investments in these types of securities were caused by the increase in interest rate spreads or the increase in interest rates at the long end of the Treasury curve. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the par value of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than temporarily impaired as of March 31, 2017 or December 31, 2016.

Residential and commercial mortgage-backed securities: The unrealized losses on investments in mortgage-backed securities were caused by increases in interest rate spreads or the increase in interest rates at the long end of the Treasury curve. The majority of contractual cash flows of these securities are guaranteed by the Federal National Mortgage Association (FNMA), the Government National Mortgage Association (GNMA) and the Federal Home Loan Mortgage Corporation (FHLMC). It is expected that the securities would not be settled at a price significantly less than the par value of the investment. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be at maturity, the Company did not consider these investments to be other-than-temporarily impaired as of March 31, 2017 or December 31, 2016.

Corporate and other securities: Included in this category are corporate debt securities, Community Reinvestment Act (“CRA”) investments, asset-backed securities, and trust preferred securities. The unrealized losses on corporate debt securities were due to widening credit spreads or the increase in interest rates at the long end of the Treasury curve and the unrealized losses on CRA investments were caused by decreases in the market value of the shares. The Company evaluated the prospects of the issuers and forecasted a recovery period; and as a result determined it did not consider these investments to be other-than-temporarily impaired as of March 31, 2017 or December 31, 2016. The unrealized loss on the trust preferred security was caused by an inactive trading market and changes in market credit spreads. The contractual terms do not allow the security to be settled at a price less than the par value. Because the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, which may be at maturity, the Company did not consider this security to be other-than-temporarily impaired as of March 31, 2017 or December 31, 2016.

Realized Gains and Losses

Gross realized gains on securities for the three months ended March 31, 2017 and 2016 are detailed in the table below:



	For the three months ended March 31,
(In thousands)	2017		2016
Available for sale:
Realized gains	$	—	$	94
Realized losses	—		—
Total securities available for sale	—		94
Held to maturity:
Realized gains	—		—
Realized losses	—		—
Total securities held to maturity	—		—
Net gains on sales of securities	$	—	$	94

The net realized gains are included in noninterest income in the Consolidated Statements of Income as net security gains. There were no gross realized gains for the three months ended March 31, 2017. For the three months ended March 31, 2016, there was a gross realized gain of $94 thousand.


•	For the three months ended March 31, 2016, the net gains are attributed to the sale of three municipal securities with a total book value of $2.4 million and resulting gains of $31 thousand and the sale of one equity security totaling $40 thousand in book value, resulting in pre-tax gains of approximately $63 thousand.

Pledged Securities

Securities with a carrying value of $19.4 million and $17.7 million for March 31, 2017 and December 31, 2016, respectively, were pledged to secure Government deposits, secure other borrowings and for other purposes required or permitted by law.