5.	SECURITIES

Securities available for sale at June 30, 2016 and December 31, 2015 are as follows:


			June 30, 2016									December 31, 2015
	Amortized		Unrealized					Fair		Amortized		Unrealized					Fair
	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
U.S. Gov’t sponsored entities	$	139,061	$	2,732	$	(4	)	$	141,789	$	141,300	$	1,579	$	(1,128	)	$	141,751
State & political subdivisions		156,731		8,108		(194	)		164,645		165,828		6,234		(243	)		171,819
Residential & multi-family mortgage		145,782		1,792		(716	)		146,858		160,316		1,060		(3,394	)		157,982
Corporate notes & bonds		18,188		199		(1,463	)		16,924		19,794		165		(1,271	)		18,688
Pooled trust preferred		800		902		0			1,702		800		2,613		0			3,413
Pooled SBA		47,394		872		(179	)		48,087		51,556		760		(907	)		51,409
Other equity securities		1,020		0		(24	)		996		1,020		0		(39	)		981

Total	$	508,976	$	14,605	$	(2,580	)	$	521,001	$	540,614	$	12,411	$	(6,982	)	$	546,043

At June 30, 2016 and December 31, 2015, there were no holdings of securities of any one issuer, other than the U.S. Government sponsored entities, in an amount greater than 10% of shareholders’ equity. The Corporation’s residential and multi-family mortgage securities are issued by government sponsored entities.

Trading securities at June 30, 2016 and December 31, 2015 are as follows:


	June 30, 2016		December 31, 2015
Corporate equity securities	$	3,037	$	3,389
Mutual funds		888		750
Certificates of deposit		255		253
Corporate notes and bonds		202		130
U.S. Government sponsored entities		56		54

Total	$	4,438	$	4,576

Securities with unrealized losses at June 30, 2016 and December 31, 2015, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):

June 30, 2016


	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	0	$	0		$	6,398	$	(4	)	$	6,398	$	(4	)
State & political subdivisions		271		(194	)		0		0			271		(194	)
Residential & multi-family mortgage		7,907		(81	)		58,084		(635	)		65,991		(716	)
Corporate notes & bonds		0		0			7,940		(1,463	)		7,940		(1,463	)
Pooled SBA		0		0			25,840		(179	)		25,840		(179	)
Other equity securities		0		0			996		(24	)		996		(24	)

	$	8,178	$	(275	)	$	99,258	$	(2,305	)	$	107,436	$	(2,580	)

December 31, 2015


	Less than 12 Months					12 Months or More					Total
Description of Securities	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Gov’t sponsored entities	$	65,675	$	(640	)	$	31,923	$	(488	)	$	97,598	$	(1,128	)
State & political subdivisions		9,103		(234	)		2,478		(9	)		11,581		(243	)
Residential & multi-family mortgage		69,631		(1,562	)		50,351		(1,832	)		119,982		(3,394	)
Corporate notes & bonds		5,027		(2	)		8,144		(1,269	)		13,171		(1,271	)
Pooled SBA		2,908		(28	)		27,127		(879	)		30,035		(907	)
Other equity securities		0		0			981		(39	)		981		(39	)

	$	152,344	$	(2,466	)	$	121,004	$	(4,516	)	$	273,348	$	(6,982	)

The Corporation evaluates securities for other-than-temporary impairment on a quarterly basis, or more frequently when economic or market conditions warrant such an evaluation.

A roll-forward of the other-than-temporary impairment amount related to credit losses for the three and six months ended June 30, 2016 and 2015 is as follows:


	2016			2015
Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, beginning of period	$	4,054		$	4,054
Credit losses previously recognized on securities sold during the period		(1,983	)		0
Additional credit loss for which other-than-temporary impairment was not previously recognized		0			0
Additional credit loss for which other-than-temporary impairment was previously recognized		0			0

Balance of credit losses on debt securities for which a portion of other-than-temporary impairment was recognized in earnings, end of period	$	2,071		$	4,054

During the quarter ended June 30, 2016 the Corporation sold two structured pooled trust preferred securities which had been charged off in their entirety in prior periods. The original cost basis of these securities was $1,983 and the proceeds received totaled $922, which is reported in net realized gains on available-for-sale securities for the three and six months ended June 30, 2016. Due to the insignificance of the Corporation’s adjusted amortized cost balance of the remaining structured pooled trust securities, no further disclosures are required.

For the securities that comprise corporate notes and bonds and the securities that are issued by state and political subdivisions, management monitors publicly available financial information, such as filings with the Securities and Exchange Commission, in order to evaluate the securities for other-than-temporary impairment. For financial institution issuers, management monitors information from quarterly “call” report filings that are used to generate Uniform Bank Performance Reports. All other securities that were in an unrealized loss position at the balance sheet date were reviewed by management, and issuer-specific documents were reviewed, as appropriate given the following considerations. When reviewing securities for other-than-temporary impairment, management considers the financial condition and near-term prospects of the issuer and whether downgrades by bond rating agencies have occurred. Management also considers the length of time and extent to which fair value has been less than cost, and whether management does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery.

As of June 30, 2016 and December 31, 2015, management concluded that the securities described in the previous paragraph were not other-than-temporarily impaired for the following reasons:

•

There is no indication of any significant deterioration of the creditworthiness of the institutions that issued the securities.

•

All contractual interest payments on the securities have been received as scheduled, and no information has come to management’s attention through the processes previously described which would lead to a conclusion that future contractual payments will not be timely received.

The Corporation does not intend to sell and it is not more likely than not that it will be required to sell the securities in an unrealized loss position before recovery of its amortized cost basis.

Information pertaining to security sales on available for sale securities is as follows:


	Proceeds		Gross Gains		Gross Losses
Three months ended June 30, 2016	$	4,420	$	1,005	$	0
Six months ended June 30, 2016		4,420		1,005		0
Three months ended June 30, 2015		15,580		472		0
Six months ended June 30, 2015		48,529		608		(117	)

The following is a schedule of the contractual maturity of securities available for sale, excluding equity securities, at June 30, 2016:


	Amortized		Fair
	Cost		Value
1 year or less	$	34,631	$	34,518
1 year – 5 years		185,702		192,456
5 years – 10 years		73,600		76,503
After 10 years		20,847		21,583

		314,780		325,060
Residential and multi-family mortgage		145,782		146,858
Pooled SBA		47,394		48,087

Total debt securities	$	507,956	$	520,005

Mortgage and asset backed securities and pooled SBA securities are not due at a single date; periodic payments are received based on the payment patterns of the underlying collateral.

On June 30, 2016 and December 31, 2015, securities carried at $365,867 and $312,669, respectively, were pledged to secure public deposits and for other purposes as provided by law.