SECURITIES

Amortized cost and fair value at December 31, 2017 and 2016, were as follows:



In thousands	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
SECURITIES AVAILABLE FOR SALE
December 31, 2017
U.S. Government and agencies	$	105,899	$	2	$	1,818	$	104,083
Mortgage-backed securities, residential	34,473		461		101		34,833
State and municipal	13,227		109		42		13,294
Corporate bonds	5,000		57		—		5,057
CRA mutual fund	1,044		—		9		1,035
Stock in other banks	647		102		—		749
	$	160,290	$	731	$	1,970	$	159,051
December 31, 2016
U.S. Government and agencies	$	81,065	$	43	$	1,529	$	79,579
Mortgage-backed securities, residential	31,272		782		81		31,973
State and municipal	24,514		240		94		24,660
Corporate bonds	5,000		62		—		5,062
CRA mutual fund	1,044		—		9		1,035
Stock in other banks	498		183		—		681
	$	143,393	$	1,310	$	1,713	$	142,990
SECURITIES HELD TO MATURITY
December 31, 2017
U.S. Government and agencies	$	19,000	$	2	$	99	$	18,903
Mortgage-backed securities, residential	25,829		55		238		25,646
	$	44,829	$	57	$	337	$	44,549
December 31, 2016
U.S. Government and agencies	$	23,017	$	26	$	54	$	22,989
Mortgage-backed securities, residential	32,551		210		325		32,436
	$	55,568	$	236	$	379	$	55,425

The following table shows the Corporation’s investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2017 and 2016:



	Less than 12 Months				12 Months or More				Total
In thousands	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
SECURITIES AVAILABLE FOR SALE
December 31, 2017
U.S. Government and agencies	$	42,775	$	445	$	58,279	$	1,373	$	101,054	$	1,818
Mortgage-backed securities, residential	7,228		56		2,845		45		10,073		101
State and municipal	1,042		8		1,950		34		2,992		42
CRA Mutual Fund	—		—		1,035		9		1,035		9
	$	51,045	$	509	$	64,109	$	1,461	$	115,154	$	1,970
December 31, 2016
U.S. Government and agencies	$	71,454	$	1,529	$	—	$	—	$	71,454	$	1,529
Mortgage-backed securities, residential	8,966		81		—		—		8,966		81
State and municipal	4,933		94		—		—		4,933		94
CRA Mutual Fund	1,035		9		—		—		1,035		9
	$	86,388	$	1,713	$	—	$	—	$	86,388	$	1,713
SECURITIES HELD TO MATURITY
December 31, 2017
U.S. Government and agencies	$	4,985	$	15	$	10,916	$	84	$	15,901	$	99
Mortgage-backed securities, residential	4,946		29		11,070		209		16,016		238
	$	9,931	$	44	$	21,986	$	293	$	31,917	$	337
December 31, 2016
U.S. Government and agencies	$	12,946	$	54	$	—	$	—	$	12,946	$	54
Mortgage-backed security, residential	12,956		325		—		—		12,956		325
	$	25,902	$	379	$	—	$	—	$	25,902	$	379

All mortgage-backed security investments are government sponsored enterprise (GSE) pass-through instruments issued by the Federal National Mortgage Association (FNMA), Government National Mortgage Association (GNMA) or Federal Home Loan Mortgage Corporation (FHLMC), which guarantee the timely payment of principal on these investments.

At December 31, 2017, sixty-four available for sale U.S. Government and agency securities had unrealized losses that individually did not exceed 5% of amortized cost. Thirty-two of these securities have been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

At December 31, 2017, fifteen available for sale residential mortgage-backed securities had unrealized losses that individually did not exceed 2% of amortized cost. Three of these securities have been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

At December 31, 2017, fourteen available for sale state and municipal securities had unrealized losses that individually did not exceed 3% of amortized cost. Eight of these securities have been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

At December 31, 2017, the CRA Mutual Fund had an unrealized loss that did not exceed 1% of amortized cost. This security has been in a continuous loss position for 12 months or more. This unrealized loss relates principally to changes in interest rates subsequent to the acquisition of the specific security.

At December 31, 2017, nine held to maturity U.S. Government and agency securities had unrealized losses that individually did not exceed 2% of amortized cost. Six of these securities have been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

At December 31, 2017, twenty-one held to maturity residential mortgage-backed securities had unrealized losses that individually did not exceed 3% of amortized cost. Thirteen of these securities have been in a continuous loss position for 12 months or more. These unrealized losses relate principally to changes in interest rates subsequent to the acquisition of the specific securities.

In analyzing the issuer’s financial condition, management considers industry analysts’ reports, financial performance, and projected target prices of investment analysts within a one-year time frame. Based on the above information, management has determined that none of these investments are other-than-temporarily impaired.

The fair values of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by obtaining quoted market prices on nationally recognized securities exchanges (Level 1), or matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the security’s relationship to other benchmark quoted prices. The Corporation uses independent service providers to provide matrix pricing.

Management routinely sells securities from its available for sale portfolio in an effort to manage and allocate the portfolio. At December 31, 2017, management had not identified any securities with an unrealized loss that it intends to sell or will be required to sell. In estimating other-than-temporary impairment losses on debt securities, management considers (1) whether management intends to sell the security, or (2) if it is more likely than not that management will be required to sell the security before recovery, or (3) if management does not expect to recover the entire amortized cost basis. In assessing potential other-than-temporary impairment for equity securities, consideration is given to management’s intention and ability to hold the securities until recovery of unrealized losses.

Amortized cost and fair value at December 31, 2017, by contractual maturity, where applicable, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay with or without penalties.



	Available for Sale				Held to Maturity
In thousands	Amortized Cost		Fair Value		Amortized Cost		Fair Value
1 year or less	$	8,651	$	8,635	$	12,000	$	11,949
Over 1 year through 5 years	102,487		100,911		7,000		6,954
Over 5 years through 10 years	12,917		12,817		—		—
Over 10 years	71		71		—		—
Mortgage-backed securities, residential	34,473		34,833		25,829		25,646
CRA mutual fund	1,044		1,035		—		—
Stock in other banks	647		749		—		—
	$	160,290	$	159,051	$	44,829	$	44,549

The Corporation realized gross gains of $0 during 2017, $26,000 during 2016, and $262,000 during 2015 and gross losses of $0 during 2017 and 2016, and $1,000 during 2015 on sales of securities available for sale.

At December 31, 2017 and 2016, securities with a carrying value of $157,601,000 and $134,763,000, respectively, were pledged as collateral as required by law on public and trust deposits, repurchase agreements, and for other purposes.