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Note 6 - Securities
 3 Months Ended
Mar. 31, 2020
Notes to Financial Statements  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]
6.
SECURITIES
 
Amortized cost and fair value of available-for-sale debt securities at
March 31, 2020
and
December 31, 2019
are summarized as follows:
 
(In Thousands)
                      
   
 
 
 
  
March 31, 2020
    
 
 
 
   
 
 
 
  
Gross
    
Gross
    
 
 
 
   
 
 
 
  
Unrealized
    
Unrealized
    
 
 
 
   
Amortized
    
Holding
    
Holding
    
Fair
  
 
  
Cost
    
Gains
    
Losses
    
Value
  
                                 
Obligations of U.S. Government agencies
   $
15,704
     $
704
     $
0
     $
16,408
  
Obligations of states and political subdivisions:
                                
Tax-exempt
    
78,126
      
2,982
      
(36
 )    
81,072
  
Taxable
    
35,764
      
1,348
      
(38
 )    
37,074
  
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
                                
Residential pass-through securities
    
54,280
      
1,472
      
0
      
55,752
  
Residential collateralized mortgage obligations
    
101,130
      
2,435
      
(9
 )    
103,556
  
Commercial mortgage-backed securities
    
45,727
      
2,846
      
(19
 )    
48,554
  
Total available-for-sale debt securities
   $
330,731
     $
11,787
     $
(102
 )   $
342,416
  
 
(In Thousands)
                      
   
 
 
 
  
December 31, 2019
    
 
 
 
   
 
 
 
  
Gross
    
Gross
    
 
 
 
   
 
 
 
  
Unrealized
    
Unrealized
    
 
 
 
   
Amortized
    
Holding
    
Holding
    
Fair
  
 
  
Cost
    
Gains
    
Losses
    
Value
  
                                 
Obligations of U.S. Government agencies
   $
16,380
     $
620
     $
0
     $
17,000
  
Obligations of states and political subdivisions:
                                
Tax-exempt
    
68,787
      
2,011
      
(38
 )    
70,760
  
Taxable
    
35,446
      
927
      
(70
 )    
36,303
  
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored
                                
agencies:
                                
Residential pass-through securities
    
58,875
      
472
      
(137
 )    
59,210
  
Residential collateralized mortgage obligations
    
115,025
      
308
      
(610
 )    
114,723
  
Commercial mortgage-backed securities
    
47,765
      
1,069
      
(107
 )    
48,727
  
Total available-for-sale debt securities
   $
342,278
     $
5,407
     $
(962
 )   $
346,723
  
 
The following table presents gross unrealized losses and fair value of available-for-sale debt securities with unrealized loss positions that are
not
deemed to be other-than-temporarily impaired, aggregated by length of time that individual securities have been in a continuous unrealized loss position at
March 31, 2020
and
December 31, 2019:
 
March 31, 2020
(In Thousands)
 
  
Less Than 12 Months
    
12 Months or More
    
Total
  
 
  
Fair
    
Unrealized
    
Fair
    
Unrealized
    
Fair
    
Unrealized
  
   
Value
    
Losses
    
Value
    
Losses
    
Value
    
Losses
  
                                                 
Obligations of states and political subdivisions:
                                                
Tax-exempt
   $
2,968
     $
(36
 )   $
0
     $
0
     $
2,968
     $
(36
 )
Taxable
    
1,270
      
(38
 )    
0
      
0
      
1,270
      
(38
 )
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
                                                
Residential collateralized mortgage obligations
    
875
      
(9
 )    
0
      
0
      
875
      
(9
 )
Commercial mortgage-backed securities
    
3,613
      
(19
 )    
0
      
0
      
3,613
      
(19
 )
Total temporary impaired available-for-sale debt securities
   $
8,726
     $
(102
 )   $
0
     $
0
     $
8,726
     $
(102
 )
 
December 31, 2019
(In Thousands)
 
 
  
Less Than 12 Months
    
12 Months or More
    
Total
  
 
  
Fair
    
Unrealized
    
Fair
    
Unrealized
    
Fair
    
Unrealized
  
   
Value
    
Losses
    
Value
    
Losses
    
Value
    
Losses
  
                                                 
Obligations of states and political subdivisions:
                                                
Tax-exempt
   $
6,429
     $
(38
 )   $
0
     $
0
     $
6,429
     $
(38
 )
Taxable
    
5,624
      
(68
 )    
161
      
(2
 )    
5,785
      
(70
 )
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
                                                
Residential pass-through securities
    
9,771
      
(35
 )    
14,787
      
(102
 )    
24,558
      
(137
 )
Residential collateralized mortgage obligations
    
31,409
      
(195
 )    
30,535
      
(415
 )    
61,944
      
(610
 )
Commercial mortgage-backed securities
    
0
      
0
      
8,507
      
(107
 )    
8,507
      
(107
 )
Total temporarily impaired available-for-sale debt securities
   $
53,233
     $
(336
 )   $
53,990
     $
(626
 )   $
107,223
     $
(962
 )
 
Gross realized gains and losses from available-for-sale securities were as follows:
 
(In Thousands)
     
 
  
3 Months Ended
  
   
March 31,
    
March 31,
  
   
2020
    
2019
  
Gross realized gains from sales
   $
52
     $
0
  
Gross realized losses from sales
    
(52
 )    
0
  
Net realized gains
   $
0
     $
0
  
 
The amortized cost and fair value of available-for-sale debt securities by contractual maturity are shown in the following table as of
March 31, 2020.
Actual maturities
may
differ from contractual maturities because counterparties
may
have the right to call or prepay obligations with or without call or prepayment penalties.
 
(In Thousands)
      
   
March 31, 2020
  
   
Amortized
    
Fair
  
 
  
Cost
    
Value
  
                 
Due in one year or less
   $
6,611
     $
6,644
  
Due from one year through five years
    
33,945
      
34,945
  
Due from five years through ten years
    
43,596
      
45,168
  
Due after ten years
    
45,442
      
47,797
  
Sub-total
    
129,594
      
134,554
  
Mortgage-backed securities issued or guaranteed by U.S. Government agencies or sponsored agencies:
                
Residential pass-through securities
    
54,280
      
55,752
  
Residential collateralized mortgage obligations
    
101,130
      
103,556
  
Commercial mortgage-backed securities
    
45,727
      
48,554
  
Total
   $
330,731
     $
342,416
  
 
The Corporation’s mortgage-backed securities and collateralized mortgage obligations have stated maturities that
may
differ from actual maturities due to borrowers’ ability to prepay obligations. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. In the table above, mortgage-backed securities and collateralized mortgage obligations are shown in
one
period.
 
Investment securities carried at
$206,718,000
at
March 31, 2020
and
$215,270,000
at
December 31, 2019
were pledged as collateral for public deposits, trusts and certain other deposits as provided by law. See Note
9
for information concerning securities pledged to secure borrowing arrangements.
 
Management evaluates securities for other-than-temporary impairment (OTTI) at least on a quarterly basis, and more frequently when economic or market conditions warrant such evaluation. Consideration is given to (
1
) the length of time and the extent to which the fair value has been less than cost, (
2
) the financial condition and near-term prospects of the issuer, and (
3
) whether the Corporation intends to sell the security or more likely than
not
will be required to sell the security before its anticipated recovery.
 
A summary of information management considered in evaluating debt and equity securities for other-than-temporary impairment (“OTTI”) at
March 31, 2020
is provided below.
 
Debt Securities
 
At
March 31, 2020
and
December 31, 2019,
management performed an assessment for possible OTTI of the Corporation’s debt securities on an issue-by-issue basis, relying on information obtained from various sources, including publicly available financial data, ratings by external agencies, brokers and other sources. The extent of individual analysis applied to each security depended on the size of the Corporation’s investment, as well as management’s perception of the credit risk associated with each security. Based on the results of the assessment, management believes impairment of debt securities at
March 31, 2020
and
December 31, 2019
to be temporary.
 
Equity Securities
 
C&N Bank is a member of the Federal Home Loan Bank of Pittsburgh (FHLB-Pittsburgh), which is
one
of
11
regional Federal Home Loan Banks. As a member, C&N Bank is required to purchase and maintain stock in FHLB-Pittsburgh. There is
no
active market for FHLB-Pittsburgh stock, and it must ordinarily be redeemed by FHLB-Pittsburgh in order to be liquidated. C&N Bank’s investment in FHLB-Pittsburgh stock, included in Other Assets in the consolidated balance sheet, was
$9,206,000
at
March 31, 2020
and
$10,131,000
at
December 31, 2019.
The Corporation evaluated its holding of FHLB-Pittsburgh stock for impairment and deemed the stock to
not
be impaired at
March 31, 2020
and
December 31, 2019.
In making this determination, management concluded that recovery of total outstanding par value, which equals the carrying value, is expected. The decision was based on review of financial information that FHLB-Pittsburgh has made publicly available.
 
The Corporation’s marketable equity security, with a carrying value of
$994,000
at
March 31, 2020
and
$979,000
at
December 31, 2019,
consisted exclusively of
one
mutual fund. There was an unrealized loss on the mutual fund of
$6,000
at
March 31, 2020
and
$21,000
at
December 31, 2019.
There was a decrease in the unrealized loss of
$15,000
in the
first
quarter
2020
and a decrease in the unrealized loss of
$12,000
in the
first
quarter
2019.
Changes in the unrealized losses on this security are included in other noninterest income in the consolidated statements of income.