SECURITIES

Amortized cost and estimated fair value of securities available for sale at December 31, 2016 and 2015 are as follows (in thousands):



	2016				2015
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	17,300	$	17,455	$	99,430	$	100,166
Mortgage-backed securities, residential	253,156		245,866		199,680		198,366
Obligations of states and political subdivisions	38,843		38,740		43,695		44,426
Corporate bonds and notes	249		250		747		752
SBA loan pools	568		570		643		647
Corporate stocks	285		521		285		463
Total	$	310,401	$	303,402	$	344,480	$	344,820

Gross unrealized gains and losses on securities available for sale at December 31, 2016 and 2015, were as follows (in thousands):



	2016				2015
	Unrealized Gains		Unrealized Losses		Unrealized Gains		Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	155	$	—	$	752	$	16
Mortgage-backed securities, residential	202		7,492		427		1,741
Obligations of states and political subdivisions	209		312		737		6
Corporate bonds and notes	1		—		5		—
SBA loan pools	3		1		5		1
Corporate stocks	236		—		178		—
Total	$	806	$	7,805	$	2,104	$	1,764

The amortized cost and estimated fair value of debt securities available for sale are shown below by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately (in thousands):



	December 31, 2016
	Amortized Cost		Fair Value
Within one year	$	8,236	$	8,286
After one, but within five years	36,171		36,400
After five, but within ten years	11,579		11,398
After ten years	406		361
Mortgage-backed securities, residential	253,156		245,866
SBA loan pools	568		570
Total	$	310,116	$	302,881

Actual maturities may differ from contractual maturities above because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

The proceeds from sales and calls of securities resulting in gains or losses are listed below (in thousands):



	2016			2015			2014
Proceeds	$	40,413		$	72,718		$	36,258
Gross gains	$	989		$	410		$	6,869
Gross losses	$	(2	)	$	(38	)	$	—
Tax expense	$	373		$	142		$	2,641

Amortized cost and estimated fair value of securities held to maturity at December 31, 2016 and 2015 are as follows (in thousands):



	2016				2015
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Obligations of states and political subdivisions	$	3,725	$	3,931	$	4,566	$	4,822
Time deposits with other financial institutions	980		981		—		—
	$	4,705	$	4,912	$	4,566	$	4,822

Gross unrealized gains and losses on securities held to maturity at December 31, 2016 and 2015, were as follows (in thousands):



	2016				2015
	Unrealized Gains		Unrealized Losses		Unrealized Gains		Unrealized Losses
Obligations of states and political subdivisions	$	206	$	—	$	256	$	—
Time deposits with other financial institutions	1		—		—		—
Total	$	207	$	—	$	256	$	—

There were no sales of securities held to maturity in 2016 or 2015.

The contractual maturity of securities held to maturity is as follows at December 31, 2016 (in thousands):



	December 31, 2016
	Amortized Cost		Fair Value
Within one year	$	1,742	$	1,754
After one, but within five years	2,626		2,780
After five, but within ten years	337		378
After ten years	—		—
Total	$	4,705	$	4,912

The following table summarizes the investment securities available for sale with unrealized losses at December 31, 2016 and December 31, 2015 by aggregated major security type and length of time in a continuous unrealized position (in thousands):



	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
2016	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-backed securities, residential	$	233,843	$	7,492	$	—	$	—	$	233,843	$	7,492
Obligations of states and political subdivisions	25,724		312		—		—		25,724		312
SBA loan pools	—		—		225		1		225		1
Total temporarily impaired securities	$	259,567	$	7,804	$	225	$	1	$	259,792	$	7,805



	Less than 12 months				12 months or longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
2015	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. Government and U.S. Government sponsored enterprises	$	15,169	$	16	$	—	$	—	$	15,169	$	16
Mortgage-backed securities, residential	177,058		1,741		—		—		177,058		1,741
Obligations of states and political subdivisions	3,756		4		592		2		4,348		6
Corporate stocks	—		—		251		1		251		1
Total temporarily impaired securities	$	195,983	$	1,761	$	843	$	3	$	196,826	$	1,764

Other-Than-Temporary-Impairment

As of December 31, 2016, the majority of the Corporation’s unrealized losses in the investment securities portfolio related to mortgage-backed securities. At December 31, 2016, all of the unrealized losses related to mortgage-backed securities were issued by U.S. government sponsored entities, Fannie Mae and Freddie Mac. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Corporation does not have the intent to sell these securities and it is not likely that it will be required to sell these securities before their anticipated recovery, the Corporation does not consider these securities to be other-than-temporarily impaired at December 31, 2016.

The table below presents a roll forward of the cumulative credit losses recognized in earnings for the periods ended December 31, 2016, 2015 and 2014 (in thousands):



	2016		2015		2014
Beginning balance, January 1,	$	—	$	—	$	1,939
Additions/Subtractions:
Reductions for previous credit losses realized on securities sold during the year	—		—		—
Reductions for previous credit losses realized on securities liquidated during the year	—		—		(1,939		)
Increases to the amount related to the credit loss for which other-than-temporary impairment was previously recognized	—		—		—
Ending balance, December 31,	$	—	$	—	$	—

During the first quarter of 2014, the Corporation received notice that one CDO consisting of a pool of trust preferred securities was liquidated and recorded $515 thousand in other operating income during the first quarter of 2014 to reflect proceeds received from the liquidation. The Corporation does not own any other CDO’s in its investment securities portfolio.

Pledged Securities

The fair value of securities pledged to secure public funds on deposit or for other purposes as required by law was $191.0 million at December 31, 2016 and $196.1 million at December 31, 2015.

The table below shows the securities pledged to secure securities sold under agreements to repurchase at December 31, 2016 and 2015 (in thousands):



	2016				2015
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Obligations of U.S. Government and U. S. Government sponsored enterprises	$	1,231	$	1,276	$	22,988	$	23,267
Mortgage-backed securities, residential	37,769		37,000		20,453		20,589
Total	$	39,000	$	38,276	$	43,441	$	43,856

Concentrations

There are no securities of a single issuer (other than securities of U.S. Government sponsored enterprises) that exceed 10% of shareholders' equity at December 31, 2016 or 2015.

Equity Method Investments

The Corporation has an equity investment in Cephas Capital Partners, L.P. This small business investment company was established for the purpose of providing financing to small businesses in market areas served by the Corporation, including minority-owned small businesses and those that are anticipated to create jobs for the low to moderate income levels in the targeted areas. As of December 31, 2016 and 2015, these investments totaled $0.4 million and $0.5 million, respectively, are included in other assets, and are accounted for under the equity method of accounting.