NOTE 5: INVESTMENT SECURITIES

Investments in securities are classified as available for sale or held to maturity as of September 30, 2016 and December 31, 2015. The amortized cost and fair values of the securities classified as available for sale and held to maturity as of September 30, 2016 are as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for Sale:
U.S. Treasury Obligations	$	25,076	$	257	$	—	$	25,333
U.S. Government Sponsored Enterprises ("U.S. GSEs")		49,030		499		—		49,529
Federal Home Loan Bank ("FHLB") Obligations		62,372		878		(3)		63,247
Residential Real Estate Mortgage-backed Securities ("Agency MBSs")		80,061		2,256		(24)		82,293
Agency Commercial Mortgage Backed Securities ("Agency CMBSs")		24,162		151		(33)		24,280
Agency Collateralized Mortgage Obligations ("Agency CMOs")		53,576		448		(63)		53,961
Asset Backed Securities ("ABSs")		295		35		—		330
Total Available for Sale	$	294,572	$	4,524	$	(123)	$	298,973


			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value
Held to Maturity:
U.S. Agency Obligations	$	18,073	$	830	$	—	$	18,903
Agency CMOs		66,456		1,249		(19)		67,686
Agency MBSs		6,143		286		—		6,429
Total Held to Maturity	$	90,672	$	2,365	$	(19)	$	93,018

The amortized cost and fair values of the securities classified as available for sale and held to maturity as of December 31, 2015 are as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for Sale:
U.S. Treasury Obligations	$	25,064	$	61	$	(12)	$	25,113
U.S. GSEs		20,895		3		(104)		20,794
FHLB Obligations		51,230		107		(226)		51,111
Agency MBSs		96,073		1,688		(512)		97,249
Agency CMBSs		24,950		—		(397)		24,553
Agency CMOs		64,648		74		(443)		64,279
ABSs		325		30		—		355
Total Available for Sale	$	283,185	$	1,963	$	(1,694)	$	283,454


			Gross		Gross
	Amortized		Unrecognized		Unrecognized		Fair
	Cost		Gains		Losses		Value
Held to Maturity:
U.S. Agency Obligations	$	20,084	$	486	$	—	$	20,570
U.S. GSEs		9,556		166		—		9,722
FHLB Obligations		4,758		76		—		4,834
Agency CMOs		78,249		253		(716)		77,786
Agency MBSs		7,027		154		—		7,181
Total Held to Maturity	$	119,674	$	1,135	$	(716)	$	120,093

The contractual final maturity distribution of the debt securities classified as available for sale as of September 30, 2016, are as follows:


									Securities
			After One		After Five				not due
	Within		But Within		But Within		After Ten		at a Single
(In thousands)	One Year		Five Years		Ten Years		Years		Maturity		Total
Available for Sale (at fair value):
U.S. Treasury Obligations	$	10,120	$	15,213	$	—	$	—	$	N/A	$	25,333
U.S. GSEs		—		49,529		—		—		N/A		49,529
FHLB Obligations		—		57,024		6,223		—		N/A		63,247
Agency MBSs		N/A		N/A		N/A		N/A		82,293		82,293
Agency CMBSs		N/A		N/A		N/A		N/A		24,280		24,280
Agency CMOs		N/A		N/A		N/A		N/A		53,961		53,961
ABSs		N/A		N/A		N/A		N/A		330		330
Total Available for Sale	$	10,120	$	121,766	$	6,223	$	—	$	160,864	$	298,973
Available for Sale (at amortized cost):
U.S. Treasury Obligations	$	10,093	$	14,983	$	—	$	—	$	N/A	$	25,076
U.S. GSEs		—		49,030		—		—		N/A		49,030
FHLB Obligations		—		56,453		5,919		—		N/A		62,372
Agency MBSs		N/A		N/A		N/A		N/A		80,061		80,061
Agency CMBSs		N/A		N/A		N/A		N/A		24,162		24,162
Agency CMOs		N/A		N/A		N/A		N/A		53,576		53,576
ABSs		N/A		N/A		N/A		N/A		295		295
Total Available for Sale	$	10,093	$	120,466	$	5,919	$	—	$	158,094	$	294,572

The contractual final maturity distribution of the debt securities classified as held to maturity as of September 30, 2016, are as follows:


									Securities
			After One		After Five				not due
	Within		But Within		But Within		After Ten		at a Single
(In thousands)	One Year		Five Years		Ten Years		Years		Maturity		Total
Held to Maturity (at fair value):
U.S. Agency Obligations	$	—	$	—	$	—	$	18,903	$	N/A	$	18,903
Agency CMOs		N/A		N/A		N/A		N/A		67,686		67,686
Agency MBSs		N/A		N/A		N/A		N/A		6,429		6,429
Total Held to Maturity	$	—	$	—	$	—	$	18,903	$	74,115	$	93,018
Held to Maturity (at amortized cost):
U.S. Agency Obligations	$	—	$	—	$	—	$	18,073	$	N/A	$	18,073
Agency CMOs		N/A		N/A		N/A		N/A		66,456		66,456
Agency MBSs		N/A		N/A		N/A		N/A		6,143		6,143
Total Held to Maturity	$	—	$	—	$	—	$	18,073	$	72,599	$	90,672

Actual maturities will differ from contractual maturities because borrowers may have rights to call or prepay obligations.

For the nine months ended September 30, 2016 and 2015, we did not record any securities gains or losses related to the sale of securities.

Securities with a carrying value of $363.92 million and $335.81 million at September 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits, securities sold under agreements to repurchase, and for other purposes required by law.

Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in continuous unrealized loss position, at September 30, 2016, were as follows:


	Less Than 12 Months					12 Months or More					Total
	Number	Fair				Number	Fair				Number	Fair
(In thousands)	of Issues	Value		Loss		of Issues	Value		Loss		of Issues	Value		Loss
Available for Sale:
FHLB Obligations	1	$	5,997	$	(3)	—	$	—	$	—	1	$	5,997	$	(3)
Agency MBSs	3		8,363		(24)	—		—		—	3		8,363		(24)
Agency CMBSs	1		3,717		(33)	—		—		—	1		3,717		(33)
Agency CMOs	2		7,024		(23)	2		2,426		(40)	4		9,450		(63)
Total Available for Sale	7	$	25,101	$	(83)	2	$	2,426	$	(40)	9	$	27,527	$	(123)
Held to Maturity:
Agency CMOs	—	$	—	$	—	1	$	3,345	$	(19)	—	$	3,345	$	(19)
Total Held to Maturity	—	$	—	$	—	1	$	3,345	$	(19)	—	$	3,345	$	(19)


	Less Than 12 Months					12 Months or More					Total
	Number	Fair				Number	Fair				Number	Fair
(In thousands)	of Issues	Value		Loss		of Issues	Value		Loss		of Issues	Value		Loss
Available for Sale:
U.S. Treasury Obligations	3	$	15,068	$	(12)	—	$	—	$	—	3	$	15,068	$	(12)
U.S. GSEs	3		14,817		(104)	—		—		—	3		14,817		(104)
FHLB Obligations	8		39,094		(226)	—		—		—	8		39,094		(226)
Agency MBSs	17		60,748		(512)	—		—		—	17		60,748		(512)
Agency CMBSs	5		19,608		(331)	1		4,761		(66)	6		24,369		(397)
Agency CMOs	15		42,235		(283)	3		6,089		(160)	18		48,324		(443)
Total Available for Sale	51	$	191,570	$	(1,468)	4	$	10,850	$	(226)	55	$	202,420	$	(1,694)
Held to Maturity:
Agency CMOs	14	$	51,713	$	(623)	2	$	5,287	$	(93)	16	$	57,000	$	(716)
Total Held to Maturity	14	$	51,713	$	(623)	2	$	5,287	$	(93)	16	$	57,000	$	(716)

There were no securities classified as trading at September 30, 2016 and December 31, 2015.

Unrealized losses on investment securities result from the cost basis of the security being higher than its current fair value. These differences generally occur because of changes in interest rates since the time of purchase, or because the credit quality of the issuer has deteriorated. We perform a quarterly analysis of each security in our portfolio to determine if impairment exists, and if it does, whether that impairment is other-than-temporary.

At September 30, 2016, all of our MBSs and CMOs held were issued by U.S. government-sponsored entities and agencies, primarily the Federal National Mortgage Association (“FNMA”) and Federal Home Loan Mortgage Corporation (“FHLMC”), institutions which the government has affirmed its commitment to support. Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because we do not have the intent to sell these securities and it is not likely that we will be required to sell the securities before their anticipated recovery, we do not consider these securities to be other-than-temporarily impaired at September 30, 2016.

Agency MBSs and Agency CMOs consist of pools of residential mortgages which are guaranteed by FNMA, FHLMC, or Government National Mortgage Association (“GNMA”) with various origination dates and maturities. Agency CMBS consists of bonds backed by commercial real estate which are guaranteed by FNMA and GNMA.

During the first quarter of 2014, we transferred securities with a total amortized cost of $12.63 million, and a corresponding fair value of $12.64 million, from available for sale to held to maturity. The net unrealized gain, net of taxes, on these securities at the dates of the transfers was $8 thousand. During the third and fourth quarters of 2013, we transferred securities with a total amortized cost of $152.89 million, and a corresponding fair value of $147.45 million, from available for sale to held to maturity. The net unrealized holding loss, net of taxes, on these securities at the dates of the transfers was $3.53 million. The unrealized holding gains and losses at the time of transfer continues to be reported in accumulated other comprehensive income, net of tax and are amortized over the remaining lives of the securities as an adjustment of the yield. The amortization of the unamortized holding gains and losses reported in accumulated other comprehensive income will offset the effect on interest income of the premium and discount for the transferred securities. The remaining unamortized balance of the net losses for the securities transferred from available for sale to held to maturity was $2.35 million or $1.52 million, net of tax at September 30, 2016.