Marketable Securities, Available-for-sale

The Company’s investment portfolio includes mainly municipal debt securities and metropolitan district bond securities, which are included in homebuilding other assets in the accompanying consolidated balance sheets. As defined in ASC Topic

320,

Investments—Debt and Equity Securities

("ASC

320"),

the Company considers its investment portfolio to be available-for-sale. Accordingly, these investments are recorded at their fair values. The cost of securities sold is based on an average-cost basis. Unrealized gains and losses on these investments are included in accumulated other comprehensive income (loss), net of tax within the accompanying consolidated balance sheet.

The Company periodically reviews its available-for-sale securities for other-than-temporary declines in fair values that are below their cost bases, as well as whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not be recoverable. At

December

31,

2016,

the Company believed that the cost bases for its available-for-sale securities were recoverable in all material respects.

For the year ended

December

31,

2016,

net realized earnings associated with the Company’s investment portfolio, which included interest, dividends and net realized gains on sales of marketable securities, totaled

$695,000.

These earnings were included in homebuilding other income (expense) within the accompanying consolidated statements of operations. Realized gains or losses on the sales of marketable securities were included as reclassification adjustments, which are a component of other comprehensive income. See Note

2.k.

for further discussion.

The primary objectives of the Company’s investment portfolio are safety of principal and liquidity. Investments are made with the purpose of achieving the highest rate of return consistent with these

two

objectives. The Company’s investment policy limits investments to debt rated investment grade or better, as well as to bank and money market instruments and to issues by the U.S. government, U.S. government agencies and municipal or other institutions primarily with investment-grade credit ratings. Our policy places restrictions on maturities, as well as on concentration by type and issuer.

The following table displays the fair values of marketable securities, available-for-sale, by type of security:

	December 31, 2016							December 31, 2015
	Amortized Cost		Gross Unrealized Losses			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Estimated Fair Value
	(Dollars in thousands)
Type of security:
Municipal bond and metropolitan district securities	$	18,563	$	(465	)	$	18,098	$	19,439	$	5	$	19,444

The following table displays the fair values of marketable securities, available-for-sale, by contractual maturity:

	December 31, 2016
	(Dollars in thousands)
Contractual maturity:
Maturing in one year or less	$	―
Maturing after three years		18,098
Total marketable securities, available-for-sale	$	18,098