Note 2.Investment Securities

The carrying value and fair value of investment securities available-for-sale (“AFS”) at March 31, 2017 and December 31, 2016 are as follows:


As of March 31, 2017
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	2,126	$	—	$	(26)	$	2,100
Mortgage-backed securities-residential		6,527		135		—		6,662
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		139,296		1,036		(1,352)		138,980
Non-agency		3,752		—		(71)		3,681
Corporate bonds		1,700		25		—		1,725
Municipal bonds		8,676		130		(64)		8,742
Other securities		1,821		—		—		1,821
Common stocks		26		—		—		26
Total available for sale	$	163,924	$	1,326	$	(1,513)	$	163,737


As of December 31, 2016
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	988	$	—	$	(22)	$	966
Mortgage-backed securities-residential		6,985		70		(17)		7,038
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		146,666		1,022		(2,129)		145,559
Non-agency		4,121		—		(86)		4,035
Corporate bonds		1,700		1		—		1,701
Municipal bonds		8,691		92		(75)		8,708
Other securities		1,821		—		—		1,821
Common stocks		26		—		—		26
Total available for sale	$	170,998	$	1,185	$	(2,329)	$	169,854

The amortized cost and fair value of investment securities at March 31, 2017, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	As of March 31, 2017
	Amortized
(In thousands)	cost		Fair value
Within 1 year	$	1,638	$	1,625
After 1 but within 5 years		6,852		6,904
After 5 but within 10 years		3,012		3,013
After 10 years		1,000		1,025
Mortgage-backed securities-residential		6,527		6,662
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		139,296		138,980
Non-agency		3,752		3,681
Total available for sale debt securities		162,077		161,890
No contractual maturity		1,847		1,847
Total available for sale securities	$	163,924	$	163,737

Proceeds from the sales of AFS investments during the three months ended March 31, 2017 and 2016 were $0 and $10.0 million, respectively. The following table summarizes gross realized gains and losses on the sale of securities recognized in earnings in the periods indicated:


	For the three months ended
	March 31,
(In thousands)	2017		2016
Gross realized gains	$	—	$	367
Gross realized losses		—		—
Net realized gains	$	—	$	367

The tables below indicate the length of time individual AFS securities have been in a continuous unrealized loss position at March 31, 2017 and December 31, 2016:


March 31, 2017	Less than 12 months					12 months or longer					Total
			Gross		Number			Gross		Number			Gross		Number
			unrealized		of			unrealized		of			unrealized		of
(In thousands)	Fair value		losses		positions	Fair value		losses		positions	Fair value		losses		positions
U.S. government agencies	$	2,100	$	(26)	2	$	—	$	—	—	$	2,100	$	(26)	2
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		74,956		(896)	31		11,654		(456)	4		86,610		(1,352)	35
Non-agency		3,681		(71)	3		—		—	—		3,681		(71)	3
Municipal bonds		665		(2)	2		3,330		(62)	4		3,995		(64)	6
Total available for sale	$	81,402	$	(995)	38	$	14,984	$	(518)	8	$	96,386	$	(1,513)	46


December 31, 2016	Less than 12 months					12 months or longer					Total
			Gross		Number			Gross		Number			Gross		Number
			unrealized		of			unrealized		of			unrealized		of
(In thousands)	Fair value		losses		positions	Fair value		losses		positions	Fair value		losses		positions
U.S. government agencies	$	966	$	(22)	1	$	—	$	—	—	$	966	$	(22)	1
Mortgage-backed securities-residential		4,237		(17)	2		—		—	—		4,237		(17)	2
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		73,864		(1,630)	31		12,045		(499)	4		85,909		(2,129)	35
Non-agency		4,035		(86)	3		—		—	—		4,035		(86)	3
Municipal bonds		1,678		(45)	3		2,314		(30)	3		3,992		(75)	6
Total available for sale	$	84,780	$	(1,800)	40	$	14,359	$	(529)	7	$	99,139	$	(2,329)	47

We evaluate declines in the fair value of securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis. We assess whether OTTI is present when the fair value of a security is less than its amortized cost. Under ASC Topic 320, OTTI is considered to have occurred with respect to debt securities (1) if an entity intends to sell the security; (2) if it is more likely than not an entity will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis. There were no credit-related impairment losses on debt securities held at March 31, 2017 and March 31, 2016 for which a portion of OTTI was recognized in other comprehensive income.

For all debt security types discussed below the fair value is based on prices provided by brokers and safekeeping custodians.

U.S. government-sponsored agencies (“U.S. Agency”): As of March 31, 2017, we had two U.S. Agency securities with a fair value of $2.1 million and a gross unrealized loss of $26 thousand. The bonds have been in an unrealized loss position for less than twelve months at March 31, 2017. Management believes that the unrealized loss on these debt securities are a function of changes in investment spreads. Management expects to recover the entire amortized cost basis of these securities. We do not intend to sell these securities before recovery of their cost basis and have not determined that it is not more likely than not that it will be required to sell these securities before recovery of their cost basis. Therefore, management has determined that these securities are not other-than-temporarily impaired at March 31, 2017.

U.S. government issued or sponsored collateralized mortgage obligations (“Agency CMOs”): As of March 31, 2017, we had 35 Agency CMOs with a fair value of $86.6 million and gross unrealized losses of $1.4 million. Four of the Agency CMOs have been in an unrealized loss position for twelve months or longer and the remaining 31 Agency CMOs have been in an unrealized loss position for less than twelve months. The unrealized loss is attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Based on its assessment of these factors, management believes that the unrealized losses on these debt securities are a function of changes in investment spreads and interest rate movements and not as a result of changes in credit quality. Management expects to recover the entire amortized cost basis of these securities. We do not intend to sell these securities before recovery of their cost basis and have not determined that it is not more likely than not that we will be required to sell these securities before recovery of their cost basis. Therefore, management has determined that these securities are not other-than-temporarily impaired at March 31, 2017.

Non-agency collateralized mortgage obligations (“Non-agency CMOs”): As of March 31, 2017, we had three non-agency CMOs with a fair value of $3.7 million and gross unrealized losses of $71 thousand. The bonds have been in an unrealized loss position for less than twelve months. We do not intend to sell these securities before recovery of their cost basis, and it is not more likely than not we will be required to sell this security before recovery of its cost basis. Therefore, management has determined that this security is not other-than-temporarily impaired at March 31, 2017.

Municipal bonds: As of March 31, 2017 we had six municipal bonds with a fair value $4.0 million and gross unrealized losses of $64 thousand. Two of the municipal bonds have been in an unrealized loss position for less than twelve months and four bonds have been in an unrealized loss position for twelve months or longer at March 31, 2017. Because we do not intend to sell the bonds and it is not more likely than not that we will be required to sell the bonds before recovery of their amortized cost basis, which may be maturity, we do not consider the bonds to be other-than-temporarily impaired at March 31, 2017.

We will continue to monitor these investments to determine if the discounted cash flow analysis, continued negative trends, market valuations, or credit defaults result in impairment that is other than temporary.