Note 2.Investment Securities

The carrying value and fair value of investment securities available-for-sale (“AFS”) at September 30, 2017 and December 31, 2016 are as follows:


As of September 30, 2017
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	2,128	$	27	$	(5)	$	2,150
Mortgage-backed securities-residential		15,693		172		(15)		15,850
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		126,671		771		(920)		126,522
Non-agency		—		—		—		—
Corporate bonds		1,700		13		—		1,713
Municipal bonds		7,453		130		(42)		7,541
Other securities		1,706		—		—		1,706
Common stocks		26		—		—		26
Total available for sale	$	155,377	$	1,113	$	(982)	$	155,508


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 September 30, 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 September 30, 2017
	Amortized
(In thousands)	cost		Fair value
Within 1 year	$	1,798	$	1,793
After 1 but within 5 years		7,476		7,558
After 5 but within 10 years		1,007		1,040
After 10 years		1,000		1,013
Mortgage-backed securities-residential		15,693		15,850
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		126,671		126,522
Total available for sale debt securities		153,645		153,776
No contractual maturity		1,732		1,732
Total available for sale securities	$	155,377	$	155,508

Proceeds from the sales of AFS investments during the three and nine months ended September 30, 2017 were $32 thousand and $19.5 million, respectively. Proceeds from the sales of AFS investments during the three and nine months ended September 30, 2016 were $25.7 million and $36.4 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				For the nine months ended
	September 30,				September 30,
(In thousands)	2017		2016		2017		2016
Gross realized gains	$	32	$	280	$	325	$	1,426
Gross realized losses		—		—		(17)		(44)
Net realized gains	$	32	$	280	$	308	$	1,382

The tables below indicate the length of time individual AFS securities have been in a continuous unrealized loss position at September 30, 2017 and December 31, 2016:


September 30, 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	$	1,133	$	(5)	1	$	—	$	—	—	$	1,133	$	(5)	1
Mortgage-backed securities-residential		3,065		(15)	1		—		—	—		3,065		(15)	1
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		52,109		(342)	20		24,974		(578)	10		77,083		(920)	30
Municipal bonds		661		(1)	2		2,145		(41)	3		2,806		(42)	5
Total available for sale	$	56,968	$	(363)	24	$	27,119	$	(619)	13	$	84,087	$	(982)	37


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. We did not record OTTI charges to earnings during the first three quarters of 2017. During the first three quarters of 2016, we recorded impairment charges of $181 thousand on two private equity funds as a result of analyses performed on recent financial information. There were no credit-related impairment losses on debt securities held at September 30, 2017 and September 30, 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 September 30, 2017, we had one U.S. Agency security with a fair value of $1.1 million and a gross unrealized loss of $5 thousand. The bond has been in an unrealized loss position for less than twelve months at September 30, 2017. Management believes that the unrealized loss on this debt security is a function of changes in investment spreads. Management expects to recover the entire amortized cost basis of this security. We do not intend to sell this security before recovery of its cost basis and have not determined that it is more likely than not that 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 September 30, 2017.

Mortgage-backed securities residential (“MBS”): As of September 30, 2017, we had one MBS with a fair value of $3.1 million and a gross unrealized loss of $15 thousand. The security has been in an unrealized loss position for less than twelve months as of September 30, 2017. Management expects to recover the entire amortized cost basis of this security. We do not intend to sell this security before recovery of its cost basis and have not determined that it is more likely than not that 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 September 30, 2017.

U.S. government issued or sponsored collateralized mortgage obligations (“Agency CMOs”): As of September 30, 2017, we had 30 Agency CMOs with a fair value of $77.1 million and gross unrealized losses of $920 thousand. Ten of the Agency CMOs have been in an unrealized loss position for twelve months or longer and the remaining 20 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 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 September 30, 2017.

Municipal bonds: As of September 30, 2017 we had five municipal bonds with a fair value $2.8 million and gross unrealized losses of $42 thousand. Two of the municipal bonds have been in an unrealized loss position for less than twelve months and three bonds have been in an unrealized loss position for twelve months or longer at September 30, 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 September 30, 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.