Note 5: Securities

The aggregate amortized costs and fair values of the available-for-sale securities portfolio are as follows:


(Dollars in thousands)			Gross		Gross
Available-for-sale securities	Amortized		Unrealized		Unrealized			Fair
June 30, 2017	Cost		Gains		(Losses)			Value
Corporate bonds	$	6,696	$	20	$	(1	)	$	6,715
U.S. Government agencies		27,319		123		(386	)		27,056
State and municipal obligations		20,703		198		(224	)		20,677

	$	54,718	$	341	$	(611	)	$	54,448


			Gross		Gross
Available-for-sale securities	Amortized		Unrealized		Unrealized			Fair
December 31, 2016	Cost		Gains		(Losses)			Value
Corporate bonds	$	7,695	$	14	$	(5	)	$	7,704
U.S. Government agencies		25,668		53		(408	)		25,313
State and municipal obligations		18,566		49		(459	)		18,156

	$	51,929	$	116	$	(872	)	$	51,173

Gross realized gains and gross realized losses on sales and calls of securities were as follows:


	For the three months ended					For the six months ended
	June 30,					June 30,
(Dollars in thousands)	2017		2016			2017			2016
Gross realized gains	$	7	$	105		$	7		$	120
Gross realized losses		—		(1	)		(5	)		(10	)

Net realized gains	$	7	$	104		$	2		$	110

Aggregate proceeds	$	16,667	$	6,395		$	17,662		$	9,097

Average yields (taxable equivalent) on securities were 3.09% and 3.08% for the three months ended June 30, 2017 and 2016, respectively, and 3.11% and 3.06% for the six months ended June 30, 2017 and 2016, respectively.

Securities with a market value of $14.7 million and $19.1 million were pledged as collateral for repurchase agreements and for other purposes as required by law as of June 30, 2017 and December 31, 2016, respectively. As of June 30, 2017 and December 31, 2016, all the securities pledged to repurchase agreements were state and municipal obligations. All the repurchase agreements had remaining contractual maturities that were overnight and continuous. Securities sold under repurchase agreements were $10.8 million and $18.3 million as of June 30, 2017 and December 31, 2016, respectively, and included in liabilities on the consolidated balance sheets. The securities pledged to each agreement are reviewed daily and can be changed at the option of the Bank with minimal risk of loss due to fair value.

Securities in an unrealized loss position at June 30, 2017 and December 31, 2016, by duration of the unrealized loss, are shown below. The unrealized loss positions were directly related to interest rate movements as there is minimal credit risk exposure in these investments. All agency securities, and states and municipal securities, are investment grade or better and their losses are considered temporary. Management does not intend to sell the securities and does not expect to be required to sell the securities. Furthermore, all amortized cost bases are expected to be recovered. Bonds with unrealized loss positions at June 30, 2017 included 40 federal agencies, one corporate bond and 23 municipals. Bonds with unrealized loss positions at December 31, 2016 included 37 federal agencies, one corporate bond and 39 municipals. The tables are shown below.


(Dollars in thousands)	Less than 12 months					12 months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
June 30, 2017	Value		Loss			Value		Loss			Value		Loss
Corporate bonds	$	500	$	(1	)	$	—	$	—		$	500	$	(1	)
U.S. Government agencies		18,052		(298	)		4,792		(88	)		22,844		(386	)
States and municipal obligations		7,207		(179	)		953		(45	)		8,160		(224	)

Total temporarily impaired securities	$	25,759	$	(478	)	$	5,745	$	(133	)	$	31,504	$	(611	)


	Less than 12 months					12 months or more					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
December 31, 2016	Value		Loss			Value		Loss			Value		Loss
Corporate bonds	$	995	$	(5	)	$	—	$	—		$	995	$	(5	)
U.S. Government agencies		20,933		(396	)		1,308		(12	)		22,241		(408	)
States and municipal obligations		12,888		(459	)		—		—			12,888		(459	)

Total temporarily impaired securities	$	34,816	$	(860	)	$	1,308	$	(12	)	$	36,124	$	(872	)

The Company’s investment in FHLB stock totaled $3.7 million and $1.9 million at June 30, 2017 and December 31, 2016, respectively. The Company also had an investment in Federal Reserve Bank of Richmond (“FRB”) stock which totaled $745 thousand and $580 thousand at June 30, 2017 and December 31, 2016, respectively. The investments in both FHLB and FRB stock are required investments related to the Bank’s membership with the FHLB and FRB. These securities do not have a readily determinable fair value as their ownership is restricted, and they lack an active market for trading. Additionally, per charter provisions related to the FHLB and FRB stock, all repurchase transactions of such stock must occur at par. Accordingly, these securities are carried at cost, and are periodically evaluated for impairment. The Company’s determination as to whether its investment in FHLB and FRB stock is impaired is based on management’s assessment of the ultimate recoverability of its par value rather than recognizing temporary declines in its value. The determination of whether the decline affects the ultimate recoverability of the investments is influenced by available information regarding various factors. These factors include, among others, the significance of the decline in net assets of the issuing banks as compared to the capital stock amount reported by these banks, and the length of time a decline has persisted; commitments by such banks to make payments required by law or regulation and the level of such payments in relation to the operating performance of the issuing bank; and the overall liquidity position of the issuing bank. Based on its most recent analysis of publicly available information regarding the financial condition of the issuing banks, management concluded that no impairment existed in the carrying value of FHLB and FRB stock.