Investment and Mortgage-Backed Securities, Available For Sale

The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of investment and mortgage-backed securities available for sale at the dates indicated are as follows:



	June 30, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
FHLB Securities	$	6,081,284	$	34,863	$	146,192	$	5,969,955
Federal Farm Credit Bank ("FFCB") Securities	2,000,000		—		56,562		1,943,438
Federal National Mortgage Association ("FNMA") Bonds	997,192		9,870		—		1,007,062
Small Business Administration (“SBA”) Bonds	115,995,397		1,743,576		288,859		117,450,114
Tax Exempt Municipal Bonds	75,821,260		1,103,897		1,763,525		75,161,632
Mortgage-Backed Securities	189,964,013		4,401,328		546,915		193,818,426
Equity Securities	250,438		62,386		—		312,824
Total Available For Sale	$	391,109,584	$	7,355,920	$	2,802,053	$	395,663,451

	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
FHLB Securities	$	13,317,462	$	83,691	$	154,492	$	13,246,661
FFCB Securities	5,750,000		—		82,006		5,667,994
FNMA Bonds	996,822		7,559		—		1,004,381
SBA Bonds	106,637,400		1,796,943		307,649		108,126,694
Tax Exempt Municipal Bonds	59,960,960		2,579,543		45,080		62,495,423
Mortgage-Backed Securities	233,963,842		5,704,855		815,984		238,852,713
Equity Securities	250,438		56,236		—		306,674
Total Available For Sale	$	420,876,924	$	10,228,827	$	1,405,211	$	429,700,540

FHLB securities, FFCB securities and FNMA and FHLMC mortgage-backed securities are issued by government-sponsored enterprises (“GSEs”). GSEs are not backed by the full faith and credit of the United States government. SBA bonds are backed by the full faith and credit of the United States government. Included in the tables above and below in mortgage-backed securities are Government National Mortgage Association ("GNMA") mortgage-backed securities, which are also backed by the full faith and credit of the United States government. At June 30, 2015 the Bank held an amortized cost and fair value of $125.5 million and $128.4 million, respectively, in GNMA mortgage-backed securities included in mortgage-backed securities listed above compared to an amortized cost and fair value of $156.8 million and $160.6 million, respectively, at December 31, 2014. All mortgage-backed securities above are either GSEs or GNMA mortgage-backed securities. The Company has not invested in any private label mortgage-backed securities.

6. Investment and Mortgage-Backed Securities, Available For Sale, Continued

The amortized cost and fair value of investment and mortgage-backed securities available for sale at June 30, 2015 are shown below by contractual maturity. Expected maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without call or prepayment penalties. Since mortgage-backed securities are not due at a single maturity date, they are disclosed separately, rather than allocated over the the maturity groupings below.



Investment Securities	Amortized Cost		Fair Value
Less Than One Year	$	756,293	$	759,158
One – Five Years	12,998,123		13,295,430
Over Five – Ten Years	63,923,630		64,618,639
More Than Ten Years	123,467,525		123,171,798
Mortgage-Backed Securities	189,964,013		193,818,426
	$	391,109,584	$	395,663,451

At June 30, 2015 the amortized cost and fair value of investment and mortgage-backed securities available for sale pledged as collateral for certain deposit accounts, FHLB advances and other borrowings were $86.5 million and $89.2 million, respectively, compared to an amortized cost and fair value of $120.7 million and $124.4 million, respectively, at December 31, 2014.

The Bank received $17.9 million and $13.4 million in gross proceeds from sales of available for sale securities during the three months ended June 30, 2015 and 2014, respectively. As a result, the Bank recognized gross gains of $182,000 and $168,000 respectively, and gross losses of $0 and $207,000 respectively, for the three months ended June 30, 2015 and 2014.

Similarly, during the six months ended June 30, 2015 and 2014, the Bank received $54.2 million and $27.3 million, respectively, in gross proceeds from sales of available for sale securities. As a result, the Bank recognized gross gains of $1.7 million and $477,000, respectively, and gross losses of $47,000 and $432,000, respectively, for the six months ended June 30, 2015 and 2014.

The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that the individual available for sale securities have been in a continuous unrealized loss position at the dates indicated.



	June 30, 2015
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
FHLB Securities	$	—	$	—	$	3,853,808	$	146,192	$	3,853,808	$	146,192
FFCB Securities	1,943,438		56,562		—		—		1,943,438		56,562
SBA Bonds	21,175,148		216,432		7,911,852		72,427		29,087,000		288,859
Tax Exempt Municipal Bond	52,740,553		1,735,478		777,236		28,047		53,517,789		1,763,525
Mortgage-Backed Securities	42,091,207		540,237		1,804,125		6,678		43,895,332		546,915
	$	117,950,346	$	2,548,709	$	14,347,021	$	253,344	$	132,297,367	$	2,802,053

6. Investment and Mortgage-Backed Securities, Available For Sale, Continued



	December 31, 2014
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
FHLB Securities	$	994,818	$	5,182	$	3,850,690	$	149,310	$	4,845,508	$	154,492
FFCB Securities	—		—		5,667,994		82,006		5,667,994		82,006
SBA Bonds	27,859,461		223,070		4,920,631		84,579		32,780,092		307,649
Tax Exempt Municipal Bond	3,605,319		16,039		1,710,586		29,041		5,315,905		45,080
Mortgage-Backed Securities	34,840,832		208,242		30,899,075		607,742		65,739,907		815,984
	$	67,300,430	$	452,533	$	47,048,976	$	952,678	$	114,349,406	$	1,405,211

Securities classified as available for sale are recorded at fair market value. At June 30, 2015 and December 31, 2014, 9.0% and 67.8% of the unrealized losses, representing nine and 24 individual securities, respectively, consisted of securities in a continuous loss position for 12 months or more. The Company has the ability and intent to hold these securities until such time as the value recovers or the securities mature. The Company believes, based on industry analyst reports and credit ratings, that the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary. The Company reviews its investment securities portfolio at least quarterly and more frequently when economic conditions warrant, assessing whether there is any indication of other-than-temporary impairment (“OTTI”).

Factors considered in the review include estimated future cash flows, length of time and extent to which market value has been less than cost, the financial condition and near term prospects of the issuer, and our intent and ability to retain the security to allow for an anticipated recovery in market value.

If the review determines that there is OTTI, then an impairment loss is recognized in earnings equal to the entire difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made, or we may recognize a portion in other comprehensive income. The fair value of investments on which OTTI is recognized then becomes the new cost basis of the investment. There was no OTTI recognized during the six months ended June 30, 2015.