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:



	March 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
FHLB Securities	$	2,000,000	$	—	$	4,890	$	1,995,110
Federal Home Loan Mortgage Corporation ("FHLMC") & Federal National Mortgage Association ("FNMA") Bonds	1,997,016		18,605		—		2,015,621
Small Business Administration (“SBA”) Bonds	109,797,838		1,692,290		174,456		111,315,672
Tax Exempt Municipal Bonds	74,181,255		3,009,287		209,164		76,981,378
Taxable Municipal Bonds	1,016,098		3,952		—		1,020,050
Mortgage-Backed Securities	191,429,724		4,020,969		432,754		195,017,939
Equity Securities	250,438		55,204		—		305,642
	$	380,672,369	$	8,800,307	$	821,264	$	388,651,412


	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
FHLB Securities	$	2,000,000	$	—	$	67,912	$	1,932,088
Federal Farm Credit Bank ("FFCB") Securities	2,000,000		—		12,064		1,987,936
FNMA Bonds	997,564		6,767		—		1,004,331
SBA Bonds	110,195,113		1,415,464		193,795		111,416,782
Tax Exempt Municipal Bonds	73,499,636		2,770,115		204,132		76,065,619
Mortgage-Backed Securities	180,197,347		3,281,116		681,251		182,797,212
Equity Securities	250,438		59,464		—		309,902
	$	369,140,098	$	7,532,926	$	1,159,154	$	375,513,870

The FHLB, FFCB, FHLMC and FNMA are government sponsored enterprises ("GSEs") and the securities and bonds issued by 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 March 31, 2016 the Bank held an amortized cost and fair value of $113.5 million and $115.6 million, respectively, in GNMA mortgage-backed securities, which are included in mortgage-backed securities in the table above, compared to an amortized cost and fair value of $116.8 million and $118.5 million, respectively, at December 31, 2015.

Also included in mortgage-backed securities in the tables above and below are private label collateralized mortgage obligation ("CMO") securities. These securities are issued by non-governmental real estate mortgage investment conduits, which are not backed by the full faith and credit of the United States government. At March 31, 2016 the Bank held an amortized cost and fair value of $14.7 million and $14.5 million, respectively, in private label CMO mortgage-backed securities, which are included in mortgage-backed securities in the table above, compared to an amortized cost and fair value of $3.8 million at December 31, 2015.

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 March 31, 2016 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	$	447,262	$	453,157
One – Five Years	16,871,672		17,216,800
Over Five – Ten Years	54,832,074		55,875,165
More Than Ten Years	117,091,637		120,088,351
Mortgage-Backed Securities	191,429,724		195,017,939
	$	380,672,369	$	388,651,412

At March 31, 2016 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 $79.2 million and $76.8 million, respectively, compared to an amortized cost and fair value of $81.0 million and $83.2 million, respectively at December 31, 2015.

The Bank received $3.2 million and $36.4 million, respectively, in gross proceeds from sales of available for sale securities during the three months ended March 31, 2016 and 2015. As a result, the Bank recognized gross gains of $258,000 and $1.5 million, respectively, and gross losses of $0 and $47,000, respectively, for the three months ended March 31, 2016 and 2015.

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.



	March 31, 2016
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
FHLB Securities	$	—	$	—	$	1,995,110	$	4,890	$	1,995,110	$	4,890
FFCB Securities	—		—		—		—		—		—
SBA Bonds	16,475,245		89,541		9,238,724		84,915		25,713,969		174,456
Tax Exempt Municipal Bonds	11,246,437		126,569		3,997,850		82,595		15,244,287		209,164
Mortgage-Backed Securities	38,690,737		334,990		8,060,303		97,764		46,751,040		432,754
	$	66,412,419	$	551,100	$	23,291,987	$	270,164	$	89,704,406	$	821,264



	December 31, 2015
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
FHLB Securities	$	—	$	—	$	1,932,088	$	67,912	$	1,932,088	$	67,912
FFCB Securities	1,987,936		12,064		—		—		1,987,936		12,064
SBA Bonds	25,090,453		119,533		7,982,777		74,262		33,073,230		193,795
Tax Exempt Municipal Bonds	13,668,473		175,020		709,800		29,112		14,378,273		204,132
Mortgage-Backed Securities	63,273,417		648,862		1,706,086		32,389		64,979,503		681,251
	$	104,020,279	$	955,479	$	12,330,751	$	203,675	$	116,351,030	$	1,159,154

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

Securities classified as available for sale are recorded at fair market value. At March 31, 2016, 32.9% of the unrealized losses, or 17 individual securities, were in a continuous loss position for 12 months or more. At December 31, 2015, 17.6% of the unrealized losses, or nine individual securities, were 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 a portion may be recognized 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 three months ended March 31, 2016.