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 were as follows:



	June 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Small Business Administration (“SBA”) Bonds	$	126,753,533	$	1,197,692	$	161,805	$	127,789,420
Tax Exempt Municipal Bonds	81,369,078		3,217,508		538,589		84,047,997
Taxable Municipal Bonds	2,019,039		8,911		—		2,027,950
Mortgage-Backed Securities	184,945,040		2,729,888		402,231		187,272,697
State Tax Credit	56,800		—		—		56,800
Equity Securities	155,000		—		—		155,000
Total Available For Sale	$	395,298,490	$	7,153,999	$	1,102,625	$	401,349,864

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
FHLB Bonds	$	998,001	$	—	$	1	$	998,000
SBA Bonds	101,280,921		909,361		284,223		101,906,059
Tax Exempt Municipal Bonds	72,248,915		1,185,753		1,899,519		71,535,149
Taxable Municipal Bonds	2,021,192		—		30,062		1,991,130
Mortgage-Backed Securities	183,657,697		2,575,616		972,222		185,261,091
Equity Securities	250,438		117,562		—		368,000
Total Available For Sale	$	360,457,164	$	4,788,292	$	3,186,027	$	362,059,429

The FHLB is a government sponsored enterprise ("GSE") 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 June 30, 2017 the Bank held an amortized cost and fair value of $101.1 million and $102.4 million, respectively, in AFS GNMA mortgage-backed securities compared to an amortized cost and fair value of $107.9 million and $109.2 million, respectively, at December 31, 2016.

Also included in mortgage-backed securities in the tables above and below are private label collateralized mortgage obligation ("CMO") securities, which are issued by non-governmental real estate mortgage investment conduits and are not backed by the full faith and credit of the United States government. At June 30, 2017 the Bank held an amortized cost and fair value of $29.7 million and $29.7 million, respectively, in AFS private label CMO mortgage-backed securities, compared to an amortized cost and fair value of $20.0 million and $19.7 million, respectively, at December 31, 2016.

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, 2017 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 maturity groupings set forth in the table below.



	June 30, 2017
Investment Securities	Amortized Cost		Fair Value
Less Than One Year	$	328,603	$	328,525
One – Five Years	15,445,316		15,603,908
Over Five – Ten Years	53,122,450		53,869,687
More Than Ten Years	141,457,081		144,275,047
Mortgage-Backed Securities	184,945,040		187,272,697
Total Available For Sale	$	395,298,490	$	401,349,864

At June 30, 2017 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 $92.1 million and $93.9 million, respectively, compared to an amortized cost and fair value of $75.3 million and $76.9 million, respectively, at December 31, 2016.

The Bank received $2.2 million and $11.4 million in gross proceeds from sales of available for sale securities during the three months ended June 30, 2017 and 2016, respectively. As a result, the Bank recognized gross gains of $45,000 and $154,000, respectively, for the three months ended June 30, 2017 and 2016, with no gross losses recognized for the same periods.

During the six months ended June 30, 2017 and 2016, the Bank received $17.5 million and $14.6 million, respectively, in gross proceeds from sales of available for sale securities. As a result, the Bank recognized gross gains of $629,000 and $412,000, respectively, with no gross losses recognized for the same periods.

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, 2017
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
SBA Bonds	$	15,277,479	$	64,891	$	8,979,781	$	96,914	$	24,257,260	$	161,805
Tax Exempt Municipal Bonds	14,089,073		416,583		2,277,880		122,006		16,366,953		538,589
Mortgage-Backed Securities	42,992,095		341,150		9,351,864		61,081		52,343,959		402,231
	$	72,358,647	$	822,624	$	20,609,525	$	280,001	$	92,968,172	$	1,102,625



	December 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	$	998,000	$	1	$	—	$	—	$	998,000	$	1
SBA Bonds	28,490,243		228,432		8,212,824		55,791		36,703,067		284,223
Tax Exempt Municipal Bonds	47,405,066		1,899,519		—		—		47,405,066		1,899,519
Taxable Municipal Bond	1,991,130		30,062		—		—		1,991,130		30,062
Mortgage-Backed Securities	62,738,366		916,699		5,600,262		55,523		68,338,628		972,222
	$	141,622,805	$	3,074,713	$	13,813,086	$	111,314	$	155,435,891	$	3,186,027

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

Securities classified as available for sale are recorded at fair market value. At June 30, 2017 and December 31, 2016, 25.4% and 3.5% of the unrealized losses, representing 21 and 15 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 the Company 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, 2017.