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, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Student Loan Pools	$	12,961,675	$	7,029	$	108,760	$	12,859,944
Small Business Administration (“SBA”) Bonds	115,797,449		372,414		724,834		115,445,029
Tax Exempt Municipal Bonds	60,477,526		1,311,392		402,930		61,385,988
Taxable Municipal Bonds	2,014,601		—		45,931		1,968,670
Mortgage-Backed Securities	172,137,551		1,017,385		2,076,428		171,078,508
State Tax Credit	56,800		—		—		56,800
Equity Securities	155,000		—		—		155,000
Total Available For Sale	$	363,600,602	$	2,708,220	$	3,358,883	$	362,949,939

	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Student Loan Pools	$	8,522,043	$	1,288	$	1,546	$	8,521,785
SBA Bonds	123,324,802		1,113,160		189,518		124,248,444
Tax Exempt Municipal Bonds	59,623,185		2,789,233		56,851		62,355,567
Taxable Municipal Bonds	2,016,833		—		19,703		1,997,130
Mortgage-Backed Securities	186,732,705		1,936,847		973,572		187,695,980
Equity Securities	155,000		—		—		155,000
Total Available For Sale	$	380,374,568	$	5,840,528	$	1,241,190	$	384,973,906

Student Loan Pools are typically 97% guaranteed by the United States government while SBA bonds are 100% 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, 2018, AFS GNMA mortgage-backed securities had an amortized cost and fair value of $78.9 million and $78.7 million, respectively, compared to an amortized cost and fair value of $101.3 million and $102.1 million, respectively, at December 31, 2017.

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, 2018 the Bank held AFS private label CMO mortgage-backed securities with an amortized cost and fair value of $30.0 million and $29.9 million, respectively, compared to an amortized cost and fair value of $26.9 million at December 31, 2017.

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, 2018 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, 2018
Investment Securities:	Amortized Cost		Fair Value
One Year or Less	$	181,392	$	179,717
After One – Five Years	11,200,552		11,175,886
After Five – Ten Years	41,198,731		41,093,031
More Than Ten Years	138,882,376		139,422,797
Mortgage-Backed Securities	172,137,551		171,078,508
Total Available For Sale	$	363,600,602	$	362,949,939

At June 30, 2018 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 $112.8 million and $112.6 million, respectively, compared to an amortized cost and fair value of $99.2 million and $100.5 million, respectively, at December 31, 2017.

The Bank received $28.6 million and $17.5 million in gross proceeds from sales of available for sale securities during the six months ended June 30, 2018 and 2017, respectively. As a result, the Bank recognized gross gains of $503,000 and $629,000, respectively, with $67,000 and $0 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, 2018
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Student Loan Pools	$	9,422,577	$	108,760	$	—	$	—	$	9,422,577	$	108,760
SBA Bonds	69,699,835		618,720		5,940,904		106,114		75,640,739		724,834
Tax Exempt Municipal Bonds	17,010,549		260,006		4,209,366		142,924		21,219,915		402,930
Taxable Municipal Bonds	1,968,670		45,931		—		—		1,968,670		45,931
Mortgage-Backed Securities	79,481,465		1,377,813		33,570,042		698,615		113,051,507		2,076,428
	$	177,583,096	$	2,411,230	$	43,720,312	$	947,653	$	221,303,408	$	3,358,883



	December 31, 2017
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Student Loan Pools	$	7,556,014	$	1,546	$	—	$	—	$	7,556,014	$	1,546
SBA Bonds	24,433,422		151,459		5,588,532		38,059		30,021,954		189,518
Tax Exempt Municipal Bonds	4,406,162		13,852		4,328,229		42,999		8,734,391		56,851
Taxable Municipal Bond	1,997,130		19,703		—		—		1,997,130		19,703
Mortgage-Backed Securities	62,574,910		624,772		23,612,359		348,800		86,187,269		973,572
	$	100,967,638	$	811,332	$	33,529,120	$	429,858	$	134,496,758	$	1,241,190

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, 2018 and December 31, 2017, 28.2% and 34.6% of the unrealized losses, representing 39 and 30 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, 2018.