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:



	December 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair value
Student Loan Pools	$	12,934,037	$	20,713	$	69,249	$	12,885,501
Small Business Administration (“SBA”) Bonds	125,777,016		560,352		890,837		125,446,531
Tax Exempt Municipal Bonds	60,141,164		1,518,974		329,769		61,330,369
Taxable Municipal Bonds	1,998,258		3,546		23,919		1,977,885
Mortgage-Backed Securities	185,291,038		1,073,432		1,903,919		184,460,551
Equity Securities	155,000		—		—		155,000
	$	386,296,513	$	3,177,017	$	3,217,693	$	386,255,837

	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
	$	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 December 31, 2018, the Bank held an amortized cost and fair value of $80.4 million and $80.2 million, respectively, in GNMA mortgage-backed securities 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 December 31, 2018 the Bank held an amortized cost and fair value of $29.7 million and $29.5 million, respectively, in private label CMO mortgage-backed securities, compared to both an amortized cost and fair value of $26.9 million at December 31, 2017.

The amortized cost and fair value of investment and mortgage-backed securities available for sale at December 31, 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 below.



	Amortized Cost		Fair Value
Due in less than one year	$	800,086	$	798,888
Due in one year to five years	8,644,891		8,640,449
Due in five to ten years	53,159,099		53,352,084
Due in ten years or more	138,401,399		139,003,865
Mortgage-Backed Securities	185,291,038		184,460,551
	$	386,296,513	$	386,255,837

(2) Investment and Mortgage-Backed Securities, Available For Sale, Continued

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 $111.8 million and $111.7 million, respectively, at December 31, 2018 and $99.2 million and $100.5 million, respectively, at December 31, 2017.

The Bank received $33.3 million, $72.3 million and $43.9 million in gross proceeds from sales of available for sale securities during the years ended December 31, 2018, 2017 and 2016, respectively. As a result, the Bank recognized gross gains of $503,000, $1.0 million and $1.0 million, respectively, and gross losses of $159,000, $510,000 and $300,000, respectively, during the years ended December 31, 2018, 2017 and 2016.

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



	December 31, 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	$	8,384,145	$	69,249	$	—	$	—	$	8,384,145	$	69,249
SBA Bonds	59,496,936		479,955		25,054,861		410,882		84,551,797		890,837
Tax Exempt Municipal Bonds	4,585,849		91,281		9,626,613		238,488		14,212,462		329,769
Taxable Municipal Bonds	—		—		980,520		23,919		980,520		23,919
Mortgage-Backed Securities	38,168,598		249,050		81,947,249		1,654,869		120,115,847		1,903,919
	$	110,635,528	$	889,535	$	117,609,243	$	2,328,158	$	228,244,771	$	3,217,693



	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 Bonds	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

Securities classified as available-for-sale are recorded at fair market value. At December 31, 2018 and 2017, 72.4% and 34.6% of the unrealized losses, representing 92 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 Company's review of its investment securities portfolio 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 of the impairment 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 years ended December 31, 2018, 2017 and 2016.