Note 2: Investments in Securities

12 Months Ended

Dec. 31, 2015

Notes

Note 2: Investments in Securities

Note 2:      Investments in Securities

The amortized cost and fair values of securities classified as available-for-sale were as follows:

	December 31, 2015
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
(In Thousands)
U.S. government agencies	$20,000	$--	$219	$19,781
Mortgage-backed securities	159,777	2,038	601	161,214
States and political subdivisions	72,951	5,081	1	78,031
Other securities	847	2,983	--	3,830
	$253,575	$10,102	$821	$262,856

	December 31, 2014
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
(In Thousands)
U.S. government agencies	$20,000	$--	$486	$19,514
Mortgage-backed securities	254,294	4,325	821	257,798
States and political subdivisions	79,237	5,810	7	85,040
Other securities	847	2,307	--	3,154
	$354,378	$12,442	$1,314	$365,506

At December 31, 2015, the Company’s mortgage-backed securities portfolio consisted of GNMA securities totaling $101.6 million, FNMA securities totaling $17.6 million and FHLMC securities totaling $42.0 million.  At December 31, 2015, $143.1 million of the Company’s mortgage-backed securities had variable rates of interest and $18.1 million had fixed rates of interest.

The amortized cost and fair value of available-for-sale securities at December 31, 2015, by contractual maturity, are shown below.  Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Fair
	Cost	Value
(In Thousands)
After one through five years	$619	$649
After five through ten years	3,566	3,715
After ten years	88,766	93,448
Securities not due on a single maturity date	159,777	161,214
Equity securities	847	3,830
	$253,575	$262,856

The amortized cost and fair values of securities classified as held to maturity were as follows:

	December 31, 2015
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
(In Thousands)
States and political
subdivisions	$353	$31	$--	$384

	December 31, 2014
		Gross	Gross
	Amortized	Unrealized	Unrealized	Fair
	Cost	Gains	Losses	Value
(In Thousands)
States and political
subdivisions	$450	$49	$--	$499

The held-to-maturity securities at December 31, 2015, by contractual maturity, are shown below.  Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Fair
	Cost	Value
(In Thousands)
After one through five years	$353	$384

The amortized cost and fair values of securities pledged as collateral was as follows at December 31, 2015 and 2014:

	2015		2014
	Amortized	Fair	Amortized	Fair
	Cost	Value	Cost	Value
(In Thousands)
Public deposits	$60,355	$62,288	$130,760	$133,940
Collateralized borrowing
accounts	131,813	131,950	160,130	161,145
Other	5,149	5,330	3,965	4,053
	$197,317	$199,568	$294,855	$299,138

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost.  Total fair value of these investments at December 31, 2015 and 2014, was approximately $76.0 million and $106.0 million, respectively, which is approximately 28.9% and 29.0% of the Company’s available-for-sale and held-to-maturity investment portfolio, respectively.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these debt securities are temporary.

The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2015 and 2014:

	2015
	Less than 12 Months		12 Months or More		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Description of Securities	Value	Losses	Value	Losses	Value	Losses
(In Thousands)
U.S. government agencies	$20,000	$(219)	$--	$--	$20,000	$(219)
Mortgage-backed securities	45,494	(348)	9,635	(253)	55,129	(601)
States and political subdivisions	--	--	910	(1)	910	(1)
	$65,494	$(567)	$10,545	$(254)	$76,039	$(821)

	2014
	Less than 12 Months		12 Months or More		Total
	Fair	Unrealized	Fair	Unrealized	Fair	Unrealized
Description of Securities	Value	Losses	Value	Losses	Value	Losses
(In Thousands)
U.S. government agencies	$--	$--	$20,000	$(486)	$20,000	$(486)
Mortgage-backed securities	40,042	(328)	45,056	(493)	85,098	(821)
States and political subdivisions	--	--	925	(7)	925	(7)
	$40,042	$(328)	$65,981	$(986)	$106,023	$(1,314)

Other-than-Temporary Impairment

Upon acquisition of a security, the Company decides whether it is within the scope of the accounting guidance for beneficial interests in securitized financial assets or will be evaluated for impairment under the accounting guidance for investments in debt and equity securities.

The accounting guidance for beneficial interests in securitized financial assets provides incremental impairment guidance for a subset of the debt securities within the scope of the guidance for investments in debt and equity securities.  For securities where the security is a beneficial interest in securitized financial assets, the Company uses the beneficial interests in securitized financial asset impairment model.  For securities where the security is not a beneficial interest in securitized financial assets, the Company uses the debt and equity securities impairment model.  The Company does not currently have securities within the scope of this guidance for beneficial interests in securitized financial assets.

The Company routinely conducts periodic reviews to identify and evaluate each investment security to determine whether an other-than-temporary impairment has occurred.  The Company considers the length of time a security has been in an unrealized loss position, the relative amount of the unrealized loss compared to the carrying value of the security, the type of security and other factors.  If certain criteria are met, the Company performs additional review and evaluation using observable market values or various inputs in economic models to determine if an unrealized loss is other than temporary.  The Company uses quoted market prices for marketable equity securities and uses broker pricing quotes based on observable inputs for equity investments that are not traded on a stock exchange.  For nonagency collateralized mortgage obligations, to determine if the unrealized loss is other than temporary, the Company projects total estimated defaults of the underlying assets (mortgages) and multiplies that calculated amount by an estimate of realizable value upon sale in the marketplace (severity) in order to determine the projected collateral loss.  The Company also evaluates any current credit enhancement underlying these securities to determine the impact on cash flows.  If the Company determines that a given security position will be subject to a write-down or loss, the Company records the expected credit loss as a charge to earnings.

During 2015, 2014 and 2013, no securities were determined to have impairment that had become other than temporary. 

Credit Losses Recognized on Investments

There were no debt securities that have experienced fair value deterioration due to credit losses, as well as due to other market factors, but are not otherwise other-than-temporarily impaired.