Note 3.Investment Securities

The carrying value and fair value of investment securities available-for-sale (“AFS”) at June 30, 2016 and December 31, 2015 are as follows:


As of June 30, 2016
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	13,594	$	33	$	—	$	13,627
Mortgage-backed securities-residential		10,145		357		—		10,502
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		160,639		3,639		(286)		163,992
Non-agency		2,243		51		—		2,294
Corporate bonds		1,700		94		—		1,794
Municipal bonds		9,724		275		(53)		9,946
Other securities		1,877		—		—		1,877
Common stocks		26		—		—		26
Total available for sale	$	199,948	$	4,449	$	(339)	$	204,058


As of December 31, 2015
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	26,127	$	—	$	(564)	$	25,563
Mortgage-backed securities-residential		11,002		106		(50)		11,058
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		170,764		1,524		(1,554)		170,734
Non-agency		2,729		1		(26)		2,704
Corporate bonds		1,500		56		—		1,556
Municipal bonds		9,910		73		(52)		9,931
Other securities		2,050		445		—		2,495
Common stocks		26		—		—		26
Total available for sale	$	224,108	$	2,205	$	(2,246)	$	224,067

The amortized cost and fair value of investment securities at June 30, 2016, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	As of June 30, 2016
	Amortized
(In thousands)	cost		Fair value
Within 1 year	$	1,003	$	1,001
After 1 but within 5 years		10,811		10,827
After 5 but within 10 years		9,091		9,319
After 10 years		4,113		4,220
Mortgage-backed securities-residential		10,145		10,502
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		160,639		163,992
Non-agency		2,243		2,294
Total available for sale debt securities		198,045		202,155
No contractual maturity		1,903		1,903
Total available for sale securities	$	199,948	$	204,058

Proceeds from the sales of AFS investments during the three and six months ended June 30, 2016 were $683 thousand and $10.7 million. Proceeds from the sales of AFS investments during the three and six months ended June 30, 2015 were $5.8 million and $24.5 million, respectively. The following table summarizes gross realized gains and losses on the sale of securities recognized in earnings in the periods indicated:


	For the three months ended				For the six months ended
	June 30,				June 30,
(In thousands)	2016		2015		2016		2015
Gross realized gains	$	779	$	385	$	1,146	$	572
Gross realized losses		(44)		—		(44)		—
Net realized gains	$	735	$	385	$	1,102	$	572

The tables below indicate the length of time individual AFS securities have been in a continuous unrealized loss position at June 30, 2016 and December 31, 2015:


June 30, 2016	Less than 12 months					12 months or longer					Total
			Gross		Number			Gross		Number			Gross		Number
			unrealized		of			unrealized		of			unrealized		of
(In thousands)	Fair value		losses		positions	Fair value		losses		positions	Fair value		losses		positions
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies	$	8,801	$	(77)	3	$	10,705	$	(209)	3	$	19,506	$	(286)	6
Municipal bonds		3,034		(49)	3		1,328		(4)	2		4,362		(53)	5
Total available for sale	$	11,835	$	(126)	6	$	12,033	$	(213)	5	$	23,868	$	(339)	11


December 31, 2015	Less than 12 months					12 months or longer					Total
			Gross		Number			Gross		Number			Gross		Number
			unrealized		of			unrealized		of			unrealized		of
(In thousands)	Fair value		losses		positions	Fair value		losses		positions	Fair value		losses		positions
U.S. government agencies	$	6,681	$	(57)	2	$	18,882	$	(507)	6	$	25,563	$	(564)	8
Mortgage-backed securities-residential		5,140		(5)	2		2,574		(45)	1		7,714		(50)	3
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		87,020		(994)	31		15,644		(560)	5		102,664		(1,554)	36
Non-agency		1,101		(26)	1		—		—	—		1,101		(26)	1
Municipal bonds		6,080		(52)	7		—		—	—		6,080		(52)	7
Total available for sale	$	106,022	$	(1,134)	43	$	37,100	$	(1,112)	12	$	143,122	$	(2,246)	55

We evaluate declines in the fair value of securities for other-than-temporary impairment (“OTTI”) at least on a quarterly basis. We assess whether OTTI is present when the fair value of a security is less than its amortized cost. Under ASC Topic 320, OTTI is considered to have occurred with respect to debt securities (1) if an entity intends to sell the security; (2) if it is more likely than not an entity will be required to sell the security before recovery of its amortized cost basis; or (3) the present value of the expected cash flows is not sufficient to recover the entire amortized cost basis. During the second quarter of 2016, we recorded impairment charges of $146 thousand on two private equity funds as a result of analyses performed on recent financial information. We did not record OTTI charges to earnings during the first two quarters of 2015. There was no credit-related impairment losses on debt securities held at June 30, 2016 and June 30, 2015 for which a portion of OTTI was recognized in other comprehensive income.

For all debt security types discussed below the fair value is based on prices provided by brokers and safekeeping custodians.

U.S. government issued or sponsored collateralized mortgage obligations (“Agency CMOs”): As of June 30, 2016, we had six Agency CMOs with a fair value of $19.5 million and gross unrealized losses of $286 thousand. Three of the Agency CMOs have been in an unrealized loss position for twelve months or longer and the remaining three Agency CMOs have been in an unrealized loss position for less than twelve months. The unrealized loss is attributable to a combination of factors, including relative changes in interest rates since the time of purchase. The contractual cash flows for these securities are guaranteed by U.S. government agencies and U.S. government-sponsored enterprises. Based on its assessment of these factors, management believes that the unrealized losses on these debt securities are a function of changes in investment spreads and interest rate movements and not as a result of changes in credit quality. Management expects to recover the entire amortized cost basis of these securities. We do not intend to sell these securities before recovery of their cost basis and have not determined that it is not more likely than not that we will be required to sell these securities before recovery of their cost basis. Therefore, management has determined that these securities are not other-than-temporarily impaired at June 30, 2016.

Municipal bonds: As of June 30, 2016 we had five municipal bonds with a fair value $4.4 million and gross unrealized losses of $53 thousand. Three of the municipal bonds have been in an unrealized loss position for less than twelve months and two bonds have been in an unrealized loss position for twelve months or longer at June 30, 2016. Because we do not intend to sell the bonds and it is not more likely than not that we will be required to sell the bonds before recovery of their amortized cost basis, which may be maturity, we do not consider the bonds to be other-than-temporarily impaired at June 30, 2016.

We will continue to monitor these investments to determine if the discounted cash flow analysis, continued negative trends, market valuations, or credit defaults result in impairment that is other than temporary.