Note 3.Investment Securities

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


As of September 30, 2016
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	3,498	$	2	$	—	$	3,500
Mortgage-backed securities-residential		7,373		342		—		7,715
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		138,137		2,372		(469)		140,040
Non-agency		4,514		52		—		4,566
Corporate bonds		1,700		74		—		1,774
Municipal bonds		8,706		216		(55)		8,867
Other securities		1,833		—		—		1,833
Common stocks		26		—		—		26
Total available for sale	$	165,787	$	3,058	$	(524)	$	168,321


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 September 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 September 30, 2016
	Amortized
(In thousands)	cost		Fair value
Within 1 year	$	—	$	—
After 1 but within 5 years		7,802		7,798
After 5 but within 10 years		5,102		5,269
After 10 years		1,000		1,074
Mortgage-backed securities-residential		7,373		7,715
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		138,137		140,040
Non-agency		4,514		4,566
Total available for sale debt securities		163,928		166,462
No contractual maturity		1,859		1,859
Total available for sale securities	$	165,787	$	168,321

Proceeds from the sales of AFS investments during the three and nine months ended September 30, 2016 were $25.7 million and $36.4 million. Proceeds from the sales of AFS investments during the three and nine months ended September 30, 2015 were $9.2 million and $33.7 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 nine months ended
	September 30,				September 30,
(In thousands)	2016		2015		2016		2015
Gross realized gains	$	280	$	104	$	1,426	$	676
Gross realized losses		—		(24)		(44)		(24)
Net realized gains	$	280	$	80	$	1,382	$	652

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


September 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	$	22,424	$	(224)	8	$	10,458	$	(245)	3	$	32,882	$	(469)	11
Municipal bonds		2,026		(49)	2		1,324		(6)	2		3,350		(55)	4
Total available for sale	$	24,450	$	(273)	10	$	11,782	$	(251)	5	$	36,232	$	(524)	15


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 first three quarters of 2016, we recorded impairment charges of $181 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 three quarters of 2015. There were no credit-related impairment losses on debt securities held at September 30, 2016 and September 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 September 30, 2016, we had 11 Agency CMOs with a fair value of $32.9 million and gross unrealized losses of $469 thousand. Three of the Agency CMOs have been in an unrealized loss position for twelve months or longer and the remaining eight 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 September 30, 2016.

Municipal bonds: As of September 30, 2016 we had four municipal bonds with a fair value $3.3 million and gross unrealized losses of $55 thousand. Two 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 September 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 September 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.