Note 2.Investment Securities

The carrying value and fair value of investment securities available-for-sale (“AFS”) at June 30, 2017 and December 31, 2016 are as follows:


As of June 30, 2017
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	2,127	$	—	$	(5)	$	2,122
Mortgage-backed securities-residential		7,029		178		—		7,207
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		115,532		911		(854)		115,589
Non-agency		—		—		—		—
Corporate bonds		1,700		28		—		1,728
Municipal bonds		7,468		132		(42)		7,558
Other securities		1,706		—		—		1,706
Common stocks		26		—		—		26
Total available for sale	$	135,588	$	1,249	$	(901)	$	135,936


As of December 31, 2016
			Gross		Gross
	Amortized		unrealized		unrealized
(In thousands)	cost		gains		losses		Fair value
U.S. government agencies	$	988	$	—	$	(22)	$	966
Mortgage-backed securities-residential		6,985		70		(17)		7,038
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		146,666		1,022		(2,129)		145,559
Non-agency		4,121		—		(86)		4,035
Corporate bonds		1,700		1		—		1,701
Municipal bonds		8,691		92		(75)		8,708
Other securities		1,821		—		—		1,821
Common stocks		26		—		—		26
Total available for sale	$	170,998	$	1,185	$	(2,329)	$	169,854

The amortized cost and fair value of investment securities at June 30, 2017, 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, 2017
	Amortized
(In thousands)	cost		Fair value
Within 1 year	$	1,798	$	1,797
After 1 but within 5 years		7,490		7,544
After 5 but within 10 years		1,007		1,039
After 10 years		1,000		1,028
Mortgage-backed securities-residential		7,029		7,207
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		115,532		115,589
Total available for sale debt securities		133,856		134,204
No contractual maturity		1,732		1,732
Total available for sale securities	$	135,588	$	135,936

Proceeds from the sales of AFS investments during the three and six months ended June 30, 2017 were $19.5 million. Proceeds from the sales of AFS investments during the three and six months ended June 30, 2016 were $683 thousand and $10.7 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 six months ended
	June 30,				June 30,
(In thousands)	2017		2016		2017		2016
Gross realized gains	$	293	$	779	$	293	$	1,146
Gross realized losses		(17)		(44)		(17)		(44)
Net realized gains	$	276	$	735	$	276	$	1,102

The tables below indicate the length of time individual AFS securities have been in a continuous unrealized loss position at June 30, 2017 and December 31, 2016:


June 30, 2017	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	$	2,122	$	(5)	2	$	—	$	—	—	$	2,122	$	(5)	2
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		47,191		(422)	18		15,647		(432)	6		62,838		(854)	24
Municipal bonds		664		(1)	2		2,151		(41)	3		2,815		(42)	5
Total available for sale	$	49,977	$	(428)	22	$	17,798	$	(473)	9	$	67,775	$	(901)	31


December 31, 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
U.S. government agencies	$	966	$	(22)	1	$	—	$	—	—	$	966	$	(22)	1
Mortgage-backed securities-residential		4,237		(17)	2		—		—	—		4,237		(17)	2
Collateralized mortgage obligations:
Issued or guaranteed by U.S. government agencies		73,864		(1,630)	31		12,045		(499)	4		85,909		(2,129)	35
Non-agency		4,035		(86)	3		—		—	—		4,035		(86)	3
Municipal bonds		1,678		(45)	3		2,314		(30)	3		3,992		(75)	6
Total available for sale	$	84,780	$	(1,800)	40	$	14,359	$	(529)	7	$	99,139	$	(2,329)	47

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. There were no credit-related impairment losses on debt securities held at June 30, 2017 and June 30, 2016 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-sponsored agencies (“U.S. Agency”): As of June 30, 2017, we had two U.S. Agency securities with a fair value of $2.1 million and a gross unrealized loss of $5 thousand. The bonds have been in an unrealized loss position for less than twelve months at June 30, 2017. Management believes that the unrealized loss on these debt securities are a function of changes in investment spreads. 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, 2017.

U.S. government issued or sponsored collateralized mortgage obligations (“Agency CMOs”): As of June 30, 2017, we had 24 Agency CMOs with a fair value of $62.8 million and gross unrealized losses of $854 thousand. Six of the Agency CMOs have been in an unrealized loss position for twelve months or longer and the remaining 18 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, 2017.

Municipal bonds: As of June 30, 2017 we had five municipal bonds with a fair value $2.8 million and gross unrealized losses of $42 thousand. Two of the municipal bonds have been in an unrealized loss position for less than twelve months and three bonds have been in an unrealized loss position for twelve months or longer at June 30, 2017. 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, 2017.

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.