Note 3. Investment Securities

The following tables present the amortized cost and aggregate fair value of available-for-sale securities, including gross unrealized gains and losses, as of the dates indicated:

 

		September 30, 2016
		Amortized				Unrealized				Unrealized				Fair
(Amounts in thousands)		Cost				Gains				Losses				Value
U.S. Agency securities		$	1,371			$	4			$	—			$	1,375
Municipal securities			116,910				5,171				(7	)			122,074
Single issue trust preferred securities			51,292				—				(2,772	)			48,520
Corporate securities			15,027				—				(5	)			15,022
Mortgage-backed Agency securities			33,578				294				(80	)			33,792
Equity securities			55				18				—				73
Total securities available for sale		$	218,233			$	5,487			$	(2,864	)		$	220,856
		December 31, 2015
		Amortized				Unrealized				Unrealized				Fair
(Amounts in thousands)		Cost				Gains				Losses				Value
U.S. Agency securities		$	31,414			$	39			$	(751	)		$	30,702
Municipal securities			124,880				4,155				(357	)			128,678
Single issue trust preferred securities			55,882				—				(8,050	)			47,832
Corporate securities			70,571				—				(238	)			70,333
Certificates of deposit			5,000				—				—				5,000
Mortgage-backed Agency securities			84,576				155				(1,175	)			83,556
Equity securities			66				6				—				72
Total securities available for sale		$	372,389			$	4,355			$	(10,571	)		$	366,173

The following tables present the amortized cost and aggregate fair value of held-to-maturity securities, including gross unrealized gains and losses, as of the dates indicated:

 

		September 30, 2016
		Amortized				Unrealized				Unrealized				Fair
(Amounts in thousands)		Cost				Gains				Losses				Value
U.S. Agency securities		$	61,766			$	317			$	—			$	62,083
Corporate securities			10,416				108				—				10,524
Total securities held to maturity		$	72,182			$	425			$	—			$	72,607
		December 31, 2015
		Amortized				Unrealized				Unrealized				Fair
(Amounts in thousands)		Cost				Gains				Losses				Value
U.S. Agency securities		$	61,863			$	75			$	(106	)		$	61,832
Municipal securities			190				3				—				193
Corporate securities			10,488				—				(23	)			10,465
Total securities held to maturity		$	72,541			$	78			$	(129	)		$	72,490

The following table presents the amortized cost and aggregate fair value of available-for-sale securities and held-to-maturity securities, by contractual maturity, as of the date indicated. Actual maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.

 

		September 30, 2016
		Amortized
(Amounts in thousands)		Cost				Fair Value
Available-for-sale securities
Due within one year		$	16,747			$	16,753
Due after one year but within five years			2,131				2,178
Due after five years but within ten years			87,281				91,586
Due after ten years			78,441				76,474
			184,600				186,991
Mortgage-backed securities			33,578				33,792
Equity securities			55				73
Total securities available for sale		$	218,233			$	220,856
Held-to-maturity securities
Due within one year		$	46,867			$	46,909
Due after one year but within five years			25,315				25,698
Due after five years but within ten years			—				—
Due after ten years			—				—
Total securities held to maturity		$	72,182			$	72,607

The following tables present the fair values and unrealized losses for available-for-sale securities in a continuous unrealized loss position for less than 12 months and for 12 months or longer as of the dates indicated:

 

		September 30, 2016
		Less than 12 Months								12 Months or Longer								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
(Amounts in thousands)		Value				Losses				Value				Losses				Value				Losses
U.S. Agency securities		$	—			$	—			$	—			$	—			$	—			$	—
Municipal securities			—				—				767				(7	)			767				(7	)
Single issue trust preferred securities			—				—				19,323				(2,772	)			19,323				(2,772	)
Corporate securities			—				—				15,022				(5	)			15,022				(5	)
Mortgage-backed Agency securities			1,167				(1	)			13,589				(79	)			14,756				(80	)
Total		$	1,167			$	(1	)		$	48,701			$	(2,863	)		$	49,868			$	(2,864	)
		December 31, 2015
		Less than 12 Months								12 Months or Longer								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
(Amounts in thousands)		Value				Losses				Value				Losses				Value				Losses
U.S. Agency securities		$	4,441			$	(5	)		$	23,922			$	(746	)		$	28,363			$	(751	)
Municipal securities			8,126				(48	)			10,393				(309	)			18,519				(357	)
Single issue trust preferred securities			—				—				47,832				(8,050	)			47,832				(8,050	)
Corporate securities			70,333				(238	)			—				—				70,333				(238	)
Mortgage-backed Agency securities			27,050				(253	)			37,291				(922	)			64,341				(1,175	)
Total		$	109,950			$	(544	)		$	119,438			$	(10,027	)		$	229,388			$	(10,571	)

 

There were no unrealized losses on held-to-maturity securities as of September 30, 2016. The following table presents the fair values and unrealized losses for held-to-maturity securities in a continuous unrealized loss position for less than 12 months and for 12 months or longer as of December 31, 2015.

 

		December 31, 2015
		Less than 12 Months								12 Months or Longer								Total
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
(Amounts in thousands)		Value				Losses				Value				Losses				Value				Losses
U.S. Agency securities		$	43,723			$	(106	)		$	—			$	—			$	43,723			$	(106	)
Corporate securities			6,851				(23	)			—				—				6,851				(23	)
Total		$	50,574			$	(129	)		$	—			$	—			$	50,574			$	(129	)

There were 20 individual securities in an unrealized loss position as of September 30, 2016, and their combined depreciation in value represented 0.98% of the investment securities portfolio. There were 107 individual securities in an unrealized loss position as of December 31, 2015, and their combined depreciation in value represented 2.44% of the investment securities portfolio.

The following table presents gross realized gains and losses from the sale of available-for-sale securities for the periods indicated:

 

		Three Months Ended								Nine Months Ended
		September 30,								September 30,
(Amounts in thousands)		2016				2015				2016				2015
Gross realized gains		$	203			$	26			$	344			$	292
Gross realized losses			(178	)			(65	)			(397	)			(141	)
Net gain (loss) on sale of securities		$	25			$	(39	)		$	(53	)		$	151

The carrying amount of securities pledged for various purposes totaled $151.82 million as of September 30, 2016, and $236.73 million as of December 31, 2015.

The Company reviews its investment portfolio quarterly for indications of other-than-temporary impairment (“OTTI”). Debt securities owned by the Company include securities issued from the U.S. Department of the Treasury (“Treasury”), municipal securities, single issue trust preferred securities, corporate securities, and certificates of deposit. For debt securities owned, the Company analyzes factors such as the impairment’s severity and duration, adverse conditions within the issuing industry, prospects for the issuer, ability to hold until recovery, security performance, changes in rating by rating agencies, and other qualitative factors to determine if the impairment will be recovered. If the evaluation suggests that the impairment will not be recovered, OTTI is recorded as a charge to earnings through noninterest income. Temporary impairment on these securities is primarily due to changes in benchmark interest rates, changes in pricing in the credit markets, destabilization in foreign markets, and other current economic factors. During the three and nine months ended September 30, 2016, the Company incurred OTTI charges on debt securities owned of $4.64 million related to the Company’s change in intent to hold certain securities to recovery. The intent was changed to sell specific trust preferred securities in the Company’s investment portfolio primarily to reduce credit concentrations with two issuers. During the three and nine months ended September 30, 2015, the Company incurred no OTTI charges on debt securities owned.

For equity securities, the Company considers its intent to hold or sell the security before recovery, the severity and duration of the decline in fair value of the security below its cost, the financial condition and near-term prospects of the issuer, and whether the decline appears related to issuer, general market, or industry conditions to determine if the impairment will be recovered. If the Company deems the impairment other-than-temporary in nature, the security is written down to its current present value and the OTTI loss is charged to earnings. During the three months ended September 30, 2016, the Company incurred no OTTI charges related to certain equity holdings. During the nine months ended September 30, 2016, the Company incurred OTTI charges related to certain equity holdings of $11 thousand. During the three and nine months ended September 30, 2015, the Company incurred no OTTI charges on equity holdings.