Note 3:  Investment Securities

 

A summary of the amortized cost and fair values of investment securities follows:

 

 

 

Residential mortgage-backed securities consist of agency securities underwritten and guaranteed by Government National Mortgage Association (“Ginnie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”), and Federal National Mortgage Association (“Fannie Mae”). 

 

Securities with limited marketability, such as Federal Reserve Bank stock, Federal Home Loan Bank stock, and certain other investments, are carried at cost and included in other assets on our Consolidated Statements of Financial Condition.  Total investments carried at cost were $7.4 million and $8.1 million at December 31, 2014 and 2013, respectively.  There are no identified events or changes in circumstances that may have a significant adverse effect on the investments carried at cost.  

 

A comparison of the amortized cost and approximate fair value of our investment securities by maturity date at December 31, 2014 follows: 

 

 

 

The foregoing analysis assumes that our residential mortgage-backed securities mature during the period in which they are estimated to prepay.  No other prepayment or repricing assumptions have been applied to our investment securities for this analysis. 

 

Gain or loss on sale or call of investments is based upon the specific identification method.  On the Consolidated Statements of Operations, the 2014 sales of investment securities was the sale of a private equity investment and the sale of a stock investment acquired in a prior year repossession. The 2013 sales of investment securities netted to zero gain. The 2012 gain on sales of investment securities was primarily the result of a single investment security held at cost.

 

Sales of securities available for sale are as follows: 

 

 

  

 

The following table shows securities with gross unrealized losses and their fair values by the length of time that the individual securities had been in a continuous unrealized loss position at December 31, 2014 and 2013.  Securities whose market values exceed cost are excluded from this table.     

 

 

 

We evaluate all securities on an individual basis for other-than-temporary impairment on at least a quarterly basis.  Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability of us to retain our investment in the issuer for a period of time sufficient to allow for an anticipated recovery in fair value. 

 

Management has the ability and intent to hold the securities classified as held to maturity in the table above until they mature, at which time we expect to receive full value for the securities.  Furthermore, as of December 31, 2014, management does not have the intent to sell any of the securities classified as available for sale in the table above and believes that we will most likely not have to sell any such securities before a recovery of cost.  The declines in fair value were attributable to increases in market interest rates over the yields available at the time the underlying securities were purchased or increases in spreads over market interest rates.  Management does not believe any of the securities are impaired due to credit quality.  Accordingly, as of December 31, 2014, management believes the impairment of these investments is not deemed to be other-than-temporary. 

 

As required by law, available for sale investment securities are pledged to secure public and trust deposits, sweep agreements, borrowings from the FHLB, and for other applicable purposes.  Securities with an amortized cost of $218.5 million and $293.4 million were pledged to meet such requirements at December 31, 2014 and 2013, respectively.  Any amount over-pledged can be released at any time.