Investment Securities and Fair Value Measurements

Investment Securities

Investment securities classified as available-for-sale consisted of the following at September 30, 2017 and December 31, 2016 (in thousands):



	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Corporate bonds	$	34,558	$	11	$	(19	)	$	34,550
Agency securities	11,302		—		(17		)	11,285
Certificates of deposit	2,982		3		(1		)	2,984
Total available-for-sale investment securities	$	48,842	$	14	$	(37	)	$	48,819



	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Corporate bonds	$	30,492	$	9	$	(56	)	$	30,445
Agency securities	6,248		—		(20		)	6,228
Certificates of deposit	5,472		16		—			5,488
Total available-for-sale investment securities	$	42,212	$	25	$	(76	)	$	42,161

As of September 30, 2017, the unrealized losses on investment securities which have been in a net loss position for 12 months or greater were not material. These unrealized losses are considered temporary and there were no impairments considered to be "other-than-temporary" based on our evaluation of available evidence, which includes our intent to hold these investments to maturity or a recovery of the cost basis.

At September 30, 2017 and December 31, 2016, the contractual maturities of our investments did not exceed 36 months. The fair values of available-for-sale investments, by remaining contractual maturity, are as follows (in thousands):



	September 30, 2017				December 31, 2016
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in 1 year or less	$	28,398	$	28,396	$	15,475	$	15,473
Due after 1 year through 3 years	20,444		20,423		26,737		26,688
Total available-for-sale investment securities	$	48,842	$	48,819	$	42,212	$	42,161

During the nine months ended September 30, 2017 and 2016, we had sales and maturities (which includes calls) of investment securities, as follows (in thousands):



	Nine Months Ended September 30, 2017
	Gross Realized Gains		Gross Realized Losses		Gross Proceeds from Sales		Gross Proceeds from Maturities
Agency securities	$	1	$	—	$	15	$	1,044
Corporate bonds	—		—		—		7,440
Certificates of deposit	—		—		—		2,490
	$	1	$	—	$	15	$	10,974



	Nine Months Ended September 30, 2016
	Gross Realized Gains		Gross Realized Losses		Gross Proceeds from Sales		Gross Proceeds from Maturities
Agency securities	$	5	$	—	$	3,005	$	9,557
Corporate bonds	1		—		5,011		2,480
Treasury bills	—		—		2,000		3,830
Certificates of Deposit	—		—		—		1,245
	$	6	$	—	$	10,016	$	17,112

Interest income from investment securities, net of the amortization and accretion of the premium and discount, for the three months ended September 30, 2017 and 2016, was $0.2 million and $0.1 million, respectively and $0.5 million and $0.3 million for the nine months ended September 30, 2017 and 2016, respectively.

Fair Value Measurements

Recurring Fair Value Measurements

Financial assets and financial liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following tables summarize our financial assets measured at fair value on a recurring basis as of September 30, 2017 and December 31, 2016, by level within the fair value hierarchy (in thousands):



	September 30, 2017
	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents:
Money market funds	$	3,910	$	—	$	—	$	3,910
Available-for-sale investment securities:
Corporate bonds	—		34,550		—		34,550
Agency securities	—		11,285		—		11,285
Certificates of deposit	2,984		—		—		2,984
Total	$	6,894	$	45,835	$	—	$	52,729



	December 31, 2016
	Level 1		Level 2		Level 3		Total Fair Value
Cash equivalents:
Money market funds	$	4,849	$	—	$	—	$	4,849
Available-for-sale investment securities:
Corporate bonds	—		30,445		—		30,445
Agency securities	—		6,228		—		6,228
Certificates of deposit	5,488		—		—		5,488
Total	$	10,337	$	36,673	$	—	$	47,010

The carrying amounts of cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate fair value because of the short maturity of these items.

There were no changes to our valuation techniques used to measure asset and liability fair values on a recurring basis during the nine months ended September 30, 2017. The valuation techniques for the items in the table above are as follows:

Cash and Cash Equivalents

As of September 30, 2017 and December 31, 2016, cash and cash equivalents include cash invested in money market funds. Fair value is based on market prices for identical assets.

Available-for-Sale Investment Securities

The fair value of our investment securities and certificates of deposit is based on pricing determined using inputs other than quoted prices that are observable either directly or indirectly such as yield curve, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, broker and dealer quotes, as well as other relevant economic measures.

Non-Recurring Fair Value Measurements

Certain assets, including goodwill, intangible assets and our note receivable with SecureDocs, are also subject to measurement at fair value on a non-recurring basis using Level 3 measurement when they are deemed to be impaired as a result of an impairment review. For the nine months ended September 30, 2017 and 2016, no impairments were identified on those assets required to be measured at fair value on a non-recurring basis.