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Securities | 12 Months Ended
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Dec. 31, 2017
Securities |
Securities | Note 4: Securities Investment Portfolio Management The following table summarizes the amortized cost and fair value of the securities portfolio at December 31, 2017 and December 31, 2016, and the corresponding amounts of gross unrealized gains and losses (in thousands):
|  |  |  |  | Gross |  | Gross |  |  |
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair
December 31, 2017 |  | Cost |  | Gains |  | Losses |  | Value
Securities available-for-sale |  |  |  |  |  |  |  |
U.S. Treasuries |  | $ | 4,002 |  | $ | - |  | $ | (55) |  | $ | 3,947
U.S. government agencies |  |  | 13,062 |  |  | 8 |  |  | (9) |  |  | 13,061
U.S. government agencies mortgage-backed |  |  | 12,372 |  |  | 7 |  |  | (165) |  |  | 12,214
States and political subdivisions |  |  | 272,240 |  |  | 7,116 |  |  | (1,264) |  |  | 278,092
Corporate bonds |  |  | 823 |  |  | 21 |  |  | (11) |  |  | 833
Collateralized mortgage obligations |  |  | 66,892 |  |  | 202 |  |  | (1,155) |  |  | 65,939
Asset-backed securities |  |  | 113,983 |  |  | 862 |  |  | (1,913) |  |  | 112,932
Collateralized loan obligations |  |  | 54,271 |  |  | 251 |  |  | (101) |  |  | 54,421
Total securities available-for-sale |  | $ | 537,645 |  | $ | 8,467 |  | $ | (4,673) |  | $ | 541,439
|  |  |  |  | Gross |  | Gross |  |  |
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair
December 31, 2016 |  | Cost |  | Gains |  | Losses |  | Value
Securities available-for-sale |  |  |  |  |  |  |  |  |  |  |  |
U.S. government agencies mortgage-backed |  | $ | 42,511 |  | $ | - |  | $ | (977) |  | $ | 41,534
States and political subdivisions |  |  | 68,718 |  |  | 258 |  |  | (273) |  |  | 68,703
Corporate bonds |  |  | 10,957 |  |  | 9 |  |  | (336) |  |  | 10,630
Collateralized mortgage obligations |  |  | 174,352 |  |  | 374 |  |  | (3,799) |  |  | 170,927
Asset-backed securities |  |  | 146,391 |  |  | 341 |  |  | (8,325) |  |  | 138,407
Collateralized loan obligations |  |  | 102,504 |  |  | 29 |  |  | (896) |  |  | 101,637
Total securities available-for-sale |  | $ | 545,433 |  | $ | 1,011 |  | $ | (14,606) |  | $ | 531,838
During the twelve months ended December 31, 2017, the total securities portfolio increased $9.6 million. Select collateralized mortgage obligations, mortgage-backed securities, corporate bonds and asset-backed securities were liquidated to allow for portfolio repositioning in favor of high quality state and municipal securities. Purchases totaling $270.2 million were executed in this security type during 2017 due to favorable pricing in the rising interest rate environment. These portfolio increases were more than offset by reductions in holdings of asset-backed securities and collateralized mortgage obligations; these reductions were comprised of sales of $146.9 million and paydowns of $13.0 million. Nonmarketable equity investments include FHLBC stock and FRBC stock. FHLBC stock was $5.4 million and $3.1 million at December 31, 2017 and December 31, 2016, respectively. FRBC stock was $4.8 million at December 31, 2017 and December 31, 2016. Our FHLBC stock is necessary to maintain access to FHLBC advances. Securities valued at $301.0 million as of December 31, 2017, an increase from $262.6 million at year-end 2016, were pledged to secure deposits and borrowings, and for other purposes. The fair value, amortized cost and weighted average yield of debt securities at December 31, 2017, by contractual maturity, were as follows in the table below. Securities not due at a single maturity date are shown separately.
|  |  |  |  | Weighted |  |  |  |  |
|  | Amortized |  | Average |  |  | Fair |
Securities available-for-sale |  | Cost |  | Yield |  |  | Value |
Due in one year or less |  | $ | 6,200 |  | 2.41 | % |  | $ | 6,185 |
Due after one year through five years |  |  | 4,346 |  | 2.03 |  |  |  | 4,279 |
Due after five years through ten years |  |  | 6,013 |  | 3.29 |  |  |  | 6,234 |
Due after ten years |  |  | 273,568 |  | 2.95 |  |  |  | 279,235 |
|  |  | 290,127 |  | 2.93 |  |  |  | 295,933 |
Mortgage-backed and collateralized mortgage obligations |  |  | 79,264 |  | 2.94 |  |  |  | 78,153 |
Asset-backed securities |  |  | 113,983 |  | 2.56 |  |  |  | 112,932 |
Collateralized loan obligations |  |  | 54,271 |  | 4.32 |  |  |  | 54,421 |
Total securities available-for-sale |  | $ | 537,645 |  | 2.99 | % |  | $ | 541,439 |
At December 31, 2017, the Company’s investments include asset-backed securities totaling $96.0 million that are backed by student loans originated under the Federal Family Education Loan program (“FFEL”). Under the FFEL, private lenders made federally guaranteed student loans to parents and students. While the program was modified several times before elimination in 2010, FFEL securities are generally guaranteed by the U.S. Department of Education (“DOE”) at not less than 97% of the principal amount of the loans. The guarantee will reduce to 85% if the DOE receives reimbursement requests in excess of 5% of insured loans; reimbursement will drop to 75% if reimbursement requests exceed 9% of insured loans. As of December 31, 2017, the likelihood of the decrease in the government guarantee was minimal as the average rate of reimbursement for 2016 was less than 1.0%. The Company has accumulated the securities of the following three different originators that individually amount to over 10% of the Company’s stockholders equity. The amortized cost and fair value of securities related to these three issuers are as follows:
|  | December 31, 2017
|  | Amortized |  | Fair
Issuer |  | Cost |  | Value
GCO Education Loan Funding Corp |  | $ | 27,625 |  | $ | 26,588
Towd Point Mortgage Trust |  |  | 29,312 |  |  | 29,210
Student Loan Marketing Association |  |  | 25,696 |  |  | 25,917
Securities with unrealized losses at December 31, 2017, and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows (in thousands except for number of securities):
|  | Less than 12 months |  | 12 months or more |  |  |  |  |  |  |  |
December 31, 2017 |  | in an unrealized loss position |  | in an unrealized loss position |  | Total
|  | Number of |  | Unrealized |  | Fair |  | Number of |  | Unrealized |  | Fair |  | Number of |  | Unrealized |  | Fair
Securities available-for-sale |  | Securities |  | Losses |  | Value |  | Securities |  | Losses |  | Value |  | Securities |  | Losses |  | Value
U.S. Treasuries |  | 1 |  | $ | 55 |  | $ | 3,947 |  | - |  | $ | - |  | $ | - |  | 1 |  | $ | 55 |  | $ | 3,947
U.S. government agencies |  | 2 |  |  | 9 |  |  | 6,550 |  | - |  |  | - |  |  | - |  | 2 |  |  | 9 |  |  | 6,550
U.S. government agencies mortgage-backed |  | 4 |  |  | 24 |  |  | 5,501 |  | 5 |  |  | 141 |  |  | 4,843 |  | 9 |  |  | 165 |  |  | 10,344
States and political subdivisions |  | 13 |  |  | 1,237 |  |  | 45,985 |  | 1 |  |  | 27 |  |  | 1,512 |  | 14 |  |  | 1,264 |  |  | 47,497
Corporate bonds |  | - |  |  | - |  |  | - |  | 1 |  |  | 11 |  |  | 332 |  | 1 |  |  | 11 |  |  | 332
Collateralized mortgage obligations |  | 3 |  |  | 31 |  |  | 11,534 |  | 8 |  |  | 1,124 |  |  | 40,219 |  | 11 |  |  | 1,155 |  |  | 51,753
Asset-backed securities |  | - |  |  | - |  |  | - |  | 7 |  |  | 1,913 |  |  | 61,745 |  | 7 |  |  | 1,913 |  |  | 61,745
Collateralized loan obligations |  | 3 |  |  | 101 |  |  | 29,313 |  | - |  |  | - |  |  | - |  | 3 |  |  | 101 |  |  | 29,313
Total securities available-for-sale |  | 26 |  | $ | 1,457 |  | $ | 102,830 |  | 22 |  | $ | 3,216 |  | $ | 108,651 |  | 48 |  | $ | 4,673 |  | $ | 211,481
|  | Less than 12 months |  | 12 months or more |  |  |  |  |  |  |  |
December 31, 2016 |  | in an unrealized loss position |  | in an unrealized loss position |  | Total
|  | Number of |  | Unrealized |  |  | Fair |  | Number of |  | Unrealized |  |  | Fair |  | Number of |  | Unrealized |  |  | Fair
Securities available-for-sale |  | Securities |  | Losses |  |  | Value |  | Securities |  | Losses |  |  | Value |  | Securities |  | Losses |  |  | Value
U.S. government agencies mortgage-backed |  | 11 |  | $ | 957 |  | $ | 40,636 |  | 1 |  | $ | 20 |  | $ | 898 |  | 12 |  | $ | 977 |  | $ | 41,534
States and political subdivisions |  | 12 |  |  | 273 |  |  | 35,241 |  | - |  |  | - |  |  | - |  | 12 |  |  | 273 |  |  | 35,241
Corporate bonds |  | 1 |  |  | 183 |  |  | 4,817 |  | 2 |  |  | 153 |  |  | 5,328 |  | 3 |  |  | 336 |  |  | 10,145
Collateralized mortgage obligations |  | 16 |  |  | 3,402 |  |  | 117,752 |  | 7 |  |  | 397 |  |  | 18,109 |  | 23 |  |  | 3,799 |  |  | 135,861
Asset-backed securities |  | 4 |  |  | 328 |  |  | 17,604 |  | 12 |  |  | 7,997 |  |  | 107,112 |  | 16 |  |  | 8,325 |  |  | 124,716
Collateralized loan obligations |  | - |  |  | - |  |  | - |  | 12 |  |  | 896 |  |  | 81,613 |  | 12 |  |  | 896 |  |  | 81,613
Total securities available-for-sale |  | 44 |  | $ | 5,143 |  | $ | 216,050 |  | 34 |  | $ | 9,463 |  | $ | 213,060 |  | 78 |  | $ | 14,606 |  | $ | 429,110
Recognition of other-than-temporary impairment was not necessary in the year ended December 31, 2017, or the year ended December 31, 2016. The changes in fair value related primarily to interest rate fluctuations. The Company’s review of other-than-temporary impairment confirmed no credit quality deterioration.
|  |  | Years ended December 31,
Securities available-for-sale |  |  | 2017 |  | 2016 |  | 2015
Proceeds from sales of securities |  |  | $ | 232,462 |  | $ | 306,400 |  | $ | 70,176
Gross realized gains on securities |  |  |  | 2,367 |  |  | 1,675 |  |  | 106
Gross realized losses on securities |  |  |  | (1,893) |  |  | (3,888) |  |  | (284)
Securities realized gains (losses), net |  |  | $ | 474 |  | $ | (2,213) |  | $ | (178)
Income tax expense (benefit) on net realized gains (losses) |  |  | $ | 198 |  | $ | (882) |  | $ | (71)

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