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Note 5: Investment Securities | 9 Months Ended
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Sep. 30, 2016
Notes |
Note 5: Investment Securities | NOTE 5: INVESTMENT SECURITIES
| September 30, 2016
|  |  | Gross |  | Gross |  |  |  | Tax
| Amortized |  | Unrealized |  | Unrealized |  | Fair |  | Equivalent
| Cost |  | Gains |  | Losses |  | Value |  | Yield
| (In Thousands)
AVAILABLE-FOR-SALE SECURITIES: |  |  |  |  |  |  |  |  |
Mortgage-backed securities | $ 133,202 |  | $ 1,587 |  | $ 70 |  | $ 134,719 |  | 1.93%
States and political subdivisions | 64,963 |  | 4,939 |  | — |  | 69,902 |  | 5.67
| $ 198,165 |  | $ 6,526 |  | $ 70 |  | $ 204,621 |  | 3.16%
| December 31, 2015
|  |  | Gross |  | Gross |  |  |  | Tax
| Amortized |  | Unrealized |  | Unrealized |  | Fair |  | Equivalent
| Cost |  | Gains |  | Losses |  | Value |  | Yield
| (In Thousands)
AVAILABLE-FOR-SALE SECURITIES: |  |  |  |  |  |  |  |  |
U.S. government agencies | $ 20,000 |  | $ — |  | $ 219 |  | $ 19,781 |  | 2.00%
Mortgage-backed securities | 159,777 |  | 2,038 |  | 601 |  | 161,214 |  | 2.09
States and political subdivisions | 72,951 |  | 5,081 |  | 1 |  | 78,031 |  | 5.71
Other securities | 847 |  | 2,983 |  | — |  | 3,830 |  | —
| $ 253,575 |  | $ 10,102 |  | $ 821 |  | $ 262,856 |  | 3.12%
| September 30, 2016
|  |  | Gross |  | Gross |  |  |  | Tax
| Amortized |  | Unrealized |  | Unrealized |  | Fair |  | Equivalent
| Cost |  | Gains |  | Losses |  | Value |  | Yield
| (In Thousands)
HELD-TO-MATURITY SECURITIES: |  |  |  |  |  |  |  |  |
States and political subdivisions | $ 247 |  | $ 14 |  | $ — |  | $ 261 |  | 7.37%
| December 31, 2015
|  |  | Gross |  | Gross |  |  |  | Tax
| Amortized |  | Unrealized |  | Unrealized |  | Fair |  | Equivalent
| Cost |  | Gains |  | Losses |  | Value |  | Yield
| (In Thousands)
HELD-TO-MATURITY SECURITIES: |  |  |  |  |  |  |  |  |
States and political subdivisions | $ 353 |  | $ 31 |  | $ — |  | $ 384 |  | 7.37%
The amortized cost and fair value of available-for-sale securities at September 30, 2016, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
| Amortized |  | Fair
| Cost |  | Value
| (In Thousands)
One year or less | $ — |  | $ —
After one through five years | 630 |  | 644
After five through ten years | 7,612 |  | 7,938
After ten years | 56,721 |  | 61,320
Securities not due on a single maturity date | 133,202 |  | 134,719
| $ 198,165 |  | $ 204,621
The held-to-maturity securities at September 30, 2016, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.
| Amortized |  | Fair
| Cost |  | Value
| (In Thousands)
After one through five years | $ 247 |  | $ 261
Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at September 30, 2016 and December 31, 2015, respectively, was approximately $13.8 million and $76.0 million, which is approximately 6.7% and 28.9% of the Company’s combined available-for-sale and held-to-maturity investment portfolio, respectively. Based on an evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these debt securities below their historical cost are temporary at September 30, 2016. The following table shows the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2016 and December 31, 2015:
|  | September 30, 2016
|  | Less than 12 Months |  | 12 Months or More |  | Total
|  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized
Description of Securities |  | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
|  | (In Thousands)
Mortgage-backed securities |  | $ 13,768 |  | $ (70) |  | $ — |  | $ — |  | $ 13,768 |  | $ (70)
|  | December 31, 2015
|  | Less than 12 Months |  | 12 Months or More |  | Total
|  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized
Description of Securities |  | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses
|  | (In Thousands)
U.S. government agencies |  | $ 20,000 |  | (219) |  | $ — |  | $ — |  | $ 20,000 |  | $ (219)
Mortgage-backed securities |  | 45,494 |  | (348) |  | 9,635 |  | (253) |  | 55,129 |  | (601)
State and political |  |  |  |  |  |  |  |  |  |  |  |
subdivisions |  | — |  | — |  | 910 |  | (1) |  | 910 |  | (1)
|  | $ 65,494 |  | $ (567) |  | $ 10,545 |  | $ (254) |  | $ 76,039 |  | $ (821)
Gross gains of $158,000 and $3.0 million and gross losses of $15,000 and $103,000 resulting from sales of available-for-sale securities were realized during the three and nine months ended September 30, 2016. Gross gains of $503,000 and $503,000 and gross losses of $501,000 and $501,000 resulting from sales of available-for-sale securities were realized during the three and nine months ended September 30, 2015. Gains and losses on sales of securities are determined on the specific-identification method. Other-than-temporary Impairment. Upon acquisition of a security, the Company decides whether it is within the scope of the accounting guidance for beneficial interests in securitized financial assets or will be evaluated for impairment under the accounting guidance for investments in debt and equity securities. The accounting guidance for beneficial interests in securitized financial assets provides incremental impairment guidance for a subset of the debt securities within the scope of the guidance for investments in debt and equity securities. Where the security is a beneficial interest in securitized financial assets, the Company uses the beneficial interests in securitized financial asset impairment model. Where the security is not a beneficial interest in securitized financial assets, the Company uses the debt and equity securities impairment model. The Company does not currently have securities within the scope of this guidance for beneficial interests in securitized financial assets. The Company conducts periodic reviews to identify and evaluate each investment security to determine whether an other-than-temporary impairment has occurred. The Company considers the length of time a security has been in an unrealized loss position, the relative amount of the unrealized loss compared to the carrying value of the security, the type of security and other factors. If certain criteria are met, the Company performs additional reviews and evaluations using observable market values or various inputs in economic models to determine if an unrealized loss is other-than-temporary. The Company uses quoted market prices for marketable equity securities and uses broker pricing quotes based on observable inputs for equity investments that are not traded on a stock exchange. For non-agency collateralized mortgage obligations, to determine if the unrealized loss is other-than-temporary, the Company projects total estimated defaults of the underlying assets (mortgages) and multiplies that calculated amount by an estimate of realizable value upon sale in the marketplace (severity) in order to determine the projected collateral loss. The Company also evaluates any current credit enhancement underlying these securities to determine the impact on cash flows. If the Company determines that a given security position will be subject to a write-down or loss, the Company records the expected credit loss as a charge to earnings. During the three and nine months ended September 30, 2016, no securities were determined to have impairment that had become other than temporary. Credit Losses Recognized on Investments. There were no debt securities that have experienced fair value deterioration due to credit losses, as well as due to other market factors, but are not otherwise other-than-temporarily impaired. Amounts Reclassified Out of Accumulated Other Comprehensive Income. Amounts reclassified from accumulated other comprehensive income and the affected line items in the statements of income during the three and nine months ended September 30, 2016 and 2015, were as follows:
| Amounts Reclassified from Accumulated Other Comprehensive Income |
| Three Months Ended September 30, | Affected Line Item in the
| 2016 |  | 2015 | Statements of Income
| (In Thousands) |
Unrealized gains on available- |  |  |  | Net realized gains on sales of
for-sale securities | $ 144 |  | $ 2 | available-for-sale securities
|  |  |  | (Total reclassified amount before tax)
Income Taxes | (53) |  | (1) | Provision for income taxes
Total reclassifications out of accumulated |  |  |  |
other comprehensive income | $ 91 |  | $ 1 |
| Amounts Reclassified from Accumulated Other Comprehensive Income |
| Nine Months Ended September 30, | Affected Line Item in the
| 2016 |  | 2015 | Statements of Income
| (In Thousands) |
Unrealized gains on available- |  |  |  | Net realized gains on sales of
for-sale securities | $ 2,881 |  | $ 2 | available-for-sale securities
|  |  |  | (Total reclassified amount before tax)
Income Taxes | (1,046) |  | (1) | Provision for income taxes
Total reclassifications out of accumulated |  |  |  |
other comprehensive income | $ 1,835 |  | $ 1 |

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