Note 3.

Investment Securities

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


	December 31, 2016
(Amounts in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. Agency securities	$	1,342	$	3	$	—		$	1,345
Municipal securities		111,659		2,258		(586	)		113,331
Single issue trust preferred securities		22,104		—		(2,165	)		19,939
Mortgage-backed Agency securities		31,290		66		(465	)		30,891
Equity securities		55		18		—			73

Total securities available for sale	$	166,450	$	2,345	$	(3,216	)	$	165,579


	December 31, 2015
(Amounts in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair 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 table presents the amortized cost and fair value of available-for-sale securities, by contractual maturity, as of December 31, 2016. Actual maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.


(Amounts in thousands)	U.S. Agency Securities		Municipal Securities		Corporate Notes		Total
Amortized cost maturity:
One year or less	$	—	$	1,135	$	—	$	1,135
After one year through five years		1		1,035		—		1,036
After five years through ten years		—		88,449		—		88,449
After ten years		1,341		21,040		22,104		44,485

Amortized cost	$	1,342	$	111,659	$	22,104		135,105

Mortgage-backed securities								31,290
Equity securities								55

Total amortized cost							$	166,450

Fair value maturity:
One year or less	$	—	$	1,141	$	—	$	1,141
After one year through five years		1		1,059		—		1,060
After five years through ten years		—		90,360		—		90,360
After ten years		1,344		20,771		19,939		42,054

Fair value	$	1,345	$	113,331	$	19,939		134,615

Mortgage-backed securities								30,891
Equity securities								73

Total fair value							$	165,579

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


	December 31, 2016
(Amounts in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
U.S. Agency securities	$	36,741	$	124	$	—		$	36,865
Corporate securities		10,392		11		(2	)		10,401

Total securities held to maturity	$	47,133	$	135	$	(2	)	$	47,266


	December 31, 2015
(Amounts in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair 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 fair value of held-to-maturity securities, by contractual maturity, as of December 31, 2016. Actual maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations with or without penalties.


(Amounts in thousands)	U.S. Agency Securities		Corporate Notes		Total
Amortized cost maturity:
One year or less	$	18,756	$	3,095	$	21,851
After one year through five years		17,985		7,297		25,282
After five years through ten years		—		—		—
After ten years		—		—		—

Total amortized cost	$	36,741	$	10,392	$	47,133

Fair value maturity:
One year or less	$	18,768	$	3,096	$	21,864
After one year through five years		18,097		7,305		25,402
After five years through ten years		—		—		—
After ten years		—		—		—

Total fair value	$	36,865	$	10,401	$	47,266

The following tables present municipal securities, by state, for the states where the largest volume of these securities are held in the Company’s portfolio. The tables also present the amortized cost and fair value of the municipal securities, including gross unrealized gains and losses, as of the dates indicated.


	December 31, 2016
(Amounts in thousands)	Percent of Municipal Portfolio			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
New York		11.66	%	$	12,876	$	334	$	—		$	13,210
Minnesota		9.70	%		10,796		232		(40	)		10,988
Wisconsin		8.66	%		9,786		74		(42	)		9,818
Ohio		8.50	%		9,599		125		(88	)		9,636
Massachusetts		8.45	%		9,355		229		(10	)		9,574
New Jersey		7.14	%		7,891		202		—			8,093
Connecticut		6.90	%		7,628		190		—			7,818
Texas		6.55	%		7,397		130		(103	)		7,424
Iowa		5.66	%		6,467		36		(88	)		6,415
Other		26.78	%		29,864		706		(215	)		30,355

Total		100.00	%	$	111,659	$	2,258	$	(586	)	$	113,331


	December 31, 2015
(Amounts in thousands)	Percent of Municipal Portfolio			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
New York		11.38	%	$	14,062	$	602	$	—		$	14,664
Minnesota		8.72	%		11,011		283		(64	)		11,230
Wisconsin		8.69	%		10,797		420		(14	)		11,203
Ohio		8.38	%		10,416		388		—			10,804
Connecticut		7.76	%		9,786		217		(5	)		9,998
New Jersey		7.69	%		9,554		378		(22	)		9,910
Massachusetts		7.60	%		9,479		315		—			9,794
Texas		6.04	%		7,651		208		(75	)		7,784
Other		5.03	%		6,471		75		(60	)		6,486
Total		28.71	%		35,843		1,272		(117	)		36,998

		100.00	%	$	125,070	$	4,158	$	(357	)	$	128,871

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:


	December 31, 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
Municipal securities	$	24,252	$	(527	)	$	715	$	(59	)	$	24,967	$	(586	)
Single issue trust preferred securities		—		—			19,939		(2,165	)		19,939		(2,165	)
Mortgage-backed Agency securities		12,834		(166	)		11,851		(299	)		24,685		(465	)

Total	$	37,086	$	(693	)	$	32,505	$	(2,523	)	$	69,591	$	(3,216	)


	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	)

The following tables present 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 the dates indicated:


	December 31, 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
Corporate securities	$	3,533	$	(2	)	$	—	$	—	$	3,533	$	(2	)

Total	$	3,533	$	(2	)	$	—	$	—	$	3,533	$	(2	)


	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 82 individual securities in an unrealized loss position as of December 31, 2016, and their combined depreciation in value represented 1.51% of the investment securities portfolio. These securities included 15 securities in a continuous unrealized loss position for 12 months or longer that the Company does not intend to sell, and that it has determined is not more likely than not going to be required to sell, prior to maturity or recovery. 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 Company reviews its investment portfolio quarterly for indications of OTTI. The initial indicator of OTTI for both debt and equity securities is a decline in fair value below book value and the severity and duration of the decline. For debt securities, the credit-related OTTI is recognized as a charge to noninterest income and the noncredit-related OTTI is recognized in OCI. The Company incurred credit-related OTTI charges on debt securities of $4.64 million in 2016 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. The Company incurred credit-related OTTI charges on debt securities of $705 thousand in 2014 related to a non-Agency mortgage-backed security that was sold in November 2014. Temporary impairment on debt securities is primarily related to changes in benchmark interest rates, changes in pricing in the credit markets, and other current economic factors. For equity securities, the OTTI is recognized as a charge to noninterest income. The Company incurred OTTI charges related to equity securities of $11 thousand in 2016 and $32 thousand in 2014. There were no OTTI charges recognized in 2015.

The following table presents the changes in credit-related losses recognized in earnings on debt securities where a portion of the impairment was recognized in OCI during the periods indicated:


	Year Ended December 31,
(Amounts in thousands)	2016			2015		2014
Beginning balance ⁽¹⁾	$	—		$	—	$	7,798
Additions for credit losses on securities not previously recognized		4,646			—		—
Additions for credit losses on securities previously recognized		—			—		705
Reduction for securities sold/realized losses		(4,646	)		—		(8,503	)

Ending balance	$	—		$	—	$	—

(1)	The beginning balance includes credit-related losses included in OTTI charges recognized on debt securities in prior periods.

The carrying amount of securities pledged for various purposes totaled $139.75 million as of December 31, 2016, and $236.73 million as of December 31, 2015.

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


	Year Ended December 31,
(Amounts in thousands)	2016			2015			2014
Gross realized gains	$	757		$	363		$	2,257
Gross realized losses		(422	)		(219	)		(3,642	)

Net gain (loss) on sale of securities	$	335		$	144		$	(1,385	)