Investment Securities

Following is a comparison of the amortized cost and fair value of securities available-for-sale, as of September 30, 2015 and December 31, 2014:



(in 000's)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value (Carrying Amount)
September 30, 2015
Securities available for sale:
U.S. Government agencies	$	10,232	$	482	$	(112	)	$	10,602
U.S. Government collateralized mortgage obligations	19,704		270		—			19,974
Mutual Funds	4,000		—		(153		)	3,847
Total securities available for sale	$	33,936	$	752	$	(265	)	$	34,423



(in 000's)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value (Carrying Amount)
December 31, 2014
Securities available for sale:
U.S. Government agencies	$	12,097	$	399	$	—		$	12,496
U.S. Government collateralized mortgage obligations	31,659		336		(13		)	31,982
Mutual Funds	4,000		—		(177		)	3,823
Total securities available for sale	$	47,756	$	735	$	(190	)	$	48,301

The amortized cost and fair value of securities available for sale at September 30, 2015, by contractual maturity, are shown below. Actual maturities may differ from contractual maturities because issuers have the right to call or prepay obligations with or without call or prepayment penalties. Contractual maturities on collateralized mortgage obligations cannot be anticipated due to allowed paydowns. Mutual funds are included in the "due in one year or less" category below.



	September 30, 2015
	Amortized Cost		Fair Value (Carrying Amount)
(in 000's)	Amortized Cost		Fair Value (Carrying Amount)
Due in one year or less	$	4,000	$	3,847
Due after one year through five years	17		17
Due after five years through ten years	—		—
Due after ten years	10,215		10,585
Collateralized mortgage obligations	19,704		19,974
	$	33,936	$	34,423

There were no realized gains or losses on sales of available-for-sale securities for the three and nine month periods ended September 30, 2015 and September 30, 2014. There were no other-than-temporary impairment losses for the three and nine month periods ended September 30, 2015 and September 30, 2014.

At September 30, 2015, available-for-sale securities with an amortized cost of approximately $17,244,209 (fair value of $17,774,050) were pledged as collateral for FHLB borrowings and public funds balances.

The Company had no held-to-maturity or trading securities at September 30, 2015 or December 31, 2014.

Management periodically evaluates each available-for-sale investment security in an unrealized loss position to determine if the impairment is temporary or other-than-temporary.

The following summarizes temporarily impaired investment securities:



(in 000's)	Less than 12 Months					12 Months or More					Total
September 30, 2015	Fair Value (Carrying Amount)		Unrealized Losses			Fair Value (Carrying Amount)		Unrealized Losses			Fair Value (Carrying Amount)		Unrealized Losses
Securities available for sale:	Fair Value (Carrying Amount)		Unrealized Losses			Fair Value (Carrying Amount)		Unrealized Losses			Fair Value (Carrying Amount)		Unrealized Losses
U.S. Government agencies	$	—	$	—		$	82	$	(112	)	$	82	$	(112	)
U.S. Government agency collateral mortgage obligations	—		—			—		—			—		—
Mutual Funds	3,847		(153		)	—		—			3,847		(153		)
Total impaired securities	$	3,847	$	(153	)	$	82	$	(112	)	$	3,929	$	(265	)

December 31, 2014
Securities available for sale:
U.S. Government agencies	$	—	$	—		$	—	$	—		$	—	$	—
U.S. Government agency collateral mortgage obligations	6,478		(13		)	—		—			6,478		(13		)
Mutual Funds	—		—			3,823		(177		)	3,823		(177		)
Total impaired securities	$	6,478	$	(13	)	$	3,823	$	(177	)	$	10,301	$	(190	)

Temporarily impaired securities at September 30, 2015, were comprised of one mutual fund and one U.S. government agency security.

The Company evaluates investment securities for other-than-temporary impairment (OTTI) at least quarterly, and more frequently when economic or market conditions warrant such an evaluation. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available-for-sale or held-to-maturity are generally evaluated for OTTI under ASC Topic 320, Investments – Debt and Equity Instruments. Certain purchased beneficial interests, including non-agency mortgage-backed securities, asset-backed securities, and collateralized debt obligations, are evaluated under ASC Topic 325-40, Beneficial Interest in Securitized Financial Assets.

In the first segment, the Company considers many factors in determining OTTI, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to the Company at the time of the evaluation.

The second segment of the portfolio uses the OTTI guidance that is specific to purchased beneficial interests including private label mortgage-backed securities. Under this model, the Company compares the present value of the remaining cash flows as estimated at the preceding evaluation date to the current expected remaining cash flows. An OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows.

Additionally, other-than-temporary-impairment occurs when the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss. If the Company intends to sell or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current-period credit loss, the other-than-temporary-impairment shall be recognized in earnings equal to the entire difference between the investment’s amortized cost basis and its fair value at the balance sheet date. If the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis less any current-period loss, the other-than-temporary-impairment shall be separated into the amount representing the credit loss and the amount related to all other factors. The amount of the total other-than-temporary-impairment related to the credit loss is recognized in earnings, and is determined based on the difference between the present value of cash flows expected to be collected and the current amortized cost of the security. The amount of the total other-than-temporary-impairment related to other factors shall be recognized in other comprehensive (loss) income, net of applicable taxes. The previous amortized cost basis less the other-than-temporary-impairment recognized in earnings shall become the new amortized cost basis of the investment.

At September 30, 2015, the decline in market value of the impaired mutual fund and U.S. government agency security is attributable to changes in interest rates, and not credit quality. Because the Company does not have the intent to sell these impaired securities, and it is not more likely than not that it will be required to sell these securities before its anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2015.