INVESTMENT

9 Months Ended

Sep. 30, 2016

Investments, Debt and Equity Securities [Abstract]

2. INVESTMENTS

Investment securities available for sale are summarized as follows (in thousands):

At September 30, 2016	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

State, county, and municipal securities	$	25,139	$	1,017	$	14	$	26,142
Mortgage-backed securities		94,431		813		282		94,962
Corporate securities		2,488		6		—		2,494
Totals	$	122,058	$	1,836	$	296	$	123,598

At December 31, 2015	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value

State, county, and municipal securities	$	28,248	$	1,223	$	14	$	29,457
Mortgage-backed securities		93,118		65		1,383		91,800
Corporate securities		2,000		1		—		2,001
Totals	$	123,366	$	1,289	$	1,397	$	123,258

At September 30, 2016 and December 31, 2015, there were no investment securities held to maturity.

The amortized costs and fair values of investment 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 and without call or prepayment penalties (in thousands).

	Available for Sale
	Amortized		Fair
	Cost		Value

Due in one year or less	$	855	$	857
Due after one year through five years		3,522		3,553
Due after five years through ten years		31,854		33,058
Due after ten years		85,827		86,130

	$	122,058	$	123,598

Securities with carrying values of $85,930,000 and $93,161,000 as of September 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits, FHLB advances and a $27,858,000 line of credit at the Federal Reserve Bank discount window and for other purposes as required by law.

For the three month period ended September 30, 2016, proceeds from the sale of securities were $3,368,000 and gross realized gains on sales of securities were $201,000. For the three month period ended September 30, 2015, proceeds from the sale of securities were $6,907,000 and gross realized gains on sales of securities were $109,000. There were no gross realized losses on sales of securities for the same period during 2016 and 2015.

For the nine month period ended September 30, 2016, proceeds from the sale of securities were $3,368,000 and gross realized gains on sales of securities were $201,000. For the nine month period ended September 30, 2015, proceeds from the sale of securities were $19,292,000 and gross realized gains on sales of securities were $421,000. There there were no gross realized losses on sales of securities for the same period during 2016 and 2015.

The Company’s investment portfolio consists principally of obligations of the United States, its agencies, or its corporations, general obligation and revenue municipals and corporate securities. In the opinion of management, there is no concentration of credit risk in its investment portfolio. The company places its deposits and correspondent accounts with and sells its federal funds to high quality institutions. Management believes credit risk associated with correspondent accounts is not significant.

The following tables show investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, at September 30, 2016 and December 31, 2015. Except as explicitly identified below, all unrealized losses on investment securities are considered by management to be temporarily impaired given the credit ratings on these investment securities and the short duration of the unrealized loss (in thousands):

At September 30, 2016
Securities Available for Sale
	Securities in a loss position for					Securities in a loss position for
	less than twelve months					twelve months or more					Total
			Unrealized					Unrealized					Unrealized
	Fair value		losses			Fair value		losses			Fair value		losses

Mortgage-backed securities	$	19,616	$	(113	)	$	15,569	$	(169	)	$	35,185	$	(282	)

Municipal securities		1,974		(14	)		—		—			1,974		(14	)

Total	$	21,590	$	(127	)	$	15,569	$	(169	)	$	37,159	$	(296	)

At December 31, 2015
Securities Available for Sale
	Securities in a loss position for					Securities in a loss position for
	less than twelve months					twelve months or more					Total
			Unrealized					Unrealized					Unrealized
	Fair value		losses			Fair value		losses			Fair value		losses

Mortgage-backed securities	$	63,533	$	(722	)	$	21,333	$	(661	)	$	84,866	$	(1,383	)

Municipal securities		2,587		(14	)		—		—			2,587		(14	)

Total	$	66,120	$	(736	)	$	21,333	$	(661	)	$	87,453	$	(1,397	)

The Company’s available for sale portfolio had twelve (12) investment securities at September 30, 2016 that were in an unrealized loss position for longer than twelve months. At December 31, 2015, the Company had fifteen (15) investment securities that were in an unrealized loss position for longer than twelve months. The Company reviews these securities for other-than-temporary impairment on a quarterly basis by monitoring their credit support and coverage, constant payment of the contractual principal and interest, loan to value and delinquencies ratios.

We use prices from third party pricing services and, to a lesser extent, indicative (non-binding) quotes from third party brokers, to measure fair value of our investment securities. Fair values of the investment securities portfolio could decline in the future if the underlying performance of the collateral for collateralized mortgage obligations or other securities deteriorates and the levels do not provide sufficient protection for contractual principal and interest. As a result, there is risk that an other-than-temporary impairment may occur in the future particularly in light of the current economic environment.

As of the date of its evaluation, the Company did not intend to sell and has the ability to hold these securities and it is more likely than not that the Company will not be required to sell those securities before recovery of its amortized cost or the security matures. The Company believes, based on industry analyst reports and credit ratings, that it will continue to receive scheduled interest payments as well as the entire principal balance, and the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary.

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References + Details

CITIZENS BANCSHARES CORP /GA/ 10-Q