Note 3 - Investment Securities Available for Sale

12 Months Ended

Dec. 31, 2012

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 3 - Investment Securities Available-for-Sale

The amortized cost and estimated fair values of investments available-for-sale at December 31, 2012 and 2011 are as follows:

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
December 31, 2012	Cost		Gains		Losses		Value
(dollars in thousands)
U. S. Government agency securities	$	47,606	$	1,477	$	1	$	49,082
Residential mortgage backed securities		170,649		2,730		296		173,083
Municipal bonds		72,050		5,314		51		77,313
Other equity investments		407		-		65		342
	$	290,712	$	9,521	$	413	$	299,820

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
December 31, 2011	Cost		Gains		Losses		Value
(dollars in thousands)
U. S. Government agency securities	$	102,283	$	1,547	$	77	$	103,753
Residential mortgage backed securities		145,451		2,767		240		147,978
Municipal bonds		57,548		4,227		2		61,773
Other equity investments		404		-		97		307
	$	305,686	$	8,541	$	416	$	313,811

Ninety nine percent (99%) of the debt instruments reflected in the above table are rated AAA or AA. The remaining one percent (1%) of the debt instruments consists of municipal bonds which have a rating of A; all ratings of which represent investment grade issues. The debt instruments have a net unrealized gain representing 3.2% of amortized cost. The debt instruments have a weighted-average duration of 3.8 years, and low credit risk. The gross unrealized loss on other equity investments represents common stock of one local banking company owned by the Company, and traded on a broker “bulletin board” exchange. The estimated fair value is determined by broker- quoted prices. The unrealized loss is deemed a result of generally weak valuations for many smaller community bank stocks, although those values have recovered somewhat in 2012. The individual banking company is profitable, has achieved growth and has a satisfactory capital position. If quoted prices are not available, fair value is measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. The unrealized gross losses that exist on the debt and equity securities are the result of market changes in interest rates since the original purchase. In addition, at December 31, 2012, the Company held $10.7 million in equity securities in a combination of Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stocks, which are held for regulatory purposes and are not marketable.

Gross unrealized losses and fair value by length of time that the individual available-for-sale securities have been in a continuous unrealized loss position as of December 31, 2012 and 2011 are as follows:

	Less than				12 Months
	12 Months				or Greater				Total
	Estimated				Estimated				Estimated
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2012	Value		Losses		Value		Losses		Value		Losses
(dollars in thousands)
U. S. Government agency securities	$	2,999	$	1	$	-	$	-	$	2,999	$	1
Residential mortgage backed securities		44,992		263		2,743		33		47,735		296
Municipal bonds		3,964		51		-		-		3,964		51
Other equity investments		-		-		112		65		112		65
	$	51,955	$	315	$	2,855	$	98	$	54,810	$	413

	Less than				12 Months
	12 Months				or Greater				Total
	Estimated				Estimated				Estimated
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2011	Value		Losses		Value		Losses		Value		Losses
(dollars in thousands)
U. S. Government agency securities	$	25,313	$	77	$	-	$	-	$	25,313	$	77
Residential mortgage backed securities		35,017		240		-		-		35,017		240
Municipal bonds		510		2		-		-		510		2
Other equity investments		-		-		81		97		81		97
	$	60,840	$	319	$	81	$	97	$	60,921	$	416

The amortized cost and estimated fair values of investments available-for-sale at December 31, 2012 and 2011 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	December 31, 2012				December 31, 2011
	Amortized		Estimated		Amortized		Estimated
(dollars in thousands)	Cost		Fair Value		Cost		Fair Value
U. S. Government agency securities maturing:
One year or less	$	5,038	$	5,053	$	15,783	$	15,906
After one year through five years		42,568		44,029		83,638		84,740
After five years through ten years		-		-		2,862		3,107
Residential mortgage backed securities		170,649		173,083		145,451		147,978
Municipal bonds maturing:
After one year through five years		11,469		11,978		10,089		10,539
Five years through ten years		60,581		65,335		47,459		51,234
Other equity investments		407		342		404		307
	$	290,712	$	299,820	$	305,686	$	313,811

In 2012, gross realized gains on sales of investment securities were $941 thousand and gross realized losses on sales of investment securities were $251 thousand. In 2011, realized gains on sales of investment securities were $1.4 million and there were no realized losses on sales of investment securities. In 2010, realized gains on sales of investment securities were $1.4 million and realized losses on sales of investment securities were $42 thousand.

Proceeds from sales and calls of investment securities in 2012 were $77.1 million, in 2011 were $85.9 million, and in 2010 were $73.3 million.

At December 31, 2012, $220.1 million (fair value) of securities were pledged as collateral for certain government deposits, and securities sold under agreement to repurchase. The outstanding balance of no single issuer, except for U.S. Government and U.S. Government agency securities, exceeded ten percent of shareholders’ equity at December 31, 2012 or 2011.