Note 3 - Investment Securities Available for Sale

3 Months Ended

Mar. 31, 2013

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

3. Investment Securities Available-for-Sale

Amortized cost and estimated fair value of securities available-for-sale are summarized as follows:

March 31, 2013 (dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U. S. Government agency securities	$	38,902	$	1,229	$	7	$	40,124
Residential mortgage backed securities		189,601		2,514		537		191,578
Municipal bonds		82,007		4,687		314		86,380
Other equity investments		407		-		58		349
	$	310,917	$	8,430	$	916	$	318,431

December 31, 2012 (dollars in thousands)	Amortized  Cost		Gross  Unrealized  Gains		Gross  Unrealized  Losses		Estimated  Fair  Value
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 unrealized losses and fair value by length of time that the individual available-for-sale securities have been in a continuous unrealized loss position are as follows:

	Less than  12 Months				12 Months  or Greater				Total
March 31, 2013 (dollars in thousands)	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
U. S. Government agency securities	$	2,999	$	7	$	-	$	-	$	2,999	$	7
Residential mortgage backed securities		44,992		537		2,743		-		47,735		537
Municipal bonds		3,964		312		-		2		3,964		314
Other equity investments		-		-		120		58		120		58
	$	51,955	$	856	$	2,863	$	60	$	54,818	$	916

	Less than  12 Months				12 Months  or Greater				Total
December 31, 2012 (dollars in thousands)	Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses		Estimated Fair Value		Unrealized Losses
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

The unrealized losses that exist are generally the result of changes in market interest rates and interest spread relationships since original purchases. The weighted average duration of debt securities, which comprise 99.9% of total investment securities, is relatively short at 4.2 years. 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. The individual banking company is profitable, has good financial trends 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 Company does not believe that the investment securities that were in an unrealized loss position as of March 31, 2013 represent an other-than-temporary impairment for the reasons noted. The Company does not intend to sell the investments and it is more likely than not that the Company will not have to sell the securities before recovery of its amortized cost basis, which may be maturity.  In addition, at March 31, 2013, the Company held $11.2 million in equity securities in a combination of Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stocks, which are required to be held for regulatory purposes and are not marketable.

The amortized cost and estimated fair value of investments available-for-sale by contractual maturity are shown in the table 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.

	March 31, 2013				December 31, 2012
(dollars in thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
U. S. Government agency securities maturing:
One year or less	$	3,000	$	2,993	$	5,038	$	5,053
After one year through five years		35,902		37,131		42,568		44,029
Residential mortgage backed securities		189,601		191,578		170,649		173,083
Municipal bonds maturing:
After one year through five years		11,219		11,678		11,469		11,978
Five years through ten years		70,788		74,702		60,581		65,335
Other equity investments		407		349		407		342
	$	310,917	$	318,431	$	290,712	$	299,820

The carrying value of securities pledged as collateral for certain government deposits, securities sold under agreements to repurchase, and certain lines of credit with correspondent banks at March 31, 2013 was $229.7  million. As of March 31, 2013 and December 31, 2012, there were no holdings of securities of any one issuer, other than the U.S. Government and U.S. Government agency securities that exceeded ten percent of shareholders’ equity.