Note 2 - Securities

3 Months Ended

Sep. 30, 2011

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

2.  SECURITIES

The amortized cost and approximate fair value of securities is as follows:

	As of September 30, 2011
	Amortized		Unrealized								Fair
	Cost		Gains		Losses				OTTI		Value
Securities available-for-sale	(In thousands)
Debt Securities
U.S. Treasury and other U.S. government corporations and agencies	$	72,647	$	182	$	(116	)	$	─		$	72,713
Obligations of state and political subdivisions		3,850		212		─			─			4,062
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		57,048		1,246		─			─			58,294
Privately issued residential		943		265		(32	)		(438	)		738
Asset backed securities		241		54		─			(185	)		110
Equity Securities
Investment in CRA funds		13,517		209		─			─			13,726
Total available-for-sale securities	$	148,246	$	2,168	$	(148	)	$	(623	)	$	149,643
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,045	$	459	$	─		$	─		$	4,504
Total held-to-maturity securities	$	4,045	$	459	$	─		$	─		$	4,504
Other investments
FHLB/Federal Reserve Bank stock (1)	$	5,511	$	─	$	─		$	─		$	5,511
Investment in subsidiary trust (1)		1,083		─		─			─			1,083
Total other investments	$	6,594	$	─	$	─		$	─		$	6,594

	As of December 31, 2010
	Amortized			Unrealized							Fair
	Cost		Gains		Losses			OTTI			Value
	(In thousands)
Securities available-for-sale
Debt Securities
U.S. Treasury and other U.S. government corporations and agencies	$	112,959	$	196	$	(1,554	)	$	─		$	111,601
Obligations of state and political subdivisions		4,356		57		(42	)		─			4,371
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		45,285		476		(377	)		─			45,384
Privately issued residential		1,564		289		(65	)		(558	)		1,230
Asset backed securities		342		67		─			(231	)		178
Equity Securities
Investment in CRA funds		13,210		─		(268	)					12,942
Total available-for-sale securities	$	177,716	$	1,085	$	(2,306	)	$	(789	)	$	175,706
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,045	$	122	$	─		$	─		$	4,167
Total held-to-maturity securities	$	4,045	$	122	$	─		$	─		$	4,167
Other investments
FHLB/Federal Reserve Bank stock (1)	$	5,842	$	─	$	─		$	─		$	5,842
Investment in subsidiary trust (1)		1,083		─		─			─			1,083
Total other investments	$	6,925	$	─	$	─		$	─		$	6,925

____________

(1) Represents securities with restrictions and limited marketability and are carried at cost.

The following table displays the gross unrealized losses and fair value of securities available-for-sale as of September 30, 2011 for which other-than-temporary impairments (“OTTI”) have not been recognized, that were in a continuous unrealized loss position for the periods indicated.  There were no securities held-to-maturity in a continuous unrealized loss position as of September 30, 2011 or December 31, 2010.

	September 30, 2011
	Less Than 12 Months					Greater Than 12 Months					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
	(In thousands)
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government corporations and agencies	$	34,834	$	(116	)	$	-	$	-		$	34,834	$	(116	)
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		10		-			17		-			27		-
Privately issued residential		-		-			191		(32	)		191		(32	)
Total available-for-sale securities	$	34,844	$	(116	)	$	208	$	(32	)	$	35,052	$	(148	)

	December 31, 2010
	Less Than 12 Months						Greater Than 12 Months				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
	(In thousands)
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government corporations and agencies	$	77,784	$	(1,554	)	$	-	$	-		$	77,784	$	(1,554	)
Obligations of state and political subdivisions		2,220		(42	)		-		-			2,220		(42	)
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		22,674		(377	)		-		-			22,674		(377	)
Privately issued residential	-		-				398		(65	)		398		(65	)
Equity Securities
Investment in CRA funds		12,942		(268	)		-		-			12,942		(268	)
Total available-for-sale securities	$	115,620	$	(2,241	)	$	398	$	(65	)	$	116,018	$	(2,306	)

As of September 30, 2011, management does not have the intent to sell any of the securities classified as available-for-sale in the table above and believes it is not more likely than not that the Company will have to sell any such securities before a recovery of the cost.  The unrealized losses are largely due to price declines in U.S. government corporations and agencies securities related to overall market volatility.  The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such securities decline.  Management does not believe that any of the unrealized losses above are due to credit quality.  Accordingly, management believes the $148,000 of gross unrealized losses is temporary and the remaining $623,000 of OTTI represents an unrealized loss which has been recognized in other comprehensive loss.

Other-Than-Temporary Impairments (OTTI)

The following table presents a rollforward for the three and nine months ended September 30, 2011, of the credit losses component of OTTI losses that have been recognized in income related to debt securities that the Company does not intend to sell.

	Impairment related to credit losses
	Three months ended September 30, 2011			Nine months ended September 30, 2011
	(In thousands)
Credit losses at beginning  of period	$	1,564		$	1,600
Additions to OTTI that were not previously recognized		4			4
Additions to OTTI that were previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis		7			25
Transfers from accumulated other comprehensive income to OTTI related to credit losses		19			166
Reclassifications from OTTI to realized losses on sales of securities		(11	)		(212	)
Credit losses at end of period	$	1,583		$	1,583

For the nine months ended September 30, 2011, credit losses of $155,000 on 12 non-agency residential mortgage-backed securities and $40,000 on two asset-backed securities were recognized. To measure credit losses, external credit ratings and other relevant collateral details and performance statistics on a security-by-security basis were considered. Securities exhibiting significant deterioration are subjected to further analysis. Assumptions were developed for prepayment speed, default rate, and loss severity for each security using third party sources and based on the collateral history. The resulting projections of future cash flows of the underlying collateral were then discounted by the underlying yield before any write-downs were considered to determine the net present value of the cash flows (“NPV”).  The difference between the cost basis and the NPV was taken as a credit loss in the current period to the extent that these losses have not been previously recognized. The difference between the NPV and the quoted market price is considered a noncredit related loss and was included in other comprehensive loss.

Other Securities Information

The following sets forth information concerning sales (excluding calls and maturities) of available-for-sale securities for the nine months ended September 30, 2011 and 2010 (in thousands).  There were no sales or transfers of held-to-maturity securities in either period.

	Nine Months Ended September 30,
	2011			2010
Amortized cost	$	7,973		$	20,092
Proceeds		7,927			20,076
Gross realized gains		94			216
Gross realized losses		(140	)		(232	)

The Company holds mortgage-backed securities and collateralized mortgage obligations which may mature at an earlier date than the contractual maturity due to prepayments. The Company also holds certain securities which may be called by the issuer at an earlier date than the contractual maturity date.

At September 30, 2011, future contractual maturities of debt securities were as follows (in thousands):

	Securities				Securities
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	—	$	—	$	—	$	—
Within two to five years		22,765		22,764		—		—
Within six to ten years		50,974		51,108		—		—
After ten years		2,999		3,013		4,045		4,504
Mortgage-backed securities and collateralized mortgage obligations		57,991		59,032		—		—
Total debt securities	$	134,729	$	135,917	$	4,045	$	4,504