Note 2 - Securities

3 Months Ended

Mar. 31, 2012

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 March 31, 2012
	Amortized		Unrealized								Fair
	Cost		Gains		Losses			OTTI			Value
	(Dollars in thousands)
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	107,722	$	328	$	(144	)	$	-		$	107,906
Obligations of state and political subdivisions		12,038		300		(110	)		-			12,228
Corporate		6,097		177		-						6,274
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		48,748		1,367		-			-			50,115
Privately issued residential		840		256		(9	)		(425	)		662
Asset backed securities		222		88		-			(184	)		126
Equity Securities
CRA funds		13,794		110		-			-			13,904
Total available-for-sale securities	$	189,461	$	2,626	$	(263	)	$	(609	)	$	191,215
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,046	$	531	$	-		$	-		$	4,577
Total held-to-maturity securities	$	4,046	$	531	$	-		$	-		$	4,577
Other investments
FHLB/Federal Reserve Bank stock(1)	$	5,292	$	-	$	-		$	-		$	5,292
Investment in subsidiary trust(1)		1,083		-		-			-			1,083
Total other investments	$	6,375	$	-	$	-		$	-		$	6,375

	As of December 31, 2011
	Amortized Cost		Unrealized								Fair Value
			Gains		Losses			OTTI
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government corporations and agencies	$	91,660	$	546	$	(7	)	$	—		$	92,199
Obligations of state and political subdivisions		5,467		279		(40	)		—			5,706
Corporate		6,102		57		(18	)		—			6,141
Mortgage-backed securities and collateralized mortgage obligations:
Government issued or guaranteed		52,594		1,160		(15	)		—			53,739
Privately issued residential		900		232		(23	)		(442	)		667
Asset backed securities		231		56		—			(185	)		102
Equity securities
Investment in CRA funds		13,700		135		—			—			13,835
Total available-for-sale securities	$	170,654	$	2,465	$	(103	)	$	(627	)	$	172,389
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,046	$	490	$	—		$	—		$	4,536
Total held-to-maturity securities	$	4,046	$	490	$	—		$	—		$	4,536
Other investments
FHLB /Federal Reserve Bank stock(1)		5,401		—		—			—			5,401
Investment in subsidiary trust(1)		1,083		—		—			—			1,083
Total other investments	$	6,484	$	—	$	—		$	—		$	6,484

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

The following table displays the fair value and gross unrealized losses of securities available for sale as of March 31, 2012 for which OTTI has 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 March 31, 2012 and December 31, 2011.

	March 31, 2012
	Less Than 12 Months					Greater Than 12 Months					Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
	(Dollars in thousands)
Securities available-for-sale
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	23,840	$	(144	)	$	—	$	—		$	23,840	$	(144	)
Obligations of state and political subdivisions		6,468		(110	)		—		—			6,468		(110	)
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		16		—			—		—			16		—
Privately issued residential		—		—			181		(9	)		181		(9	)
Total securities	$	30,324	$	(254	)	$	181	$	(9	)	$	30,505	$	(263	)

	As of December 31, 2011
	Less Than 12 Months					Greater Than 12 Months					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Treasury and other U.S. government corporations and agencies	$	4,993	$	(7	)	$	—	$	—		$	4,993	$	(7	)
Obligations of state and political subdivisions		1,580		(40	)		—		—			1,580		(40	)
Corporate		3,017		(18	)		—		—			3,017		(18	)
Mortgage-backed securities and collateralized mortgage obligations:
Government issued or guaranteed		8,786		(15	)		10		—			8,796		(15	)
Privately issued residential		—		—			168		(23	)		168		(23	)
Total securities	$	18,376	$	(80	)	$	178	$	(23	)	$	18,554	$	(103	)

As of March 31, 2012, management did not have the intent to sell any of the securities classified as available-for-sale in unrealized loss positions 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. However, if strategic opportunities arise, the Company may consider selling selected securities.  Any unrealized losses on such selected securities would be charged to earnings.

The unrealized losses are largely due to increases in the market interest rates over the yields available at the time the underlying securities were purchased. 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 any of the unrealized losses above are due to credit quality. Accordingly, management believes the $263,000 of unrealized losses is temporary and the remaining $609,000 of OTTI as of March 31, 2012 represents an unrealized loss for which an impairment has been recognized in other comprehensive loss.

Other-Than-Temporary Impairments (OTTI)

The following table represents the impairment activity related to debt securities (in thousands):

Impairment related to credit losses	Three months ended March 31, 2012		Three months ended March 31, 2011
Beginning balance at beginning of period	$	1,594	$	1,600
Addition of OTTI that was not previously recognized		—		—
Additions to OTTI that was previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis		21		—
Transfers from accumulated other comprehensive income (“AOCI”) to OTTI related to credit losses		18		88
Reclassifications from OTTI to realized losses		—		(199	)
Ending balance at end of period	$	1,633	$	1,489

For the three months ended March 31, 2012, the Company recognized credit-related losses of $38,000 on 5 non-agency residential mortgage-backed securities and $1,000 on one asset-backed security. The noncredit portion of these impairments of $17,000 on non-agency residential mortgage-backed securities was included in accumulated other comprehensive income (loss) for the three months ended March 31, 2012.

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 income (loss).

Other Securities Information

The following sets forth information concerning sales (excluding calls and maturities) of available-for-sale securities (in thousands).  There were no sales or transfers of held-to-maturity securities for the three months ended March 31, 2012 or 2011.

	Three Months Ended March 31,
	2012		2011
Amortized cost	$	—	$	173
Proceeds		—		106
Gross realized gains		—		—
Gross realized losses		—		(67	)

At March 31, 2012, 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		24,322		24,500		—		—
Within six to ten years		90,587		90,857		—		—
After ten years		11,170		11,177		4,046		4,577
Mortgage-backed securities and collateralized mortgage obligations		49,588		50,777		—		—
Total debt securities	$	175,667	$	177,311	$	4,046	$	4,577

The Company holds mortgage-backed securities 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.