Note 2 - Securities

9 Months Ended

Sep. 30, 2013

Investments Schedule [Abstract]

Investment [Text Block]

2.     SECURITIES

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

	As of September 30, 2013
	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	$	86,395	$	-	$	(4,649	)	$	-		$	81,746
Obligations of state and political subdivisions		17,899		156		(912	)		-			17,143
Corporate		6,063		216		-			-			6,279
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		63,874		782		(929	)		-			63,727
Privately issued residential		588		379		-			(299	)		668
Asset backed securities		152		143		-			(152	)		143
Equity Securities
Community Reinvestment Act (“CRA”) funds		14,352		-		(401	)		-			13,951
Total available-for-sale securities	$	189,323	$	1,676	$	(6,891	)	$	(451	)	$	183,657
Securities held-to-maturity
Obligations of state and political subdivisions	$	7,788	$	372	$	(52	)	$	-		$	8,108
Total held-to-maturity securities	$	7,788	$	372	$	(52	)	$	-		$	8,108
Other investments
Federal Home Loan Bank (“FHLB”)(1)/Federal Reserve Bank stock (2)	$	4,619	$	-	$	-		$	-		$	4,619
Investment in subsidiary trust (3)		1,083		-		-			-			1,083
Total other investments	$	5,702	$	-	$	-		$	-		$	5,702

	As of December 31, 2012
	Amortized		Unrealized								Fair
	Cost		Gains		Losses			OTTI			Value
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	70,892	$	362	$	(73	)	$	—		$	71,181
Obligations of state and political subdivisions		12,810		579		—			—			13,389
Corporate		6,080		270		—			—			6,350
Mortgage-backed securities and collateralized mortgage obligations:
Government issued or guaranteed		56,572		1,369		—			—			57,941
Privately issued residential		718		330		—			(365	)		683
Asset backed securities		187		129		—			(173	)		143
Equity securities
Investment in CRA funds		14,128		233		—			—			14,361
Total available-for-sale securities	$	161,387	$	3,272	$	(73	)	$	(538	)	$	164,048
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,046	$	711	$	—		$	—		$	4,757
Total held-to-maturity securities	$	4,046	$	711	$	—		$	—		$	4,757
Other investments
FHLB (1)/Federal Reserve Bank (2) stock		4,509		—		—			—			4,509
Investment in subsidiary trust (3)		1,083		—		—			—			1,083
Total other investments	$	5,592	$	—	$	—		$	—		$	5,592

(1)	FHLB stock held by the Banks is subject to certain restrictions under the membership requirements of the FHLB. Redemption of FHLB stock is dependent upon repayment of borrowings, if any, from the FHLB.
(2)	Federal Reserve Bank stock held by MetroBank is subject to certain restrictions under Federal Reserve Bank Policy.
(3)	The Company’s ownership of common securities of MCBI Trust I is carried at cost.

The following table displays the fair value and gross unrealized losses on securities available-for-sale as of September 30, 2013 and December 31, 2012 for which other-than-temporary impairments (“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 December 31, 2012.

	As of September 30, 2013
	Less Than 12 Months					Greater Than 12 Months				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Dollars in thousands)
Securities available-for-sale
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	81,747	$	(4,649	)	$	—	$	—	$	81,747	$	(4,649	)
Obligations of state and political subdivisions		14,161		(912	)		—		—		14,161		(912	)
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		35,108		(929	)		—		—		35,108		(929	)
Privately issued residential		17		—			—		—		17		—
CRA funds		13,951		(401	)						13,951		(401	)
Total available-for-sale securities	$	144,984	$	(6,891	)	$	—	$	—	$	144,984	$	(6,891	)
Securities held-to-maturity
Obligations of state and political subdivisions	$	2,158	$	(52	)	$	—	$	—	$	2,158	$	(52	)
Total held-to-maturity securities	$	2,158	$	(52	)	$	—	$	—	$	2,158	$	(52	)

	As of December 31, 2012
	Less Than 12 Months					Greater Than 12 Months				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(Dollars in thousands)
Securities available-for-sale
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	9,921	$	(73	)	$	—	$	—	$	9,921	$	(73	)
Mortgage-backed securities and collateralized mortgage obligations
Privately issued residential		—		—			72		—		72		—
Total securities	$	9,921	$	(73	)	$	72	$	—	$	9,993	$	(73	)

As of September 30, 2013, 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 $6.9 million of unrealized losses of available-for-sale securities and the $52,000 of unrealized losses of held-to-maturity securities as of September 30, 2013 is temporary and the remaining $451,000 of OTTI as of September 30, 2013 represents unrealized losses for which an impairment 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, 2013, of the credit loss component of OTTI losses that have been recognized in earnings related to debt securities that the Company does not intend to sell.

	Impairment related to credit losses
	Three months ended September 30, 2013		Nine months ended September 30, 2013
	(In thousands)
Credit losses at beginning of period	$	1,748	$	1,716
Additions to OTTI that were not previously recognized		3		3
Additions to OTTI that was previously recognized when there is no intent to sell and no requirement to sell before recovery of the amortized cost basis		4		4
Transfers from accumulated other comprehensive income (loss) to OTTI related to credit losses		3		35
Credit losses at end of period	$	1,758	$	1,758

For the nine months ended September 30, 2013, credit-related losses of $30,000 on five non-agency residential mortgage-backed securities and $11,000 on one asset-backed security were recognized. There were no credit-related impairments included in accumulated other comprehensive income (loss) for the three or nine months ended September 30, 2013.

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

There were no sales of available-for-sale securities or sales or transfers of held-to-maturity securities for the nine months ended September 30, 2013 or 2012.

At September 30, 2013, future contractual maturities of debt securities were as follows (in thousands):

	Securities Available-for-sale				Securities Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	—	$	—	$	—	$	—
Within two to five years		20,053		20,088		—		—
Within six to ten years		73,188		68,785		—		—
After ten years		17,268		16,438		7,788		8,108
Mortgage-backed securities and collateralized mortgage obligations		64,462		64,395		—		—
Total debt securities	$	174,971	$	169,706	$	7,788	$	8,108

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.