Note 2 - Investment Securities

9 Months Ended

Sep. 30, 2014

Disclosure Text Block Supplement [Abstract]

Investments in Debt and Equity Instruments, Cash and Cash Equivalents, Unrealized and Realized Gains (Losses) [Text Block]

2.           Investment Securities

Debt and equity securities have been classified in the consolidated balance sheets according to management’s intent.  Investment securities at September 30, 2014 and December 31, 2013 are summarized as follows:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2014
Securities available for sale:
Agency mortgage-backed securities	$	30,408	$	173	$	160	$	30,421
Agency CMO		15,813		108		205		15,716
Other debt securities:
Agency notes and bonds		22,555		35		162		22,428
Municipal obligations		30,884		1,172		135		31,921
Subtotal - debt securities		99,660		1,488		662		100,486
Mutual funds		5		0		0		5
Total securities available for sale	$	99,665	$	1,488	$	662	$	100,491
Securities held to maturity:
Agency mortgage-backed securities	$	7	$	0	$	0	$	7
Total securities held to maturity	$	7	$	0	$	0	$	7
December 31, 2013
Securities available for sale:
Agency mortgage-backed securities	$	18,408	$	205	$	244	$	18,369
Agency CMO		20,486		96		341		20,241
Other debt securities:
Agency notes and bonds		31,594		49		729		30,914
Municipal obligations		36,200		778		938		36,040
Subtotal - debt securities		106,688		1,128		2,252		105,564
Mutual funds		3,238		0		40		3,198
Total securities available for sale	$	109,926	$	1,128	$	2,292	$	108,762
Securities held to maturity:
Agency mortgage-backed securities	$	9	$	0	$	0	$	9
Total securities held to maturity	$	9	$	0	$	0	$	9

Agency notes and bonds, agency mortgage-backed securities and agency collateralized mortgage obligations (CMO) include securities issued by the Government National Mortgage Association (GNMA), a U.S. government agency, and the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC) and the Federal Home Loan Bank (FHLB), which are government-sponsored enterprises.

The amortized cost and fair value of debt securities as of September 30, 2014, by contractual maturity, are shown below.  Expected maturities of mortgage-backed securities may differ from contractual maturities because the mortgages underlying the obligations may be prepaid without penalty.

	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
(In thousands)
Due in one year or less	$	120	$	122	$	0	$	0
Due after one year through five years		13,653		13,782		0		0
Due after five years through ten years		23,602		23,945
Due after ten years		16,064		16,500		0		0
		53,439		54,349		0		0
Mortgage-backed securities and CMO		46,221		46,137		7		7
	$	99,660	$	100,486	$	7	$	7

Information pertaining to investment securities available for sale with gross unrealized losses at September 30, 2014, aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows:

	Number of Investment Positions		Fair Value		Gross Unrealized Losses
(Dollars in thousands)
Continuous loss position less than twelve months:
Agency notes and bonds		5	$	2,013	$	4
Agency CMO		2		1,620		8
Agency mortgage-backed securities		20		15,653		75
Muncipal obligations		2		323		1
Total less than twelve months		29		19,609		88
Continuous loss position more than twelve months:
Agency notes and bonds		10		11,473		158
Agency CMO		10		8,187		197
Agency mortgage-backed securities		7		6,192		85
Muncipal obligations		16		7,300		134
Total more than twelve months		43		33,152		574
Total securities available for sale		72	$	52,761	$	662

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation.  Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recover in fair value.

At September 30, 2014, the 72 U.S. government agency debt securities, including agency notes and bonds, mortgage-backed securities and CMO, and municipal obligations in a loss position had depreciated approximately 1.3% from the amortized cost basis.  All of the U.S. government agency securities and municipal obligations are issued by U.S. government agencies, government-sponsored enterprises and municipal governments, or are secured by first mortgage loans and municipal project revenues.  These unrealized losses related principally to current interest rates for similar types of securities.  In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition.  As the Company has the ability to hold the debt securities until maturity, or the foreseeable future if classified as available for sale, no declines are deemed to be other-than-temporary.

During the nine months ended September 30, 2014, the Company realized gross gains on sales of available for sale municipal securities and U.S. government agency mortgage-backed securities of $66,000 and $5,000, respectively and a loss of $17,000 on the sale of mutual funds.  During the three months ended September 30, 2014, the Company realized gross gains on sales of available for sale municipal securities and U.S. government agency mortgage-backed securities of $12,000 and $5,000, respectively and a loss of $17,000 on the sale of mutual funds.  During the nine months ended September 30, 2013, the Company realized gross gains on sales of available for sale municipal securities and U.S. government agency debt securities of $21,000 and $8,000, respectively.  The Company realized gross gains on sales of available for sale U.S. government agency debt securities of $8,000 during the three months ended September 30, 2013.

In June 2014, the Company acquired an additional 31,750 shares of common stock in another financial institution, in addition to the 100,000 shares acquired in December 2013, representing approximately 9% of the outstanding common stock of the entity, for a total investment of $711,000.  The investment is accounted for using the cost method of accounting and is included in other assets in the consolidated balance sheet.