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Investment Securities
3 Months Ended
Mar. 31, 2014
Investment Securities
2. Investment Securities

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

 

            Gross      Gross         
     Amortized      Unrealized      Unrealized      Fair  
(In thousands)    Cost      Gains      Losses      Value  

March 31, 2014

           

Securities available for sale:

           

Agency mortgage-backed securities

   $ 21,792       $ 204       $ 179       $ 21,817   

Agency CMO

     19,231         120         264         19,087   

Other debt securities:

           

Agency notes and bonds

     29,959         42         499         29,502   

Municipal obligations

     35,670         929         553         36,046   
  

 

 

    

 

 

    

 

 

    

 

 

 

Subtotal—debt securities

     106,652         1,295         1,495         106,452   
  

 

 

    

 

 

    

 

 

    

 

 

 

Mutual funds

     2,172         0         31         2,141   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities available for sale

   $ 108,824       $ 1,295       $ 1,526       $ 108,593   
  

 

 

    

 

 

    

 

 

    

 

 

 

Securities held to maturity:

           

Agency mortgage-backed securities

   $ 8       $ 0       $ 0       $ 8   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total securities held to maturity

   $ 8       $ 0       $ 0       $ 8   
  

 

 

    

 

 

    

 

 

    

 

 

 

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 March 31, 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      Fair      Amortized      Fair  
     Cost      Value      Cost      Value  
(In thousands)                            

Due in one year or less

   $ 0       $ 0       $ 0       $ 0   

Due after one year through five years

     10,447         10,456         0         0   

Due after five years through ten years

     28,126         28,199         

Due after ten years

     27,056         26,893         0         0   
  

 

 

    

 

 

    

 

 

    

 

 

 
     65,629         65,548         0         0   

Mortgage-backed securities and CMO

     41,023         40,904         8         8   
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 106,652       $ 106,452       $ 8       $ 8   
  

 

 

    

 

 

    

 

 

    

 

 

 

Information pertaining to investment securities available for sale with gross unrealized losses at March 31, 2014, aggregated by investment category and the length of time that individual investment securities have been in a continuous position, follows:

 

     Number of             Gross  
     Investment      Fair      Unrealized  
     Positions      Value      Losses  
(Dollars in thousands)                     

Continuous loss position less than twelve months:

        

Agency notes and bonds

     20       $ 22,047       $ 499   

Agency CMO

     11         9,909         185   

Agency mortgage-backed securities

     20         15,956         113   

Muncipal obligations

     16         6,220         153   

Mutual fund

     1         1,558         17   
  

 

 

    

 

 

    

 

 

 

Total less than twelve months

     68         55,690         967   
  

 

 

    

 

 

    

 

 

 

Continuous loss position more than twelve months:

        

Muncipal obligations

     12         6,208         400   

Agency CMO

     2         1,742         79   

Agency mortgage-backed securities

     2         1,747         66   

Mutual fund

     1         402         14   
  

 

 

    

 

 

    

 

 

 

Total more than twelve months

     17         10,099         559   
  

 

 

    

 

 

    

 

 

 

Total securities available for sale

     85       $ 65,789       $ 1,526   
  

 

 

    

 

 

    

 

 

 

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 March 31, 2014, the 83 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 2.3% 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 three months ended March 31, 2013, the Company realized gross gains on sales of available for sale municipal securities of $21,000. The Company did not sell any securities during the three months ended March 31, 2014.

In December 2013, the Company acquired 100,000 shares of common stock in another financial institution, representing approximately 7% of the outstanding common stock of the entity, for a total investment of $540,000. The investment is accounted for using the cost method of accounting and is included in other assets in the consolidated balance sheet.