Note 6 - Investment Securities

9 Months Ended

Sep. 30, 2012

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

6. Investment Securities

The following tables summarize the amortized costs and estimated fair value of the securities portfolio at September 30, 2012 and December 31, 2011. The summary is divided into available for sale and held to maturity investment securities.

	Amortized		Gross		Gross		Estimated
September 30, 2012 (In thousands)	Cost		Unrealized Gains		Unrealized Losses		Fair Value
Available For Sale
Obligations of U.S. government-sponsored entities	$	74,407	$	293	$	2	$	74,698
Obligations of states and political subdivisions		100,192		5,417		36		105,573
Mortgage-backed securities – residential		400,240		13,983		38		414,185
Mutual funds and equity securities		579		33		-		612
Corporate debt securities		6,741		46		1,299		5,488
Total securities – available for sale	$	582,159	$	19,772	$	1,375	$	600,556
Held To Maturity
Obligations of states and political subdivisions	$	875	$	133	$	-	$	1,008

	Amortized		Gross		Gross		Estimated
December 31, 2011 (In thousands)	Cost		Unrealized Gains		Unrealized Losses		Fair Value
Available For Sale
Obligations of U.S. government-sponsored entities	$	95,770	$	408	$	15	$	96,163
Obligations of states and political subdivisions		80,801		3,903		85		84,619
Mortgage-backed securities – residential		397,675		11,384		196		408,863
Mortgage-backed securities – commercial		203		6		-		209
Mutual funds and equity securities		1,601		-		-		1,601
Corporate debt securities		7,901		-		1,537		6,364
Total securities – available for sale	$	583,951	$	15,701	$	1,833	$	597,819
Held To Maturity
Obligations of states and political subdivisions	$	875	$	99	$	-	$	974

The amortized cost and estimated fair value of the debt securities portfolio at September 30, 2012, by contractual maturity, are detailed below. The summary is divided into available for sale and held to maturity securities. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities are stated separately due to the nature of payment and prepayment characteristics of these securities, as principal is not due at a single date.

	Available For Sale				Held To Maturity
	Amortized		Estimated		Amortized		Estimated
September 30, 2012 (In thousands)	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	3,143	$	3,145	$	-	$	-
Due after one year through five years		58,570		59,380		-		-
Due after five years through ten years		99,166		103,288		-		-
Due after ten years		20,461		19,946		875		1,008
Mortgage-backed securities		400,240		414,185		-		-
Total	$	581,580	$	599,944	$	875	$	1,008

Gross realized gains and losses on the sale of available for sale investment securities were as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In thousands)	2012		2011		2012		2011
Gross realized gains	$	343	$	400	$	1,038	$	1,226
Gross realized losses		67		14		74		17
Net realized gains	$	276	$	386	$	964	$	1,209

Investment securities with unrealized losses at September 30, 2012 and December 31, 2011 not recognized in income are presented in the tables below. The tables segregate investment securities that have been in a continuous unrealized loss position for less than twelve months from those that have been in a continuous unrealized loss position for twelve months or more. The tables also include the fair value of the related securities.

	Less than 12 Months				12 Months or More				Total
September 30, 2012 (In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored entities	$	7,872	$	2	$	-	$	-	$	7,872	$	2
Obligations of states and political subdivisions		4,882		36		-		-		4,882		36
Mortgage-backed securities – residential		7,259		38		-		-		7,259		38
Corporate debt securities		-		-		4,548		1,299		4,548		1,299
Total	$	20,013	$	76	$	4,548	$	1,299	$	24,561	$	1,375

	Less than 12 Months				12 Months or More				Total
December 31, 2011 (In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored entities	$	13,494	$	15	$	-	$	-	$	13,494	$	15
Obligations of states and political subdivisions		2,913		20		6,886		65		9,799		85
Mortgage-backed securities – residential		56,249		196		-		-		56,249		196
Corporate debt securities		-		-		4,299		1,537		4,299		1,537
Total	$	72,656	$	231	$	11,185	$	1,602	$	83,841	$	1,833

Unrealized losses included in the tables above have not been recognized in income since they have been identified as temporary. The Company evaluates investment securities for other-than-temporary impairment (“OTTI”) at least quarterly, and more frequently when economic or market conditions warrant. Many factors are considered, including: (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, (3) whether the market decline was effected by macroeconomic conditions, and (4) whether the Company has the intent to sell the security or more likely than not will be required to sell the security before its anticipated recovery. The assessment of whether an OTTI charge exists involves a high degree of subjectivity and judgment and is based on the information available to the Company at a point in time.

At September 30, 2012, the Company’s investment securities portfolio had gross unrealized losses of $1.4 million, an improvement of $458 thousand or 25.0% from year-end 2011. Of the total gross unrealized losses at September 30, 2012, $1.3 million relates to investments that have been in a continuous loss position for 12 months or more. All of the investments with an unrealized losses position for 12 or more months consist of corporate debt securities. The unrealized loss position of corporate debt securities has improved $238 thousand or 15.5% from year-end 2011 and $203 thousand or 13.5% from June 30, 2012.

Corporate debt securities in the Company’s investment securities portfolio at September 30, 2012 include $4.5 million carrying value of single-issuer trust preferred capital securities issued by a national and global financial services firm. These securities are currently performing and, although downgraded in the second quarter of 2012, continue to be rated as investment grade by major rating agencies. The unrealized losses on corporate debt securities is mainly a result of the general decline in financial markets and illiquidity events that began in 2008 and is not due to adverse changes in the expected cash flows of the individual securities. Overall market declines, particularly of banking and financial institutions, are a result of significant stress throughout the regional and national economy that began during 2008 and has not fully stabilized.

The Company attributes the unrealized losses in other sectors of its investment securities portfolio to changes in market interest rates. In general, market rates for these securities exceed the yield available at the time many of the securities in the portfolio were purchased. The Company does not expect to incur a loss on these securities unless they are sold prior to maturity. The Company’s current intent is to hold these securities until recovery.

Investment securities with unrealized losses at September 30, 2012 are performing according to their contractual terms. The Company does not have the intent to sell these securities and likely will not be required to sell these securities before their anticipated recovery. The Company does not consider any of the securities to be impaired due to reasons of credit quality or other factors.