Note 7 - Investment Securities

9 Months Ended

Sep. 30, 2013

Investments, Debt and Equity Securities [Abstract]

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

7. Investment Securities

The following tables summarize the amortized costs and estimated fair value of the securities portfolio at September 30, 2013 and December 31, 2012. The summary is divided into available for sale and held to maturity investment securities.

September 30, 2013 (In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available For Sale
Obligations of U.S. government-sponsored entities	$	98,239	$	163	$	2,315	$	96,087
Obligations of states and political subdivisions		130,441		2,266		2,169		130,538
Mortgage-backed securities – residential		348,935		6,282		3,468		351,749
Corporate debt securities		6,721		42		987		5,776
Mutual funds and equity securities		1,898		22		17		1,903
Total securities – available for sale	$	586,234	$	8,775	$	8,956	$	586,053
Held To Maturity
Obligations of states and political subdivisions	$	820	$	51	$	-	$	871

December 31, 2012 (In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Available For Sale
Obligations of U.S. government-sponsored entities	$	75,945	$	216	$	66	$	76,095
Obligations of states and political subdivisions		113,986		4,943		174		118,755
Mortgage-backed securities – residential		360,099		10,596		256		370,439
Corporate debt securities		6,638		44		856		5,826
Mutual funds and equity securities		1,962		33		2		1,993
Total securities – available for sale	$	558,630	$	15,832	$	1,354	$	573,108
Held To Maturity
Obligations of states and political subdivisions	$	820	$	136	$	-	$	956

The amortized cost and estimated fair value of the debt securities portfolio at September 30, 2013, 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. Mutual funds and equity securities in the available for sale portfolio consist of investments attributed to the Company’s captive insurance subsidiary. These securities have no stated maturity and are not included in the maturity schedule that follows. Mortgage-backed securities are stated separately due to the nature of payment and prepayment characteristics, as principal is not due at a single date.

	Available For Sale				Held To Maturity
September 30, 2013 (In thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	2,681	$	2,694	$	-	$	-
Due after one year through five years		105,522		105,666		-		-
Due after five years through ten years		109,489		107,528		-		-
Due after ten years		17,709		16,513		820		871
Mortgage-backed securities		348,935		351,749		-		-
Total	$	584,336	$	584,150	$	820	$	871

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

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2013		2012		2013			2012
Gross realized gains	$	3	$	343	$	6		$	1,038
Gross realized losses		1		67		64			74
Net realized gain (loss)	$	2	$	276	$	(58	)	$	964

Investment securities with unrealized losses at September 30, 2013 and December 31, 2012 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, 2013 (In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored entities	$	76,817	$	2,315	$	-	$	-	$	76,817	$	2,315
Obligations of states and political subdivisions		57,780		1,891		3,135		278		60,915		2,169
Mortgage-backed securities – residential		116,427		2,894		12,336		574		128,763		3,468
Corporate debt securities		106		2		4,876		985		4,982		987
Mutual funds and equity securities		681		17		-		-		681		17
Total	$	251,811	$	7,119	$	20,347	$	1,837	$	272,158	$	8,956

	Less than 12 Months				12 Months or More				Total
December 31, 2012 (In thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Obligations of U.S. government-sponsored entities	$	26,433	$	66	$	-	$	-	$	26,433	$	66
Obligations of states and political subdivisions		17,199		174		-		-		17,199		174
Mortgage-backed securities – residential		39,659		256		-		-		39,659		256
Corporate debt securities		-		-		4,994		856		4,994		856
Mutual funds and equity securities		299		2		-		-		299		2
Total	$	83,590	$	498	$	4,994	$	856	$	88,584	$	1,354

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, 2013, the Company’s investment securities portfolio had gross unrealized losses of $9.0 million, an increase of $7.6 million from year-end 2012. Of the total gross unrealized losses at September 30, 2013, $1.8 million relates to investments that have been in a continuous loss position for 12 months or more. Unrealized losses on corporate debt securities and mortgage-backed securities make up $985 thousand and $574 thousand, respectively, of the unrealized loss on investment securities in a continuous loss position of 12 months or more.

Corporate debt securities in the Company’s investment securities portfolio at September 30, 2013 include single-issuer trust preferred capital securities with a carrying value of $4.9 million. These securities were issued by a national and global financial services firm and purchased by the Company during 2007. The securities are currently performing and continue to be rated as investment grade by major rating agencies. The issuer of the securities announced in the first quarter of 2013 that it had passed stringent regulatory stress testing and received regulatory approval to both increase per share common dividend payments and increase its equity repurchase program. The Company does not intend to sell these securities nor does the Company believe it is likely that it will be required to sell these securities prior to their anticipated recovery. The Company believes these securities are not impaired due to reasons of credit quality or other factors, but rather the unrealized loss is primarily attributed to continuing uncertainties in both international and domestic economies and market volatility. The Company believes that it will collect all amounts due according to the contractual terms of these securities and that the fair values of these securities will continue to recover as they approach their maturity dates.

The Company attributes the unrealized losses in other sectors of its investment securities portfolio to changes in market interest rates and volatility. Market interest rates rose sharply during the second quarter of 2013 as measured by the yields on Treasury bonds, particularly for the five and ten year maturity periods. Investment securities with unrealized losses at September 30, 2013 are performing according to their contractual terms, and the Company does not expect to incur a loss on these securities unless they are sold prior to maturity. 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.