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Note 3 - Investment Securities Available for Sale
12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]
3.
INVESTMENT SECURITIES AVAILABLE FOR SALE
 
The amortized cost, gross gains and losses and fair values of securities available for sale are as follows:
 
   
December 31, 2016
 
           
Gross
   
Gross
         
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
(Dollar amounts in thousands)
 
Cost
   
Gains
   
Losses
   
Value
 
                                 
U.S. government agency
securities
  $
10,158
    $
174
    $
(96
)   $
10,236
 
Obligations of states and
political subdivisions:
                               
Taxable
   
1,615
     
129
     
(4
)    
1,740
 
Tax-exempt
   
78,327
     
1,678
     
(522
)    
79,483
 
Mortgage-backed securities in
government-sponsored entities
   
20,128
     
202
     
(261
)    
20,069
 
Private-label mortgage-backed securities
   
1,579
     
130
     
-
     
1,709
 
Total debt securities
   
111,807
     
2,313
     
(883
)    
113,237
 
Equity securities in financial institutions
   
750
     
389
     
-
     
1,139
 
Total
  $
112,557
    $
2,702
    $
(883
)   $
114,376
 
 
 
 
 
   
December 31, 2015
 
           
Gross
   
Gross
         
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
(Dollar amounts in thousands)
 
Cost
   
Gains
   
Losses
   
Value
 
                                 
U.S. government agency
securities
  $
21,655
    $
245
    $
(271
)   $
21,629
 
Obligations of states and
political subdivisions:
                               
Taxable
   
1,989
     
134
     
-
     
2,123
 
Tax-exempt
   
91,940
     
3,402
     
(175
)    
95,167
 
Mortgage-backed securities in
government-sponsored entities
   
24,480
     
316
     
(272
)    
24,524
 
Private-label mortgage-backed securities
   
2,079
     
184
     
-
     
2,263
 
Total debt securities
   
142,143
     
4,281
     
(718
)    
145,706
 
Equity securities in financial institutions
   
750
     
64
     
-
     
814
 
Total
  $
142,893
    $
4,345
    $
(718
)   $
146,520
 
 
The amortized cost and fair value of debt securities at
December
31,
2016,
by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers
may
have the right to call or prepay obligations with or without call or prepayment penalties.
 
   
Amortized
   
Fair
 
(Dollar amounts in thousands)
 
Cost
   
Value
 
                 
Due in one year or less
  $
3,693
    $
3,759
 
Due after one year through five years
   
9,487
     
9,796
 
Due after five years through ten years
   
11,870
     
12,248
 
Due after ten years
   
86,757
     
87,434
 
                 
Total
  $
111,807
    $
113,237
 
 
Investment securities with an approximate carrying value of
$60.3
million and
$68.8
million at
December
31,
2016
and
2015,
respectively, were pledged to secure deposits and other purposes as required by law.
 
 
Proceeds from the sales of securities available for sale and the gross realized gains and losses for the years ended
December
31,
2016
through
2014,
are as follows (in thousands):
 
   
2016
   
2015
   
2014
 
Proceeds from sales
  $
9,063
    $
15,686
    $
8,383
 
Gross realized gains
   
309
     
440
     
306
 
Gross realized losses
   
(6
)    
(117
)    
(58
)
 
 
 
The following tables show the Company’s gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.
 
   
December 31, 2016
 
   
Less than Twelve Months
   
Twelve Months or Greater
   
Total
 
           
Gross
           
Gross
           
Gross
 
   
Fair
   
Unrealized
   
Fair
   
Unrealized
   
Fair
   
Unrealized
 
(Dollar amounts in thousands)
 
Value
   
Losses
   
Value
   
Losses
   
Value
   
Losses
 
                                                 
U.S. government agency
securities
  $
3,803
    $
(47
)   $
1,316
    $
(49
)   $
5,119
    $
(96
)
Obligations of states and
political subdivisions
                                               
Tax-exempt
   
23,554
     
(522
)    
-
     
-
     
23,554
     
(522
)
Taxable
   
502
     
(4
)    
-
     
-
     
502
     
(4
)
Mortgage-backed securities in
government-sponsored entities
   
9,066
     
(126
)    
4,438
     
(135
)    
13,504
     
(261
)
Total
  $
36,925
    $
(699
)   $
5,754
    $
(184
)   $
42,679
    $
(883
)
 
 
 
   
December 31, 2015
 
   
Less than Twelve Months
   
Twelve Months or Greater
   
Total
 
           
Gross
           
Gross
           
Gross
 
   
Fair
   
Unrealized
   
Fair
   
Unrealized
   
Fair
   
Unrealized
 
(Dollar amounts in thousands)
 
Value
   
Losses
   
Value
   
Losses
   
Value
   
Losses
 
                                                 
U.S. government agency
securities
  $
3,818
    $
(57
)   $
10,872
    $
(214
)   $
14,690
    $
(271
)
Obligations of states and
political subdivisions
                                               
Tax-exempt
   
1,268
     
(9
)    
9,394
     
(166
)    
10,662
     
(175
)
Mortgage-backed securities in
government-sponsored entities
   
8,725
     
(86
)    
6,685
     
(186
)    
15,410
     
(272
)
Total
  $
13,811
    $
(152
)   $
26,951
    $
(566
)   $
40,762
    $
(718
)
 
There were
67
securities that were considered temporarily impaired at
December
31,
2016.
 
On a quarterly basis, the Company performs an assessment to determine whether there have been any events or economic circumstances indicating that a security with an unrealized loss has suffered other-than-temporary impairment (“OTTI”). A debt security is considered impaired if the fair value is less than its amortized cost basis at the reporting date. The accounting literature requires the Company to assess whether the unrealized loss is other than temporary. For equity securities where the fair value has been significantly below cost for
one
year, the Company’s policy is to recognize an impairment loss unless sufficient evidence is available that the decline is not other than temporary and a recovery period can be predicted.
 
The Company has asserted that at
December
31,
2016
and
2015,
the declines outlined in the above table represent temporary declines and the Company does not intend to sell and does not believe it will be required to sell these securities before recovery of their cost basis, which
may
be at maturity. The Company has concluded that any impairment of its investment securities portfolio outlined in the above table is not other than temporary and is the result of interest rate changes, sector credit rating changes, or company-specific rating changes that are not expected to result in the non-collection of principal and interest during the period.
 
Debt securities issued by U.S. government agencies, U.S. government-sponsored enterprises, and state and political subdivisions accounted for more than
97.5%
of the total available-for-sale portfolio as of
December
 
31,
2016,
and
no
credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government and the lack of significant unrealized loss positions within the obligations of state and political subdivisions security portfolio. The Company evaluates credit losses on a quarterly basis. The Company considered the following factors in determining whether a credit loss exists and the period over which the debt security is expected to recover:
 
 
The length of time and the extent to which the fair value has been less than the amortized cost basis.
 
 
Changes in the near term prospects of the underlying collateral of a security such as changes in default rates, loss severity given default and significant changes in prepayment assumptions.
 
 
 
The level of cash flows generated from the underlying collateral supporting the principal and interest payments of the debt securities.
 
 
Any adverse change to the credit conditions and liquidity of the issuer, taking into consideration the latest information available about the overall financial condition of the issuer, credit ratings, recent legislation, and government actions affecting the issuer’s industry and actions taken by the issuer to deal with the present economic climate.