Note 4 - Debt and Equity Securities

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

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

4. Debt and Equity Securities

The Company’s investments in equity securities that have readily determinable fair values and all investments in debt securities are classified in one of the following three categories and accounted for accordingly: (1) trading securities, (2) securities available for sale and (3) securities held-to-maturity.

The Company did not hold any trading securities at June 30, 2015 and December 31, 2014. The Company did not hold any securities held-to-maturity at December 31, 2014. Securities available for sale are recorded at fair value.

The following table summarizes the Company’s portfolio of securities held-to-maturity at June 30, 2015:

	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
	(In thousands)
Securites held-to-maturity:
Municipals	$	7,220	$	7,220	$	-	$	-
Total	$	7,220	$	7,220	$	-	$	-

During the three months ended June 30, 2015, the Company transferred municipal bonds with an amortized cost and fair value of $4.5 million from available for sale to held-to-maturity. The transferred securities had a weighted average term to maturity of approximately seven months at the time of transfer.

The following table summarizes the Company’s portfolio of securities available for sale at June 30, 2015:

	Amortized Cost		Gross Unrealized Fair Value		Gross Unrealized Gains		Losses
	(In thousands)
Securites available for sale:
Corporate	$	105,852	$	104,648	$	521	$	1,725
Municipals		136,927		139,911		3,114		130
Mutual funds		21,193		21,193		-		-
Other		42,004		42,071		69		2
Total other securities		305,976		307,823		3,704		1,857
REMIC and CMO		530,684		532,662		6,165		4,187
GNMA		12,802		13,080		401		123
FNMA		170,838		170,534		1,635		1,939
FHLMC		13,259		13,398		139		-
Total mortgage-backed securities		727,583		729,674		8,340		6,249
Total securities available for sale	$	1,033,559	$	1,037,497	$	12,044	$	8,106

Mortgage-backed securities shown in the table above include two private issue collateralized mortgage obligations (“CMOs”) that are collateralized by commercial real estate mortgages with amortized cost and fair value of $9.1 million at June 30, 2015.

The following table summarizes the Company’s portfolio of securities available for sale at December 31, 2014:

	Amortized Cost		Fair Value		Gross Unrealized Gains		Gross Unrealized Losses
	(In thousands)
Securites available for sale:
Corporate	$	90,719	$	91,273	$	1,268	$	714
Municipals		145,864		148,896		3,093		61
Mutual funds		21,118		21,118		-		-
Other		7,098		7,090		-		8
Total other securities		264,799		268,377		4,361		783
REMIC and CMO		504,207		505,768		6,188		4,627
GNMA		13,862		14,159		421		124
FNMA		169,956		170,367		2,128		1,717
FHLMC		14,505		14,639		142		8
Total mortgage-backed securities		702,530		704,933		8,879		6,476
Total securities available for sale	$	967,329	$	973,310	$	13,240	$	7,259

Mortgage-backed securities shown in the table above include three private issue CMOs that are collateralized by commercial real estate mortgages with an amortized cost and fair value of $12.4 million at December 31, 2014.

The following table represents the activity related to the credit loss component recognized in earnings on debt securities held by the Company for which a portion of OTTI was recognized in AOCI for the periods indicated:

	For the three months ended June 30,				For the six months ended June 30,
	2015		2014		2015		2014
	(In thousands)
Beginning balance	$	-	$	3,738	$	-	$	3,738
Recognition of actual losses		-		-		-		-
OTTI charges due to credit loss recorded in earnings		-		-		-		-
Securities sold during the period		-		-		-		-
Securities where there is an intent to sell or requirement to sell		-		-		-		-
Ending balance	$	-	$	3,738	$	-	$	3,738

The following table represents the gross gains and gross losses realized from the sale of securities available for sale for the periods indicated:

	For the three months ended June 30,					For the six months ended June 30,
	2015			2014		2015			2014
	(In thousands)
Gross gains from the sale of securities	$	233		$	-	$	233		$	-
Gross losses from the sale of securities		(169	)		-		(169	)		-
Net gains from the sale of securities	$	64		$	-	$	64		$	-

The following table details the amortized cost and fair value of the Company’s securities classified as held-to-maturity at June 30, 2015, by contractual maturity.

	Amortized Cost		Fair Value
	(In thousands)
Securities held-to-maturity:(1)
Due in one year or less	$	6,140	$	6,140
Due after one year through five years		1,080		1,080
Total securities held-to-maturity	$	7,220	$	7,220

(1) 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.

The following table details the amortized cost and fair value of the Company’s securities classified as available for sale at June 30, 2015, by contractual maturity.

	Amortized Cost		Fair Value
	(In thousands)
Securities available for sale:(1)
Due in one year or less	$	32,046	$	32,232
Due after one year through five years		15,000		15,298
Due after five years through ten years		92,077		90,741
Due after ten years		166,853		169,552
Total other securities		305,976		307,823
Mortgage-backed securities		727,583		729,674
Total securities available for sale	$	1,033,559	$	1,037,497

(1) 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.

The following table shows the Company’s available for sale securities with gross unrealized losses and their fair value aggregated by category and length of time the individual securities had been in a continuous unrealized loss position at June 30, 2015:

	Total				Less than 12 months				12 months or more
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
Corporate	$	53,275	$	1,725	$	38,413	$	1,587	$	14,862	$	138
Municipals		17,077		130		17,077		130		-		-
Other		298		2		298		2		-		-
Total other securities		70,650		1,857		55,788		1,719		14,862		138
REMIC and CMO		245,107		4,187		141,760		1,205		103,347		2,982
GNMA		7,727		123		7,727		123		-		-
FNMA		100,608		1,939		68,604		1,040		32,004		899
Total mortgage-backed securities		353,442		6,249		218,091		2,368		135,351		3,881
Total securities available for sale	$	424,092	$	8,106	$	273,879	$	4,087	$	150,213	$	4,019

OTTI losses on impaired securities must be fully recognized in earnings if an investor has the intent to sell the debt security or if it is more likely than not that the investor will be required to sell the debt security before recovery of its amortized cost. However, even if an investor does not expect to sell a debt security, the investor must evaluate the expected cash flows to be received and determine if a credit loss has occurred. In the event that a credit loss has occurred, only the amount of impairment associated with the credit loss is recognized in earnings in the Consolidated Statements of Income. Amounts relating to factors other than credit losses are recorded in accumulated other comprehensive income (“AOCI”) within Stockholders’ Equity.

The Company reviewed each investment that had an unrealized loss at June 30, 2015. An unrealized loss exists when the current fair value of an investment is less than its amortized cost basis. Unrealized losses on available for sale securities, that are deemed to be temporary, are recorded in AOCI, net of tax. Unrealized losses that are considered to be other-than-temporary are split between credit related and noncredit related impairments, with the credit related impairment being recorded as a charge against earnings and the noncredit related impairment being recorded in AOCI, net of tax.

Corporate:

The unrealized losses in Corporate securities at June 30, 2015 consist of losses on seven Corporate securities. The unrealized losses were caused by movements in interest rates. It is not anticipated that these securities would be settled at a price that is less than the amortized cost of the Company’s investment. Each of these securities is performing according to its terms and, in the opinion of management, will continue to perform according to its terms. The Company does not have the intent to sell these securities and it is more likely than not the Company will not be required to sell the securities before recovery of the securities’ amortized cost basis. This conclusion is based upon considering the Company’s cash and working capital requirements and contractual and regulatory obligations, none of which the Company believes would cause the sale of the securities. Therefore, the Company did not consider these investments to be other-than-temporarily impaired at June 30, 2015.

Municipal Securities:

The unrealized losses in Municipal securities at June 30, 2015, consist of losses on five Municipal securities. The unrealized losses were caused by movements in interest rates. It is not anticipated that these securities would be settled at a price that is less than the amortized cost of the Company’s investment. Each of these securities is performing according to its terms and, in the opinion of management, will continue to perform according to its terms. The Company does not have the intent to sell these securities and it is more likely than not the Company will not be required to sell the securities before recovery of the securities’ amortized cost basis. This conclusion is based upon considering the Company’s cash and working capital requirements and contractual and regulatory obligations, none of which the Company believes would cause the sale of the securities. Therefore, the Company did not consider these investments to be other-than-temporarily impaired at June 30, 2015.

Other Securities:

The unrealized losses in Other Securities at June 30, 2015, consist of a loss on one single issuer trust preferred security. The unrealized losses on this security were caused by market interest volatility, a significant widening of credit spreads across markets for these securities and illiquidity and uncertainty in the financial markets. This security is currently rated below investment grade. It is not anticipated that this security would be settled at a price that is less than the amortized cost of the Company’s investment. This security is performing according to its terms and, in the opinion of management, will continue to perform according to its terms. The Company does not have the intent to sell this security and it is more likely than not the Company will not be required to sell this security before recovery of the security’s amortized cost basis. This conclusion is based upon considering the Company’s cash and working capital requirements and contractual and regulatory obligations, none of which the Company believes would cause the sale of the security. Therefore, the Company did not consider this investment to be other-than-temporarily impaired at June 30, 2015.

REMIC and CMO:

The unrealized losses in Real Estate Mortgage Investment Conduit (“REMIC”) and CMO securities at June 30, 2015 consist of 12 issues from the Federal Home Loan Mortgage Corporation (“FHLMC”), 14 issues from the Federal National Mortgage Association (“FNMA”) and nine issues from Government National Mortgage Association (“GNMA”). The unrealized losses on the REMIC and CMO securities issued by FHLMC, FNMA and GNMA were caused by movements in interest rates. It is not anticipated that these securities would be settled at a price that is less than the amortized cost of the Company’s investment. Each of these securities is performing according to its terms, and, in the opinion of management, will continue to perform according to its terms. The Company does not have the intent to sell these securities and it is more likely than not the Company will not be required to sell the securities before recovery of the securities’ amortized cost basis. This conclusion is based upon considering the Company’s cash and working capital requirements, and contractual and regulatory obligations, none of which the Company believes would cause the sale of the securities. Therefore, the Company did not consider these investments to be other-than-temporarily impaired at June 30, 2015.

GNMA:

The unrealized losses in GNMA securities at June 30, 2015 consist of a loss on one security. The unrealized losses were caused by movements in interest rates. It is not anticipated that this security would be settled at a price that is less than the amortized cost of the Company’s investment. This security is performing according to its terms and, in the opinion of management, will continue to perform according to its terms. The Company does not have the intent to sell this security and it is more likely than not the Company will not be required to sell the security before recovery of the security’s amortized cost basis. This conclusion is based upon considering the Company’s cash and working capital requirements and contractual and regulatory obligations, none of which the Company believes would cause the sale of the security. Therefore, the Company did not consider this security to be other-than-temporarily impaired at June 30, 2015.

FNMA:

The unrealized losses in FNMA securities at June 30, 2015 consist of losses on 17 securities. The unrealized losses were caused by movements in interest rates. It is not anticipated that these securities would be settled at a price that is less than the amortized cost of the Company’s investment. Each of these securities is performing according to its terms and, in the opinion of management, will continue to perform according to its terms. The Company does not have the intent to sell these securities and it is more likely than not the Company will not be required to sell the securities before recovery of the securities’ amortized cost basis. This conclusion is based upon considering the Company’s cash and working capital requirements and contractual and regulatory obligations, none of which the Company believes will cause the sale of the securities. Therefore, the Company did not consider these investments to be other-than-temporarily impaired at June 30, 2015.

The following table shows the Company’s available for sale securities with gross unrealized losses and their fair value, aggregated by category and length of time that individual securities had been in a continuous unrealized loss position, at December 31, 2014.

	Total				Less than 12 months				12 months or more
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
Corporate	$	39,287	$	714	$	9,573	$	428	$	29,714	$	286
Municipals		8,810		61		3,546		11		5,264		50
Other		292		8		-		-		292		8
Total other securities		48,389		783		13,119		439		35,270		344
REMIC and CMO		216,190		4,627		77,382		399		138,808		4,228
GNMA		8,358		124		-		-		8,358		124
FNMA		95,148		1,717		-		-		95,148		1,717
FHLMC		6,773		8		6,773		8		-		-
Total mortgage-backed  securities		326,469		6,476		84,155		407		242,314		6,069
Total securities available for sale	$	374,858	$	7,259	$	97,274	$	846	$	277,584	$	6,413