Securities

12 Months Ended

Dec. 31, 2014

Securities [Abstract]

SECURITIES

NOTE 4          Securities

The amortized cost and estimated fair value of investment securities are as follows:

			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
December 31, 2014
Securities available for sale
U.S. agency issued residential mortgage-backed securities	$	45,626	$	834	$	124	$	46,336
U.S. agency issued residential collateralized mortgage obligations		27,031		247		262		27,016
Privately issued residential collateralized mortgage obligations		28		1		0		29
Nonrated SBA loan fund		950		0		0		950
Other equity securities		47		0		0		47
Totals	$	73,682		1,082		386	$	74,378
Securities held to maturity
Obligations of states and political subdivisions	$	67,836	$	1,517	$	162	$	69,191
Nonrated trust preferred securities		1,543		26		155		1,414
Nonrated senior subordinated notes		400		4		0		404
Totals	$	69,779	$	1,547	$	317	$	71,009
December 31, 2013
Securities available for sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	1,001	$	0	$	2	$	999
U.S. agency issued residential mortgage-backed securities		21,388		522		424		21,486
U.S. agency issued residential collateralized mortgage obligations		37,998		482		576		37,904
Privately issued residential collateralized mortgage obligations		102		3		0		105
Obligations of states and political subdivision		159		0		0		159
Nonrated SBA loan fund		950		0		0		950
Other equity securities		47		0		0		47
Totals	$	61,645	$	1,007	$	1,002	$	61,650
Securities held to maturity
Obligations of states and political subdivisions	$	69,704	$	1,059	$	887	$	69,876
Nonrated trust preferred securities		1,524		30		165		1,389
Nonrated senior subordinated notes		401		6		0		407
Totals	$	71,629	$	1,095	$	1,052	$	71,672

Fair values of securities are estimated based on financial models or prices paid for similar securities. It is possible future interest rates could change considerably resulting in a material change in the estimated fair value.

Nonrated trust preferred securities at December 31, 2014 and 2013, consist of separate obligations issued by three holding companies headquartered in Wisconsin. Nonrated senior subordinated notes at December 31, 2014 and 2013, consist of one obligation issued by a Wisconsin state chartered bank. All issues of nonrated trust preferred securities or senior subordinated notes were current as to principal and interest payments as of December 31, 2014 and 2013.

The following table indicates the number of months securities that are considered to be temporarily impaired have been in an unrealized loss position at December 31:

	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
2014
Securities available for sale
U.S. agency issued residential mortgage-backed securities	$	5,555	$	22	$	6,787	$	102	$	12,342	$	124
U.S. agency issued residential collateralized mortgage obligations		3,267		16		9,844		246		13,111		262
Totals	$	8,822	$	38	$	16,631	$	348	$	25,453	$	386
Securities held to maturity
Obligations of states and political subdivisions	$	4,015	$	38	$	6,103	$	124	$	10,118	$	162
Nonrated trust preferred securities		0		0		706		155		706		155
Totals	$	4,015	$	38	$	6,809	$	279	$	10,824	$	317

	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
2013
Securities available for sale
U.S. Treasury securities and obligations of U.S. government corporations and agencies	$	999	$	2	$	0	$	0	$	999	$	2
U.S. agency issued residential mortgage-backed securities		13,206		424		0		0		13,206		424
U.S. agency issued residential collateralized mortgage obligations		14,179		334		5,830		242		20,009		576
Obligations of states and political subdivisions		159		0		0		0		159		0
Totals	$	28,543	$	760	$	5,830	$	242	$	34,373	$	1,002
Securities held to maturity
Obligations of states and political subdivisions	$	23,017	$	806	$	1,073	$	81	$	24,090	$	887
Non rated trust preferred securities		368		102		322		63		690		165
Totals	$	23,385	$	908	$	1,395	$	144	$	24,780	$	1,052

 
At December 31, 2014, 76 debt securities had unrealized losses with aggregate depreciation of 1.90% from the amortized cost basis, compared to 167 debt securities which had unrealized losses with aggregate depreciation of 3.36% from the amortized cost basis at December 31, 2013. These unrealized losses relate principally to an increase in interest rates relative to interest rates in effect at the time of purchase or reclassification from available-for-sale to held-to-maturity classification and are not due to changes in the financial condition of the issuers. However, the unrealized loss on nonrated trust preferred securities is due to an increase in credit spreads for risk on such investments demanded in the market. In analyzing an issuer’s financial condition, management considers whether the securities are issued by a government body or agency, whether a rating agency has downgraded the securities, industry analysts’ reports, and internal review of issuer financial statements. Since management does not intend to sell and has the ability to hold debt securities until maturity (or the foreseeable future for securities available for sale), no declines are deemed to be other than temporary.

The amortized cost and estimated fair value of debt securities and nonrated trust preferred securities and senior subordinated notes at December 31, 2014, 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.

	Available for Sale				Held to Maturity
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Due in one year or less	$	0	$	0	$	4,568	$	4,588
Due after one year through five years		0		0		24,288		24,885
Due after five years through ten years		0		0		37,826		38,531
Due after ten years		0		0		3,097		3,005
Subtotals		0		0		69,779		71,009
Mortgage-backed securities and collateralized mortgage obligations		72,685		73,381		0		0
Totals	$	72,685	$	73,381	$	69,779	$	71,009

Securities with a fair value of $46,368 and 47,593 at December 31, 2014 and 2013, respectively, were pledged to secure public deposits, other borrowings, and for other purposes required by law.

During 2014, PSB realized a gain of $3 ($2 after tax expense) from proceeds totaling $1,774 on the sale of securities available for sale. During 2013, PSB realized a gain of $12 ($7 after tax expense) from proceeds totaling $986 on the sale of securities available for sale. There were no sales of securities during 2012.

During 2014, PSB reclassified $3 ($2 after tax impacts) to reduce comprehensive net income following a gain on sale of securities available for sale. The reduction to comprehensive net income was recognized as a $3 ($2 after tax impacts) gain on sale of securities on the statement of income during the year. During 2013, PSB reclassified $12 ($7 after tax impacts) to reduce comprehensive net income following a gain on sale of securities available for sale. The reduction to comprehensive net income was recognized as a $12 ($7 after tax impacts) gain on sale of securities on the statement of income during the year.

During 2010, PSB transferred all of its municipal, trust preferred, and senior subordinated note securities from the available-for-sale classification to the held-to-maturity classification to better reflect its intent and practice to hold these long-term debt securities until maturity. Fair value of the securities was $54,130 at the time of the transfer, which included a $2,552 unrealized gain over the existing amortized cost basis. The original unrealized gain on the transfer date is being amortized against the new cost basis (equal to transfer date fair value) over the remaining life of the securities which is recorded as a reduction to other comprehensive income. Amortization of the unrealized gain reduced comprehensive income by $330 ($200 after tax impacts), $430 ($236 after tax impacts), and $452 ($274 after tax impacts) during the three years ended December 31, 2014.

Scheduled amortization at December 31, 2014, of the remaining unrealized gain is as follows:

2015	$	274
2016		194
2017		115
2018		68
2019		22
Thereafter		22
Total	$	695