XML 73 R12.htm IDEA: XBRL DOCUMENT v2.4.1.9
Note 4 - Debt and Equity Securities
 3 Months Ended
Mar. 31, 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 or securities held-to-maturity during the three months ended March 31, 2015 and December 31, 2014. Securities available for sale are recorded at fair value.

The following table summarizes the Company’s portfolio of securities available for sale at March 31, 2015:

   
Amortized
Cost
   
Fair Value
   
Gross
Unrealized
Gains
   
Gross
Unrealized
Losses
 
   
(In thousands)
 
Corporate
  $ 95,785     $ 95,750     $ 939     $ 974  
Municipals
    144,152       148,377       4,258       33  
Mutual funds
    21,278       21,278       -       -  
Other
    24,550       24,550       2       2  
Total other securities
    285,765       289,955       5,199       1,009  
REMIC and CMO
    514,592       521,312       8,857       2,137  
GNMA
    13,359       13,733       455       81  
FNMA
    166,451       168,556       2,786       681  
FHLMC
    13,912       14,128       216       -  
Total mortgage-backed securities
    708,314       717,729       12,314       2,899  
Total securities available for sale
  $ 994,079     $ 1,007,684     $ 17,513     $ 3,908  

 Mortgage-backed securities shown in the table above include three private issue collateralized mortgage obligations (“CMOs”) that are collateralized by commercial real estate mortgages with amortized cost and market value of $12.4 million at March 31, 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 the individual securities had been in a continuous unrealized loss position at March 31, 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
  $ 49,026     $ 974     $ 19,389     $ 611     $ 29,637     $ 363  
Municipals
    5,268       33       5,268       33       -       -  
Other
    298       2       -       -       298       2  
Total other securities
    54,592       1,009       24,657       644       29,935       365  
REMIC and CMO
    158,838       2,137       55,749       134       103,089       2,003  
GNMA
    8,099       81       8,099       81       -       -  
FNMA
    62,834       681       29,897       179       32,937       502  
Total mortgage-backed securities
    229,771       2,899       93,745       394       136,026       2,505  
Total securities available for sale
  $ 284,363     $ 3,908     $ 118,402     $ 1,038     $ 165,961     $ 2,870  

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 March 31, 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 March 31, 2015 consist of losses on six 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 March 31, 2015.

Municipal Securities:

The unrealized losses in Municipal securities at March 31, 2015, consist of losses on two 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 March 31, 2015.

Other Securities:

The unrealized losses in Other Securities at March 31, 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 March 31, 2015.

REMIC and CMO:

The unrealized losses in Real Estate Mortgage Investment Conduit (“REMIC”) and CMO securities at March 31, 2015 consist of six issues from the Federal Home Loan Mortgage Corporation (“FHLMC”), 10 issues from the Federal National Mortgage Association (“FNMA”), six issues from Government National Mortgage Association (“GNMA”) and one private issue CMO collateralized by commercial real estate mortgages.

The unrealized losses on the REMIC and CMO securities issued by FHLMC, FNMA, GNMA and the one private issue 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 March 31, 2015.

GNMA:

The unrealized losses in GNMA securities at March 31, 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 March 31, 2015.

FNMA:

The unrealized losses in FNMA securities at March 31, 2015 consist of losses on nine 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 March 31, 2015.

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
March 31,
 
   
2015
   
2014
 
   
(In thousands)
 
Beginning balance
  $ -     $ 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  

The following table details the amortized cost and estimated fair value of the Company’s securities classified as available for sale at March 31, 2015, by contractual maturity. 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
Cost
   
Fair Value
 
   
(In thousands)
 
             
Due in one year or less
  $ 37,469     $ 37,706  
Due after one year through five years
    26,104       26,768  
Due after five years through ten years
    79,662       79,130  
Due after ten years
    142,530       146,351  
Total other securities
    285,765       289,955  
Mortgage-backed securities
    708,314       717,729  
Total securities available for sale
  $ 994,079     $ 1,007,684  

We did not sell any securities during the three months ended March 31, 2015 and 2014.

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)
 
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 market value of $12.4 million at December 31, 2014.

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 have 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