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Note 3 - Securities
 12 Months Ended
Dec. 31, 2015
Investments, Debt and Equity Securities [Abstract]  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 3 – SECURITIES


The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows:


   

Amortized

Cost

    

Gross

Unrealized

Gains

    

Gross

Unrealized

Losses

    

Fair

Value

  

2015

                                

U.S. Government agency debt obligations

   $ 146,660,000     $ 1,932,000     $ (1,552,000 )   $ 147,040,000  

Mortgage-backed securities

     66,670,000       708,000       (304,000 )     67,074,000  

Municipal general obligation bonds

     120,679,000       1,549,000       (205,000 )     122,023,000  

Municipal revenue bonds

     8,841,000       76,000       (3,000 )     8,914,000  

Other investments

     1,946,000       0       (5,000 )     1,941,000  
    $ 344,796,000     $ 4,265,000     $ (2,069,000 )   $ 346,992,000  

2014

                                

U.S. Government agency debt obligations

   $ 194,894,000     $ 1,612,000     $ (3,038,000 )   $ 193,468,000  

Mortgage-backed securities

     92,656,000       1,123,000       (218,000 )     93,561,000  

Municipal general obligation bonds

     132,347,000       1,042,000       (307,000 )     133,082,000  

Municipal revenue bonds

     10,769,000       117,000       (13,000 )     10,873,000  

Other investments

     1,925,000       3,000       0       1,928,000  
    $ 432,591,000     $ 3,897,000     $ (3,576,000 )   $ 432,912,000  

Securities with unrealized losses at year-end 2015 and 2014, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows:


   

Less than 12 Months

    

12 Months or More

    

Total

  
Description of Securities  

Fair

Value

    

Unrealized

Loss

    

Fair

Value

    

Unrealized

Loss

    

Fair

Value

   

Unrealized

Loss

  

2015

                                                

U.S. Government agency debt obligations

   $ 0     $ 0     $ 76,496,000     $ 1,552,000     $ 76,496,000     $ 1,552,000  

Mortgage-backed securities

     18,025,000       69,000       34,660,000       235,000       52,685,000       304,000  

Municipal general obligation bonds

     1,981,000       4,000       30,134,000       201,000       32,115,000       205,000  

Municipal revenue bonds

     0       0       1,134,000       3,000       1,134,000       3,000  

Other investments

     1,446,000       5,000       0       0       1,446,000       5,000  
    $ 21,452,000     $ 78,000     $ 142,424,000     $ 1,991,000     $ 163,876,000     $ 2,069,000  

2014

                                                

U.S. Government agency debt obligations

   $ 81,891,000     $ 202,000     $ 74,120,000     $ 2,836,000     $ 156,011,000     $ 3,038,000  

Mortgage-backed securities

     49,940,000       218,000       0       0       49,940,000       218,000  

Municipal general obligation bonds

     54,104,000       307,000       0       0       54,104,000       307,000  

Municipal revenue bonds

     4,644,000       13,000       0       0       4,644,000       13,000  

Other investments

     0       0       0       0       0       0  
    $ 190,579,000     $ 740,000     $ 74,120,000     $ 2,836,000     $ 264,699,000     $ 3,576,000  

We evaluate securities for other-than-temporary impairment at least on a quarterly basis. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability we have to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. For those debt securities whose fair value is less than their amortized cost basis, we also consider our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery and if we do not expect to recover the entire amortized cost basis of the security. In analyzing an issuer’s financial condition, we may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition.


At December 31, 2015, 250 debt securities and one mutual fund with fair values totaling $164 million had unrealized losses aggregating $2.1 million. After we considered whether the securities were issued by the federal government or its agencies and whether downgrades by bond rating agencies had occurred, we determined that unrealized losses were due to changing interest rate environments. As we do not intend to sell our debt securities before recovery of their cost basis and we believe it is more likely than not that we will not be required to sell our debt securities before recovery of the cost basis, no unrealized losses are deemed to be other-than-temporary.


The amortized cost and fair values of debt securities at December 31, 2015, by maturity, are shown in the following table. The contractual maturity is utilized for U.S. Government agency debt obligations and municipal bonds. 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. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately. Weighted average yields are also reflected, with yields for municipal securities shown at their tax equivalent yield.


   

Weighted Average Yield

    

Amortized

Cost

    

Fair

Value

  

Due in one year or less

     0.89%     $ 40,382,000     $ 40,399,000  

Due from one to five years

     1.67       110,364,000       110,552,000  

Due from five to ten years

     3.09       54,022,000       54,868,000  

Due after ten years

     3.55       71,412,000       72,158,000  

Mortgage-backed securities

     1.75       66,670,000       67,074,000  

Other investments

     2.51       1,946,000       1,941,000  
      2.22%     $ 344,796,000     $ 346,992,000  

During 2015, municipal general obligation bonds totaling $1.5 million were sold, resulting in a nominal net gain on sale. No securities were sold during 2014. During 2013, Michigan Strategic Fund bonds totaling $10.3 million were sold at par value.


Securities issued by the State of Michigan and all its political subdivisions had a combined amortized cost of $106 million and $113 million at December 31, 2015 and December 31, 2014, with estimated market values of $107 million and $114 million, respectively. Securities issued by all other states and their political subdivisions had a combined amortized cost of $24.0 million and $30.0 million at December 31, 2015 and December 31, 2014, with estimated market values of $24.1 million and $30.0 million, respectively. Total securities of any other specific issuer, other than the U.S. Government and its agencies and the State of Michigan and all its political subdivisions, did not exceed 10% of shareholders’ equity.


The carrying value of U.S. Government agency debt obligations and mortgage-backed securities that are pledged to secure repurchase agreements was $155 million and $168 million at December 31, 2015 and 2014, respectively. Investments in FHLBI stock are restricted and may only be resold to, or redeemed by, the issuer.