XML 90 R11.htm IDEA: XBRL DOCUMENT v2.4.0.8
Note 3 - Investment Securities Available For Sale
 12 Months Ended
Dec. 31, 2013
Investments, Debt and Equity Securities [Abstract]  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

3.

INVESTMENT SECURITIES AVAILABLE FOR SALE


The amortized cost and fair values of securities available for sale are as follows:  


   

December 31, 2013

 
           

Gross

   

Gross

         
   

Amortized

   

Unrealized

   

Unrealized

   

Fair

 

(Dollar amounts in thousands)

 

Cost

   

Gains

   

Losses

   

Value

 
                                 

U.S. government agency securities

  $ 27,289     $ 135       (1,661 )   $ 25,763  

Obligations of states and political subdivisions:

                               

Taxable

    3,787       46       (38 )     3,795  

Tax-exempt

    86,524       1,562       (3,267 )     84,819  

Mortgage-backed securities in government-sponsored entities

    38,816       535       (1,028 )     38,323  

Private-label mortgage-backed securities

    3,366       327       -       3,693  

Total debt securities

    159,782       2,605       (5,994 )     156,393  

Equity securities in financial institutions

    750       -       -       750  

Total

  $ 160,532     $ 2,605     $ (5,994 )   $ 157,143  

   

December 31, 2012

 
           

Gross

   

Gross

         
   

Amortized

   

Unrealized

   

Unrealized

   

Fair

 

(Dollar amounts in thousands)

 

Cost

   

Gains

   

Losses

   

Value

 
                                 

U.S. government agency securities

  $ 24,485     $ 566       (91 )   $ 24,960  

Obligations of states and political subdivisions:

                               

Taxable

    6,888       738       -       7,626  

Tax-exempt

    80,391       4,683       (104 )     84,970  

Mortgage-backed securities in government-sponsored entities

    69,238       1,929       (65 )     71,102  

Private-label mortgage-backed securities

    4,553       511       -       5,064  

Total debt securities

    185,555       8,427       (260 )     193,722  

Equity securities in financial institutions

    750       -       -       750  

Total

  $ 186,305     $ 8,427     $ (260 )   $ 194,472  

The amortized cost and fair value of debt securities at December 31, 2013, 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

  $ 1,530     $ 1,552  

Due after one year through five years

    4,640       4,858  

Due after five years through ten years

    22,433       22,257  

Due after ten years

    131,179       127,726  
                 

Total

  $ 159,782     $ 156,393  

Investment securities with an approximate carrying value of $66.3 million and $62,5 million at December 31, 2013 and 2012, 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 three years ended December, 31 are as follows (in thousands):


   

2013

   

2012

   

2011

 

Proceeds from sales

  $ 25,088       32,985       24,127  

Gross realized gains

    186       704       830  

Gross realized losses

    (175 )     (94 )     (809 )

Impairment losses

    -       -       (194 )

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, 2013

 
   

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

  $ 13,130     $ (929 )   $ 7,166     $ (732 )   $ 20,295     $ (1,661 )

Obligations of states and political subdivisions

                                               

Taxable

    1,301       (38 )     -       -       1,301       (38 )

Tax-exempt

    26,743       (2,883 )     2,678       (383 )     29,421       (3,267 )

Mortgage-backed securities in government-sponsored entities

    18,082       (757 )     5,248       (271 )     23,330       (1,028 )

Total

  $ 59,255     $ (4,608 )   $ 15,092     $ (1,386 )   $ 74,347     $ (5,994 )

   

December 31, 2012

 
   

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

  $ 9,938     $ (91 )   $ -     $ -     $ 9,938     $ (91 )

Obligations of states and political subdivisions

    9,240       (104 )     -       -       9,240       (104 )

Mortgage-backed securities in government-sponsored entities

    12,353       (65 )     -       -       12,353       (65 )

Total

  $ 31,531     $ (260 )   $ -     $ -     $ 31,531     $ (260 )

There were 98 securities that were considered temporarily impaired at December 31, 2013.


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, 2013 and 2012, 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 noncollection 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 97.2% of the total available-for-sale portfolio as of December 31, 2013, 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’s assessment was concentrated mainly on private-label collateralized mortgage obligations of approximately $3.4 million, for which the Company evaluates credit losses on a quarterly basis. Gross unrealized gains related to private-label collateralized mortgage obligations amounted to $327,000, with no associated gross unrealized loss. 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.


The Company determined equity securities in financial institutions to be other than temporarily impaired and recognized a loss of $194,000 in 2011. This amount represents a before-tax, non-cash charge, and was recorded as a reduction to noninterest income.


The Company’s investment in one private-label collateralized mortgage obligation with a carrying value of $899,000 was impaired in 2011 as a result of the Company’s determination that declines in their fair value were other than temporary. As a result of this determination, the Company recognized a $35,000 before-tax, non-cash charge, which was recorded as a reduction to noninterest income.