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Note 6 - Investment Securities Available for Sale

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]

NOTE 6 - INVESTMENT SECURITIES AVAILABLE FOR SALE

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

		June 30, 2015
						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
(Dollar amounts in thousands)		Cost				Gains				Losses				Value

U.S. government agency securities		$	22,404			$	275			$	(457	)		$	22,222
Obligations of states and political subdivisions:
Taxable			1,991				129				-				2,120
Tax-exempt			101,595				2,652				(1,308	)			102,939
Mortgage-backed securities in government-sponsored entities			26,663				354				(335	)			26,682
Private-label mortgage-backed securities			2,500				215				-				2,715
Total debt securities			155,153				3,625				(2,100	)			156,678
Equity securities in financial institutions			750				149				-				899
Total		$	155,903			$	3,774			$	(2,100	)		$	157,577

		December 31, 2014
						Gross				Gross
		Amortized				Unrealized				Unrealized				Fair
		Cost				Gains				Losses				Value

U.S. government agency securities		$	23,035			$	311			$	(450	)		$	22,896
Obligations of states and political subdivisions:
Taxable			2,953				226				-				3,179
Tax-exempt			91,916				3,803				(553	)			95,166
Mortgage-backed securities in government-sponsored entities			29,150				475				(234	)			29,391
Private-label mortgage-backed securities			2,672				247				-				2,919
Total debt securities			149,726				5,062				(1,237	)			153,551
Equity securities in financial institutions			750				33				-				783
Total		$	150,476			$	5,095			$	(1,237	)		$	154,334

The amortized cost and fair value of debt securities at June 30, 2015, 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.

The following table provides investment maturity tranches as of June 30, 2015:

		Amortized				Fair
(Dollar amounts in thousands)		Cost				Value

Due in one year or less		$	2,121			$	2,185
Due after one year through five years			12,763				13,021
Due after five years through ten years			17,263				17,548
Due after ten years			123,006				123,924

Total		$	155,153			$	156,678

Proceeds from the sales of securities available for sale and the gross realized gains and losses for the six months ended June 30 are as follows:

		For the Three Months								For the Six Months
(Dollar amounts in thousands)		Ended June 30,								Ended June 30,
		2015				2014				2015				2014
Proceeds from sales		$	1,721			$	980			$	3,312			$	1,494
Gross realized gains			92				64				140				64
Gross realized losses			(70	)			-				(94	)			(6	)

Investment securities with an approximate carrying value of $57.5 million and $61.9 million at June 30, 2015 and December 31, 2014, respectively, were pledged to secure deposits and other purposes as required by law.

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.

		June 30, 2015
		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		$	2,745			$	(79	)		$	12,791			$	(378	)		$	15,536			$	(457	)
Obligations of states and political subdivisions			19,988				(457	)			11,586				(851	)			31,574				(1,308	)
Mortgage-backed securities in government-sponsored entities			9,410				(139	)			7,305				(196	)			16,715				(335	)
Total		$	32,143			$	(675	)		$	31,682			$	(1,425	)		$	63,825			$	(2,100	)

		December 31, 2014
		Less than Twelve Months								Twelve Months or Greater								Total
						Gross								Gross								Gross
		Fair				Unrealized				Fair				Unrealized				Fair				Unrealized
		Value				Losses				Value				Losses				Value				Losses

U.S. government agency securities		$	-			$	-			$	15,734			$	(450	)		$	15,734			$	(450	)
Obligations of states and political subdivisions			2,406				(10	)			18,232				(543	)			20,638				(553	)
Mortgage-backed securities in government-sponsored entities			-				-				16,774				(234	)			16,774				(234	)
Total		$	2,406			$	(10	)		$	50,740			$	(1,227	)		$	53,146			$	(1,237	)

There were 91 securities considered temporarily impaired at June 30, 2015.

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 Company assesses whether the unrealized loss is other than temporary.

OTTI losses are recognized in earnings when the Company has the intent to sell the debt security or it is more likely than not that it will be required to sell the debt security before recovery of its amortized cost basis. However, even if the Company does not expect to sell a debt security, it must evaluate expected cash flows to be received and determine if a credit loss has occurred.

An unrealized loss is generally deemed to be other than temporary and a credit loss is deemed to exist if the present value of the expected future cash flows is less than the amortized cost basis of the debt security. As a result the credit loss component of an OTTI is recorded as a component of investment securities gains (losses) in the accompanying Consolidated Statement of Income, while the remaining portion of the impairment loss is recognized in other comprehensive income, provided the Company does not intend to sell the underlying debt security and it is “more likely than not” that the Company will not have to sell the debt security prior to recovery.

Debt securities issued by U.S. government agencies, U.S. government-sponsored enterprises, and state and political subdivisions accounted for more than 98% of the total available-for-sale portfolio as of June 30, 2015 and no credit losses are expected, given the explicit and implicit guarantees provided by the U.S. federal government and the lack of prolonged unrealized loss positions within the obligations of state and political subdivisions security portfolio. The Company considers 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; and

	•		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.

For the six months ended June 30, 2015 and 2014, there were no available-for-sale debt securities with an unrealized loss that suffered OTTI. Management does not believe any individual unrealized loss as of June 30, 2015 or December 31, 2014 represented an other-than-temporary impairment. The unrealized losses on debt securities are primarily the result of interest rate changes. These conditions will not prohibit the Company from receiving its contractual principal and interest payments on these debt securities. The fair value of these debt securities is expected to recover as payments are received on these securities and they approach maturity. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

The entire disclosure for investments in certain debt and equity securities.

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