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Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]
 9 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
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:

 

     September 30, 2016  
(Dollar amounts in thousands)    Amortized
Cost		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		      Fair Value  

U.S. government agency securities

    $ 10,516       $ 359       $ (12 )     $ 10,863   

Obligations of states and political subdivisions:

            

Taxable

      1,616         186         —           1,802   

Tax-exempt

      81,829         3,899         (5 )       85,723   

Mortgage-backed securities in government-sponsored entities

      20,939         485         (44 )       21,380   

Private-label mortgage-backed securities

      1,927         141         —           2,068   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total debt securities

      116,827         5,070         (61 )       121,836   

Equity securities in financial institutions

      750         468         —           1,218   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 117,577       $ 5,538       $ (61 )     $ 123,054   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

     December 31, 2015  
     Amortized
Cost		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		      Fair Value  

U.S. government agency securities

    $ 21,655       $ 245       $ (271 )     $ 21,629   

Obligations of states and political subdivisions:

            

Taxable

      1,989         134         —           2,123   

Tax-exempt

      91,940         3,402         (175 )       95,167   

Mortgage-backed securities in government-sponsored entities

      24,480         316         (272 )       24,524   

Private-label mortgage-backed securities

      2,079         184         —           2,263   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total debt securities

      142,143         4,281         (718 )       145,706   

Equity securities in financial institutions

      750         64         —           814   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total

    $ 142,893       $ 4,345       $ (718 )     $ 146,520   
  

 

 

     

 

 

     

 

 

     

 

 

  

The amortized cost and fair value of debt securities at September 30, 2016, 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.

 

(Dollar amounts in thousands)    Amortized
Cost		      Fair
Value		  

Due in one year or less

    $ 2,842       $ 2,879   

Due after one year through five years

      9,132         9,500   

Due after five years through ten years

      12,916         13,510   

Due after ten years

      91,937         95,947   
  

 

 

     

 

 

  

Total

    $ 116,827       $ 121,836   
  

 

 

     

 

 

  

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

 

     For the Three Months
Ended September 30,		      For the Nine Months Ended
September 30,		  
(Dollar amounts in thousands)        2016              2015              2016              2015      

Proceeds from sales

    $ —         $ 11,973       $ 9,115       $ 15,284   

Gross realized gains

      —           233         306         373   

Gross realized losses

      —           (22 )       (3 )       (116 ) 

Investment securities with an approximate carrying value of $64.7 million and $68.8 million at September 30, 2016 and December 31, 2015, 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.

 

     September 30, 2016  
     Less than
Twelve Months		      Twelve Months
or Greater		     Total  
(Dollar amounts in thousands)    Fair
Value		      Gross
Unrealized
Losses		      Fair
Value		      Gross
Unrealized
Losses		     Fair
Value		      Gross
Unrealized
Losses		  

U.S. government agency securities

    $ 2,000       $ —         $ 1,465       $ (12 )    $ 3,465       $ (12 ) 

Obligations of states and political subdivisions

                 

Tax-exempt

      608         —           —           (5 )      608         (5 ) 

Mortgage-backed securities in government-sponsored entities

      —           —           4,709         (44 )      4,709         (44 ) 

Private-label mortgage-backed securities

      75         —           —           —          75         —     
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

Total

    $ 2,683       $ —         $ 6,174       $ (61 )    $ 8,857       $ (61 ) 
  

 

 

     

 

 

     

 

 

     

 

 

    

 

 

     

 

 

  

 

     December 31, 2015  
     Less than
Twelve Months		     Twelve Months
or Greater		     Total  
     Fair
Value		      Gross
Unrealized
Losses		     Fair
Value		      Gross
Unrealized
Losses		     Fair
Value		      Gross
Unrealized
Losses		  

U.S. government agency securities

    $ 3,818       $ (57 )    $ 10,872       $ (214 )    $ 14,690       $ (271 ) 

Obligations of states and political subdivisions

                

Tax-exempt

      1,268         (9 )      9,394         (166 )      10,662         (175 ) 

Mortgage-backed securities in government-sponsored entities

      8,725         (86 )      6,685         (186 )      15,410         (272 ) 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  

Total

    $ 13,811       $ (152 )    $ 26,951       $ (566 )    $ 40,762       $ (718 ) 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  

There were 9 securities considered temporarily impaired at September 30, 2016.

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 97% of the total available-for-sale portfolio as of September 30, 2016 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 nine months ended September 30, 2016 and 2015, 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 September 30, 2016 or December 31, 2015 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.

3. INVESTMENT SECURITIES AVAILABLE FOR SALE

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

 

     December 31, 2015  
(Dollar amounts in thousands)    Amortized
Cost		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		     Fair Value  

U.S. government agency securities

    $ 21,655       $ 245       $ (271 )    $ 21,629   

Obligations of states and political subdivisions:

           

Taxable

      1,989         134         —          2,123   

Tax-exempt

      91,940         3,402         (175 )      95,167   

Mortgage-backed securities in government-sponsored entities

      24,480         316         (272 )      24,524   

Private-label mortgage-backed securities

      2,079         184         —          2,263   
  

 

 

     

 

 

     

 

 

    

 

 

  

Total debt securities

      142,143         4,281         (718 )      145,706   

Equity securities in financial institutions

      750         64         —          814   
  

 

 

     

 

 

     

 

 

    

 

 

  

Total

    $ 142,893       $ 4,345       $ (718 )    $ 146,520   
  

 

 

     

 

 

     

 

 

    

 

 

  

 

     December 31, 2014  
(Dollar amounts in thousands)    Amortized
Cost		      Gross
Unrealized
Gains		      Gross
Unrealized
Losses		     Fair 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 December 31, 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.

 

(Dollar amounts in thousands)    Amortized
Cost		      Fair Value  

Due in one year or less

    $ 1,135       $ 1,153   

Due after one year through five years

      10,790         10,890   

Due after five years through ten years

      19,172         19,830   

Due after ten years

      111,042         113,833   
  

 

 

     

 

 

  

Total

    $ 142,139       $ 145,706   
  

 

 

     

 

 

  

Investment securities with an approximate carrying value of $68.8 million and $61.9 million at December 31, 2015 and 2014, 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 years ended December, 31 are as follows (in thousands):

 

    

 

  
     2015      2014      2013  

Proceeds from sales

    $ 15,686       $ 8,383       $ 25,088   

Gross realized gains

      440         306         186   

Gross realized losses

      (117 )       (58 )       (175 ) 

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, 2015  
     Less than Twelve
Months		     Twelve Months or
Greater		     Total  
(Dollar amounts in thousands)    Fair
Value		      Gross
Unrealized
Losses		     Fair
Value		      Gross
Unrealized
Losses		     Fair
Value		      Gross
Unrealized
Losses		  

U.S. government agency securities

    $ 3,818       $ (57 )    $ 10,872       $ (214 )    $ 14,690       $ (271 ) 

Obligations of states and political subdivisions

                

Tax-exempt

      1,268         (9 )      9,394         (166 )      10,662         (175 ) 

Mortgage-backed securities in government-sponsored entities

      8,725         (86 )      6,685         (186 )      15,410         (272 ) 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  

Total

    $ 13,811       $ (152 )    $ 26,951       $ (566 )    $ 40,762       $ (718 ) 
  

 

 

     

 

 

    

 

 

     

 

 

    

 

 

     

 

 

  

 

     December 31, 2014  
     Less than Twelve
Months		     Twelve Months or
Greater		     Total  
(Dollar amounts in thousands)    Fair
Value		      Gross
Unrealized
Losses		     Fair
Value		      Gross
Unrealized
Losses		     Fair
Value		      Gross
Unrealized
Losses		  

U.S. government agency securities

    $ —         $ —        $ 15,734       $ (450 )    $ 15,734       $ (450 ) 

Obligations of states and political subdivisions

                

Tax-exempt

      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 46 securities that were considered temporarily impaired at December 31, 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 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, 2015 and 2014, 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 non-collection 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 97.9% of the total available-for-sale portfolio as of December 31, 2015, 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 evaluates credit losses on a quarterly basis. 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.