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Note 4 - Investment Securities
 12 Months Ended
Dec. 31, 2017
Notes to Financial Statements  
Investments in Debt and Equity Instruments, Cash and Cash Equivalents, Unrealized and Realized Gains (Losses) [Text Block]
(
4
)
          INVESTMENT SECURITIES
 
Investment securities have been classified in the consolidated balance sheets according to management’s intent. Investment securities at
December 31, 2017
and
2016
are summarized as follows:
 
 
 
 
Gross
 
Gross
 
 
 
 
Amortized
 
Unrealized
 
Unrealized
 
Fair
(In thousands)
 
Cost
 
Gains
 
Losses
 
Value
 
 
 
 
 
 
 
 
 
December 31, 2017:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed securities
 
$
114,902
 
 
$
-
 
 
$
2,253
 
 
$
112,649
 
Agency CMO
 
 
15,660
 
 
 
1
 
 
 
338
 
 
 
15,323
 
Other debt securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency notes and bonds
 
 
70,013
 
 
 
-
 
 
 
985
 
 
 
69,028
 
Municipal obligations
 
 
73,303
 
 
 
1,274
 
 
 
405
 
 
 
74,172
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total securities available for sale
 
$
273,878
 
 
$
1,275
 
 
$
3,981
 
 
$
271,172
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities held to maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed securities
 
$
1
 
 
$
-
 
 
$
-
 
 
$
1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total securities held to maturity
 
$
1
 
 
$
-
 
 
$
-
 
 
$
1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2016:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities available for sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed securities
 
$
110,493
 
 
$
93
 
 
$
2,349
 
 
$
108,237
 
Agency CMO
 
 
16,293
 
 
 
23
 
 
 
288
 
 
 
16,028
 
Other debt securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency notes and bonds
 
 
69,407
 
 
 
14
 
 
 
759
 
 
 
68,662
 
Municipal obligations
 
 
63,189
 
 
 
783
 
 
 
1,129
 
 
 
62,843
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total securities available for sale
 
$
259,382
 
 
$
913
 
 
$
4,525
 
 
$
255,770
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Securities held to maturity:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agency mortgage-backed securities
 
$
2
 
 
$
-
 
 
$
-
 
 
$
2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total securities held to maturity
 
$
2
 
 
$
-
 
 
$
-
 
 
$
2
 
 
The amortized cost and fair value of debt securities as of
December 31, 2017,
by contractual maturity, are shown below. Expected maturities of mortgage-backed securities and CMO
may
differ from contractual maturities because the mortgages underlying the obligations
may
be prepaid without penalty.
 
    Securities Available for Sale   Securities Held to Maturity
    Amortized   Fair   Amortized   Fair
    Cost   Value   Cost   Value
(In thousands)                
                 
Due in one year or less   $
2,642
     $
2,636
     $
-
     $
-
  
Due after one year through five years    
77,309
      
76,343
      
-
      
-
  
Due after five years through ten years    
29,553
      
29,611
      
-
      
-
  
Due after ten years    
33,812
      
34,610
      
-
      
-
  
     
143,316
      
143,200
      
-
      
-
  
Mortgage-backed securities and CMO    
130,562
      
127,972
      
1
      
1
  
                                 
    $
273,878
     $
271,172
     $
1
     $
1
  
 
At
December 31, 2017,
certain securities available for sale with an amortized cost of
$47.7
million and fair value of
$47.6
million were pledged to secure public fund deposits.
 
At
December 31, 2017
and
2016,
there were
no
holdings of securities of any
one
issuer, other than the U.S. Government and its agencies, with an aggregate book value greater that
10%
of stockholders’ equity.
 
Information pertaining to investment securities with gross unrealized losses at
December 31, 2017
and
2016,
aggregated by investment category and the length of time that individual investment securities have been in a continuous loss position, follows. At
December 31, 2017
and
2016,
the Company did
not
have any securities held to maturity with an unrealized loss.
 
    Number of     Gross
    Investment   Fair   Unrealized
(Dollars in thousands)  
Positions
  
Value
  
Losses
             
December 31, 2017:
                        
Continuous loss position less than twelve months:                        
Agency mortgage-backed securities    
37
 
   $
37,570
 
   $
400
 
Agency CMO    
6
 
    
3,036
 
    
38
 
Agency notes and bonds    
4
 
    
11,119
 
    
69
 
Municipal obligations    
20
 
    
10,955
 
    
83
 
                         
Total less than twelve months    
67
 
    
62,680
 
    
590
 
                         
Continuous loss position more than twelve months:                        
Agency mortgage-backed securities    
60
 
    
74,960
 
    
1,853
 
Agency CMO    
18
 
    
11,801
 
    
300
 
Agency notes and bonds    
19
 
    
57,909
 
    
916
 
Municipal obligations    
29
 
    
14,667
 
    
322
 
                         
Total more than twelve months    
126
 
    
159,337
 
    
3,391
 
                         
Total securities available for sale    
193
 
   $
222,017
 
   $
3,981
 
 
    Number of     Gross
    Investment   Fair   Unrealized
(Dollars in thousands)  
Positions
  
Value
  
Losses
             
December 31, 2016:
                        
Continuous loss position less than twelve months:                        
Agency mortgage-backed securities    
78
 
   $
101,838
 
   $
2,336
 
Agency CMO    
13
 
    
11,767
 
    
239
 
Agency notes and bonds    
20
 
    
59,126
 
    
759
 
Municipal obligations    
54
 
    
28,414
 
    
1,129
 
                         
Total less than twelve months    
165
 
    
201,145
 
    
4,463
 
                         
Continuous loss position more than twelve months:                        
Agency mortgage-backed securities    
1
 
    
531
 
    
13
 
Agency CMO    
5
 
    
2,502
 
    
49
 
                         
Total more than twelve months    
6
 
    
3,033
 
    
62
 
                         
Total securities available for sale    
171
 
   $
204,178
 
   $
4,525
 
 
Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (
1
) the length of time and the extent to which the fair value has been less than cost, (
2
) the financial condition and near-term prospects of the issuer, and (
3
) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.
 
At
December 31, 2017,
the municipal obligations and U.S. government agency debt securities, including agency mortgage-backed securities, agency CMOs, and agency notes and bonds, in a loss position had depreciated approximately
1.8%
from the amortized cost basis. All of the U.S. government agency securities and municipal securities are issued by U.S. government agencies, government-sponsored enterprises, or municipal governments, and are secured by
first
mortgage loans or municipal project revenues. These unrealized losses related principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As the Company has the ability to hold the U.S. government agency debt securities and municipal securities in an unrealized loss position until maturity,
no
declines are deemed to be other-than-temporary.
 
While management does
not
anticipate any credit-related impairment losses at
December 31, 2017,
additional deterioration in market and economic conditions
may
have an adverse impact on the credit quality in the future.
 
During the year ended
December 31, 2017,
the Company realized gross gains of
$61,000
and gross losses of
$7,000
on the sale of available for sale securities. During the year ended
December 31, 2016,
the Company realized gross gains of
$176,000
and gross losses of
$0
on the sale of available for sale securities. During the year ended
December 31, 2015,
the Company realized
no
gains or losses on the sale of securities. Securities acquired from Peoples with a fair value of
$45.4
million were sold within a short period of time following the merger, resulting in
no
gain or loss for financial reporting purposes.
 
At
December 31, 2015,
the Company held
131,750
shares of common stock in another financial institution, representing approximately
9%
of the outstanding common stock of the entity, for a total investment of
$711,000.
The investment was accounted for using the cost method of accounting and was included in other assets in the consolidated balance sheet. The Company’s investment was sold for
$856,000
in
July 2016,
resulting in a gain of
$145,000
which is included in other income in the consolidated statement of income.