XML 84 R13.htm IDEA: XBRL DOCUMENT v2.4.0.8
Investment Securities
 9 Months Ended
Dec. 31, 2013
Notes  
Investment Securities

5.      INVESTMENT SECURITIES

 

The amortized cost and fair value of investment securities available for sale consisted of the following at the dates indicated (in thousands):

 

 

Amortized Cost

 

Gross Unrealized Gains

 

Gross Unrealized Losses

 

Estimated Fair Value

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

Trust preferred

$

1,919

 

$

2

 

$

-

 

$

1,921

Agency securities

 

18,447

 

 

-

 

 

(574

)

 

17,873

Total

$

20,366

 

$

2

 

$

(574

)

$

19,794

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2013

 

 

 

 

 

 

 

 

 

 

 

Trust preferred

$

2,766

 

$

-

 

$

(1,528

)

$

1,238

Agency securities

 

5,000

 

 

-

 

 

(22

)

 

4,978

Total

$

7,766

 

$

-

 

$

(1,550

)

$

6,216

 

The contractual maturities of investment securities available for sale at December 31, 2013 are as follows (in thousands):

 

 

December 31, 2013

 

Amortized

Cost

 

 

Estimated

Fair Value

 

 

 

 

 

 

Due in one year or less

$

-

 

$

-

Due after one year through five years

 

12,438

 

 

12,034

Due after five years through ten years

 

6,009

 

 

5,839

Due after ten years

 

1,919

 

 

1,921

Total

$

20,366

 

$

19,794

 

The fair value of temporarily impaired securities, the amount of unrealized losses and the length of time these unrealized losses existed are as follows at the dates indicated (in thousands):

 

 

Less than 12 months

 

  12 months or longer

 

  Total

 

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency securities

   $

17,873

   $

 

(574

)

   $

-

 

   $

-

 

   $

17,873

 

   $

(574

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trust preferred

   $

-

 

   $

-

 

   $

1,238

 

   $

(1,528

)

     $

1,238

 

   $

(1,528

)

Agency securities

 

4,978

 

 

(22

)   

 

-

 

 

-

 

 

4,978

 

 

(22

)

Total

   $

4,978

 

   $

(22

)

   $

1,238

 

   $

(1,528

)

     $

6,216

 

   $

(1,550

)

 

At December 31, 2013, the Company had a single collateralized debt obligation which is secured by trust preferred securities issued by 15 other holding companies. The Company holds the mezzanine tranche of this security. All tranches senior to the mezzanine tranche have been repaid by the issuers. Four of the issuers of trust preferred securities in this pool have defaulted (representing 51% of the remaining collateral, including excess collateral), and two other issuers are currently deferring interest payments (6% of the remaining collateral). The Company has estimated an expected default rate of 43% for its portion of this security. The expected default rate was estimated based primarily on an analysis of the financial condition of the underlying issuers. The Company estimates that a default rate of 58% would trigger additional other than temporary impairment (“OTTI”) of this security. The Company utilized a discount rate of 10% to estimate the fair value of this security. There was no excess subordination on this security.

 

During the three and nine months ended December 31, 2013, the Company determined that there was no additional OTTI charge on the above collateralized debt obligation. The Company does not intend to sell this security and it is not more likely than not that the Company will be required to sell the security before the anticipated recovery of the remaining amortized cost basis.

 

To determine the component of gross OTTI related to credit losses, the Company compared the amortized cost basis of the collateralized debt obligation to the present value of the revised expected cash flows, discounted using the current pre-impairment yield.  The revised expected cash flow estimates are based primarily on an analysis of default rates, prepayment speeds and third-party analytical reports.  Significant judgment of management is required in this analysis that includes, but is not limited to, assumptions regarding the ultimate collectibility of principal and interest on the underlying collateral.

 

The unrealized losses on the above agency securities were primarily attributable to increases in market interest rates subsequent to their purchase by the Company. The Company expects the fair value of the agency securities to recover as the agency securities approach their maturity dates or sooner if market yields for such securities decline. The Company does not believe that the agency securities are other than temporarily impaired because of their credit quality or related to any issuer or industry specific event. Based on management’s evaluation and intent, the unrealized losses related to the agency securities in this table are considered temporary.

 

The Company realized no gains or losses on sales of investment securities for the three and nine months ended December 31, 2013 and 2012. Investment securities with an amortized cost of $1.0 million at December 31, 2013 and March 31, 2013 and a fair value of $971,000 and $996,000 at December 31, 2013 and March 31, 2013, respectively, were pledged as collateral for government public funds held by the Bank.