Note 5 - Investment Securities Available for Sale

12 Months Ended

Dec. 31, 2013

Investment Holdings [Abstract]

Investment Holdings [Text Block]

5.       INVESTMENT SECURITIES AVAILABLE FOR SALE

Investment securities available for sale consisted of the following at December 31 (in thousands):

	2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Municipal securities	$	42,203	$	199	$	(478	)	$	41,924
Mortgage-backed securities		29,092		11		(199	)		28,904
Total	$	71,295	$	210	$	(677	)	$	70,828

	2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Municipal securities	$	44,562	$	849	$	(18	)	$	45,393
Corporate debt securities		8,000		--		(68	)		7,932
Total	$	52,562	$	849	$	(86	)	$	53,325

The following tables summarize the gross unrealized losses and fair value of the Company's investments with unrealized losses that are not deemed to be other-than-temporarily impaired (“OTTI”), aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31 (in thousands):

	2013
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Municipal securities	$	17,851	$	424	$	945	$	54	$	18,796	$	478
Mortgage-backed securities		27,004		199		--		--		27,004		199
Total	$	44,855	$	623	$	945	$	54	$	45,800	$	677

	2012
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Municipal securities	$	4,033	$	18	$	--	$	--	$	4,033	$	18
Corporate debt securities		3,980		20		3,952		48		7,932		68
Total	$	8,013	$	38	$	3,952	$	48	$	11,965	$	86

On a quarterly basis, management conducts a formal review of securities for the presence of OTTI.  Management assesses whether an OTTI is present when the fair value of a security is less than its amortized cost basis at the balance sheet date.  For such securities, OTTI is considered to have occurred if the Company intends to sell the security, if it is more likely than not the Company will be required to sell the security before recovery of its amortized cost basis or if the present values of expected cash flows is not sufficient to recover the entire amortized cost.

The unrealized losses are primarily a result of increases in market yields from the time of purchase.  In general, as market yields rise, the fair value of securities will decrease; as market yields fall, the fair value of securities will increase. Management generally views changes in fair value caused by changes in interest rates as temporary; therefore, these securities have not been classified as other-than-temporarily impaired.  Additionally, the unrealized losses are also considered temporary because scheduled coupon payments have been made, it is anticipated that the entire principal balance will be collected as scheduled, and management neither intends to sell the securities and nor is it more likely than not that the Company will be required to sell the securities before the recovery of the remaining amortized cost amount.

The Company has pledged investment securities with carrying values of approximately $398,000 and $1.6 million at December 31, 2013 and 2012, respectively, as collateral for certain deposits in excess of $250,000. In addition, at December 31, 2012, investment securities with a total carrying value of approximately $7.9 million were held at the FRB to be available to pledge as collateral for the primary discount window. No investment securities were held by the FRB at December 31, 2013 and no FRB borrowings were outstanding at December 31, 2013 or 2012.

The following table sets forth the amount (dollars in thousands) of investment securities available for sale that contractually mature during each of the periods indicated and the weighted average yields for each range of maturities at December 31, 2013. Weighted average yields for municipal obligations have not been adjusted to a tax-equivalent basis. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay the obligation without prepayment penalties.

	December 31, 2013
	Amortized Cost		Fair Value		Weighted Average Yield
Within one year	$	1,513	$	1,520		2.71%
Due from one year to five years		13,149		13,183		2.20%
Due from five years to ten years		18,107		17,938		2.77%
Due after ten years		9,434		9,283		3.43%
		42,203		41,924		2.74%
Mortgage-backed securities		29,092		28,904		3.04%
Total	$	71,295	$	70,828		2.86%

As of December 31, 2013 and 2012, investment securities with an amortized cost totaling approximately $34.4 million and $36.8 million, respectively, have call options held by the issuer, of which approximately $13.0 million and $9.2 million, respectively, are or were callable within one year.

Information regarding sales of the Company’s investment securities available for sale for the years ended December 31 is summarized below (in thousands):

	2013			2012
Sales proceeds	$	12,169		$	5,387
Gross realized gains	$	47		$	542
Gross realized losses		(22	)		--
Net gains on sales of investment securities	$	25		$	542