Note 4 - Investment Securities

3 Months Ended

Mar. 31, 2015

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

4. Investment Securities. The following is a summary of the securities portfolio by major category. The amortized cost and fair value of each category, with gross unrealized gains and losses at March 31, 2015 and December 31, 2014 are summarized as follows:

	March 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Securities available for sale:	Cost		Gains		Losses		Value
	(In thousands)
Government agencies	$	30,896	$	763	$	-	$	31,659
Mortgage-backed securities		151,504		4,626		41		156,089
Municipal securities		53,879		2,063		21		55,921
Corporate bonds		28,881		54		121		28,814
Total	$	265,160	$	7,506	$	183	$	272,483

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Securities available for sale:	Cost		Gains		Losses		Value
	(In thousands)
Government agencies	$	30,911	$	397	$	76	$	31,232
Mortgage-backed securities		170,443		4,384		547		174,280
Municipal securities		54,014		1,797		109		55,702
Corporate bonds		31,411		36		362		31,085
Total	$	286,779	$	6,614	$	1,094	$	292,299

	March 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Securities held to maturity:	Cost		Gains		Losses		Value
	(In thousands)
Government agencies	$	508	$	6	$	-	$	514

	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Securities held to maturity:	Cost		Gains		Losses		Value
	(In thousands)
Government agencies	$	507	$	5	$	-	$	512

The following table summarizes investment securities gross unrealized losses, fair value and length of time the securities were in a continuous unrealized loss position at March 31, 2015 and December 31, 2014. The Company deems these unrealized losses to be temporary and recoverable prior to or at maturity. The Company has the ability and intent to hold the investment securities for a reasonable period of time sufficient for a market price recovery or until maturity.

	March 31, 2015
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
Mortgage-backed securities	$	17,427	$	20	$	2,975	$	21	$	20,402	$	41
Municipal securities		4,253		21		-		-		4,253		21
Corporate bonds		11,307		29		5,908		92		17,215		121
Total	$	32,987	$	70	$	8,883	$	113	$	41,870	$	183

	December 31, 2014
	Less Than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(In thousands)
Government agencies	$	11,790	$	76	$	-	$	-	$	11,790	$	76
Mortgage-backed securities		61,106		527		3,093		20		64,109		547
Municipal securities		5,469		99		904		10		6,373		109
Corporate bonds		21,670		256		3,894		106		25,564		362
Total	$	100,035	$	958	$	7,891	$	136	$	107,926	$	1,094

The following table summarizes the amortized cost and fair values of the investment securities portfolio at March 31, 2015, by contractual maturity. 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.

	Less Than One Year		One to Five Years		Five to Ten Years		Over Ten Years
Securities available for sale:	(In thousands)
Government agencies
Amortized cost	$	-	$	7,614	$	23,282	$	-
Fair value		-		7,710		23,949		-
Mortgage-backed securities
Amortized cost		-		75,592		53,959		21,953
Fair value		-		77,428		55,009		23,652
Municipal securities
Amortized cost		1,945		24,240		23,969		3,725
Fair value		1,965		24,947		25,142		3,867
Corporate bonds
Amortized cost		-		15,383		13,498		-
Fair value		-		15,385		13,429		-
Total Amortized cost	$	1,945	$	122,829	$	114,708	$	25,678
Total Fair value	$	1,965	$	125,470	$	117,529	$	27,519

	Less Than One Year		One to Five Years		Five to Ten Years		Over Ten Years
Securities held to maturity:	(In thousands)
Government agencies
Amortized cost	$	-	$	508	$	-	$	-
Fair value		-		514		-		-
Total Amortized cost	$	-	$	508	$	-	$	-
Total Fair value	$	-	$	514	$	-	$	-

FHLB agency bonds with an amortized cost of $9.4 million and $9.7 million were pledged as collateral for public deposits at March 31, 2015 and December 31, 2014, respectively. In addition, a government agency bond with an amortized cost of $508,000 and $507,000 was pledged as collateral on a forward starting interest rate swap transaction at March 31, 2015 and December 31, 2014, respectively.

At March 31, 2015, the investment securities portfolio included 58 taxable and tax-exempt debt instruments issued by various U.S. states, counties, cities, municipalities and school districts. The following table is a summary, by U.S. state, of the Company’s investment in the obligations of state and political subdivisions:

	Amortized Cost		Fair Value
Obligations of state and political subdivisions:	(dollars in thousands)
General obligation bonds:
Texas	$	11,252	$	11,880
Pennsylvania		6,492		6,597
California		3,563		3,640
North Carolina		2,993		3,061
New York		2,579		2,669
South Carolina		2,295		2,371
Other (9 states)		10,742		11,124
Total general obligation bonds		39,916		41,342
Revenue bonds:
North Carolina		4,964		5,220
New York		2,796		2,865
Texas		2,766		2,854
Pennsylvania		1,774		1,871
Florida		1,663		1,768
Total revenue bonds		13,963		14,578
Total obligations of state and political subdivisions	$	53,879	$	55,920

The largest exposure in general obligation bonds was one bond issued by Ambridge Area School District, Pennsylvania, with a total amortized cost basis of $2.4 million and total fair value of $2.4 million at March 31, 2015. Of this total, $2.4 million in amortized cost and $2.4 million in fair value are guaranteed by an insurance policy issued by Assured Guaranty Municipal Corp.

The following table is a summary of the revenue sources related to the Company’s investment in revenue bonds:

	March 31, 2015
	Amortized Cost		Fair Value
Revenue bonds by revenue source:		(dollars in thousands)
Refunding bonds	$	4,483	$	4,738
University and college		2,766		2,854
Public improvements		2,177		2,266
Pension funding		1,774		1,871
Other		2,763		2,849
Total revenue bonds	$	13,963	$	14,578

The largest single exposure in revenue bonds is an issue from the Philadelphia Authority for Industrial Development in Pennsylvania. The debt is to be repaid by the City of Philadelphia from revenues of pledged assets held and their taxes received. As of March 31, 2015, this issue had an amortized cost of $1.8 million and fair value of $1.9 million.

Prior to purchasing any security, the Bank ensures that the security is “investment grade”. For a security to be investment grade it must: (1) have a low risk of default by the obligor, and (2) expect the full and timely repayment of principal and interest over the expected life. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), certain investments are deemed investment grade. These include: U.S. Treasury securities, Federal Agency securities, Revenue Bonds, and Unlimited-Tax General Obligation Municipals. Other securities undergo a pre-purchase analysis to ensure they are investment grade. To determine if a security is investment grade, if available, management utilizes the ratings of the Nationally Recognized Statistical Rating Organizations (NRSRO). However, they are not the sole basis of determining if a security is investment grade. In addition, on a pre-purchase basis, at least one of the following items pertaining to the obligor is acquired and reviewed as part of the Bank’s internal credit analysis: data from debt offerings (prospectus/offering circular); data from regulatory filings (10-Q, 10-K, 8-K); data available from the obligor’s website (annual reports, press releases); data obtained from a third party (i.e. bond broker, analyst); NRSRO report on the initial offering and/or subsequent reviews of the issuer; or other pertinent available financial information. There have been no instances where the NRSRO’s credit rating has significantly differed from that of the Bank’s credit analysis.

In addition to the pre-purchase analysis preformed on securities acquired, we preform going monitoring of our corporate and municipal bond holdings. This monitoring includes staying abreast of material events that may impact the Bank’s ability to be repaid all principal and interest from an issuer in a timely manner. Given the recent disruptions to the oil and gas industry and our municipal holdings in Texas, we have expanded the scope of our surveillance to municipalities in Texas. In addition to monitoring for material events, such as changes in NRSRO grades, we track the West Texas Intermediate (WTI) Crude Oil prices, both current and futures. While we will continue to monitor our positions, given the diversified economic landscape of Texas, the current and future pricing of WTI, the strong credit ratings of our holdings, our limited exposure to the more oil sensitive areas of the state (Houston and Harris County, Midland, Odessa) coupled with the insurance backing of our investments in the oil sensitive areas of Texas, we are comfortable holding our positions at the present time.