Note 2 - Investment Securities

12 Months Ended

Dec. 31, 2015

Investments, Debt and Equity Securities [Abstract]

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

2. 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 December 31, 2015 and 2014, are summarized as follows:

	Amortized		Gross		Gross		Fair
Securities available for sale:	Cost		Unrealized Gains		Unrealized Losses		Value
	(In thousands)
December 31, 2015
Government agencies	$	30,850	$	541	$	6	$	31,385
Mortgage-backed securities		128,820		3,141		277		131,684
Municipal securities		55,534		1,305		8		56,831
Corporate bonds		28,744		-		349		28,395
Total	$	243,948	$	4,987	$	640	$	248,295
December 31, 2014
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

	Amortized		Gross		Gross		Fair
Securities held to maturity:	Cost		Unrealized Gains		Unrealized Losses		Value
	(In thousands)
December 31, 2015
Government agencies	$	508	$	2	$	-	$	510
Total	$	508	$	2	$	-	$	510
December 31, 2014
Government agencies	$	507	$	5	$	-	$	512
Total	$	507	$	5	$	-	$	512

The following table presents a summary of realized gains and losses from the sale of available for sale investment securities:

	Years Ended December 31,
	2015			2014
	(In thousands)
Proceeds from Sale	$	46,236		$	788
Gross realized gains on sales		1,429			14
Gross realized losses on sales		(11	)		-
Total realized gains (losses), net	$	1,418		$	14

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 December 31, 2015 and 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.

	Less Than 12 Months				12 Months or More				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
	(In thousands)
December 31, 2015
Government agencies	$	3,785	$	12	$	-	$	-	$	3,785	$	12
Mortgage-backed securities		51,956		264		2,641		7		54,597		271
Municipal securities		1,530		8		-		-		1,530		8
Corporate bonds		16,115		120		11,280		229		27,395		349
Total	$	73,386	$	404	$	13,921	$	236	$	87,307	$	640
December 31, 2014
Government agencies	$	11,790	$	76	$	-	$	-	$	11,790	$	76
Mortgage-backed securities		61,106		527		3,093		20		64,199		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 December 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 to		Five to		Over
	One Year		Five Years		Ten Years		Ten Years
	(In thousands)
Securities available for sale:
Government agencies
Amortized cost	$	-	$	15,413	$	15,438	$	-
Fair value		-		15,576		15,809		-
Mortgage-backed securities
Amortized cost		-		63,149		42,277		23,393
Fair value		-		63,739		42,956		24,989
Municipal securities
Amortized cost		2,729		21,653		26,193		4,959
Fair value		2,736		22,163		26,854		5,078
Corporate bonds
Amortized cost		-		18,746		9,998		-
Fair value		-		18,624		9,771		-
Total Amortized cost	$	2,729	$	118,961	$	93,906	$	28,352
Total Fair value	$	2,736	$	120,102	$	95,390	$	30,067
Securities held to maturity:
Government agencies
Amortized cost	$	-	$	508	$	-	$	-
Fair value		-		510		-		-
Total Amortized cost	$	-	$	508	$	-	$	-
Total Fair value	$	-	$	510	$	-	$	-

FHLB Agency Bonds with an amortized cost of $11.8 million were pledged as collateral for public deposits at December 31, 2015, compared to $9.7 million at December 31, 2014. In addition, a government agency bond with an amortized cost of $508,000 and $507,000 was pledged as collateral on an interest rate swap transaction at December 31, 2015 and 2014, respectively.

Prior to purchasing any security, the Bank ensures 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) the Bank must 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 criteria pertaining to the obligor is acquired and reviewed as part of the Bank’s credit analysis: Data from debt offerings (prospectus/offering circular); data from regulatory filings (Securities and Exchange Commission Forms 10-K, 10-Q, 8-K); data available from the obligor’s website (annual reports, press releases); data obtained from a third party (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.

At December 31, 2015, the investment securities portfolio included 56 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:

	December 31, 2015
	Amortized Cost		Fair Value
	(In thousands)
Obligations of state and political subdivisions:
General obligation bonds:
Pennsylvania	$	6,461	$	6,589
California		3,612		3,709
Washington		3,430		3,436
Indiana		2,468		2,483
North Carolina		2,375		2,408
South Carolina		2,261		2,321
Alabama		1,839		1,860
Texas		1,814		1,848
Other (11 states)		10,175		10,481
Total general obligation bonds		34,435		35,135
Revenue bonds:
New York		7,307		7,531
North Carolina		3,781		3,893
Mississippi		2,348		2,378
Oklahoma		2,277		2,369
Pennsylvania		1,827		1,886
Other (3 states)		3,559		3,639
Total revenue bonds		21,099		21,696
Total obligations of state and political subdivisions	$	55,534	$	56,831

The largest exposure in general obligation bonds is issued by King County, Washington, with a total amortized cost basis of $2.4 million and total fair value of $2.4 million at December 31, 2015.

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

	December 31, 2015
	Amortized Cost		Fair Value
	(In thousands)
Revenue bonds by revenue source:
University and college	$	8,694	$	8,945
Public improvements		5,046		5,204
Pension funding		1,827		1,886
Refunding bonds		1,111		1,128
Other		4,421		4,533
Total revenue bonds	$	21,099	$	21,696

The largest single exposure in revenue bonds is an issue from the Dormitory Authority of the State of New York (DASNY). DASNY was created in 1944 to finance and build dormitories for state teachers’ colleges. Its mission has expanded over time and in 1995 DASNY became the largest public authority issuer of tax-exempt bonds in the country. The debt is secured by a dedication of 25% of the New York State personal income tax. As of December 31, 2015, this issue had an amortized cost of $2.9 million and fair value of $3.0 million.