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Note 2 - Securities
3 Months Ended
Mar. 31, 2014
Investments, Debt and Equity Securities [Abstract]  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

2.

SECURITIES


The amortized cost and fair value of available for sale securities and the related pre-tax gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) are as follows:


   

Amortized

Cost

   

Gross

Unrealized

Gains

   

Gross

Unrealized

Losses

   

Fair

Value

 

March 31, 2014

                               

U.S. Government agency debt obligations

  $ 116,492,000     $ 430,000     $ (7,628,000 )   $ 109,294,000  

Mortgage-backed securities

    11,544,000       1,071,000       0       12,615,000  

Municipal general obligation bonds

    16,488,000       411,000       0       16,899,000  

Municipal revenue bonds

    877,000       42,000       0       919,000  

Mutual funds

    1,393,000       0       (23,000 )     1,370,000  
                                 
    $ 146,794,000     $ 1,954,000     $ (7,651,000 )   $ 141,097,000  
                                 

December 31, 2013

                               

U.S. Government agency debt obligations

  $ 108,279,000     $ 263,000     $ (10,065,000 )   $ 98,477,000  

Mortgage-backed securities

    12,456,000       1,102,000       0       13,558,000  

Municipal general obligation bonds

    16,488,000       388,000       (4,000 )     16,872,000  

Municipal revenue bonds

    878,000       38,000       0       916,000  

Mutual funds

    1,386,000       0       (31,000 )     1,355,000  
                                 
    $ 139,487,000     $ 1,791,000     $ (10,100,000 )   $ 131,178,000  

Securities with unrealized losses at March 31, 2014 and December 31, 2013, aggregated by investment category and length of time that individual securities have been in a continuous loss position, are as follows:


   

Less than 12 Months

   

12 Months or More

   

Total

 
   

Fair

Value

   

Unrealized

Loss

   

Fair

Value

   

Unrealized

Loss

   

Fair

Value

   

Unrealized

Loss

 
                                                 

March 31, 2014

                                               

U.S. Government agency debt obligations

  $ 44,172,000     $ (2,532,000 )   $ 42,828,000     $ (5,096,000 )   $ 87,000,000     $ (7,628,000 )

Mortgage-backed securities

    0       0       0       0       0       0  

Municipal general obligation bonds

    0       0       0       0       0       0  

Municipal revenue bonds

    0       0       0       0       0       0  

Mutual funds

    1,370,000       (23,000 )     0       0       1,370,000       (23,000 )
                                                 
    $ 45,542,000     $ (2,555,000 )   $ 42,828,000     $ (5,096,000 )   $ 88,370,000     $ (7,651,000 )
                                                 
                                                 

December 31, 2013

                                               

U.S. Government agency debt obligations

  $ 57,117,000     $ (5,798,000 )   $ 29,679,000     $ (4,267,000 )   $ 86,796,000     $ (10,065,000 )

Mortgage-backed securities

    0       0       0       0       0       0  

Municipal general obligation bonds

    295,000       (4,000 )     0       0       295,000       (4,000 )

Municipal revenue bonds

    0       0       0       0       0       0  

Mutual funds

    1,355,000       (31,000 )     0       0       1,355,000       (31,000 )
                                                 
    $ 58,767,000     $ (5,833,000 )   $ 29,679,000     $ (4,267,000 )   $ 88,446,000     $ (10,100,000 )

We evaluate securities for other-than-temporary impairment at least on a quarterly basis. Consideration is given to the length of time and the extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability we have to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. For those debt securities whose fair value is less than their amortized cost basis, we also consider our intent to sell the security, whether it is more likely than not that we will be required to sell the security before recovery and if we do not expect to recover the entire amortized cost basis of the security. In analyzing an issuer’s financial condition, we may consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred and the results of reviews of the issuer’s financial condition.


At March 31, 2014, 63 debt securities and one mutual fund with fair values totaling $88.4 million have unrealized losses aggregating $7.7 million. After we considered whether the securities were issued by the federal government or its agencies and whether downgrades by bond rating agencies had occurred, we determined that unrealized losses were due to changing interest rate environments. As we do not intend to sell our debt securities before recovery of their cost basis and we believe it is more likely than not that we will not be required to sell our debt securities before recovery of the cost basis, no unrealized losses are deemed to be other-than-temporary.


The amortized cost and fair value of debt securities at March 31, 2014, by maturity, are shown in the following table. The contractual maturity is utilized for U.S. Government agency debt obligations and municipal bonds. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, are shown separately. Weighted average yields are also reflected, with yields for municipal securities shown at their tax equivalent yield.


   

Weighted

Average

Yield

   

Amortized

Cost

   

Fair

Value

 
                         

Due in 2014

    5.44 %   $ 1,770,000     $ 1,801,000  

Due in 2015 through 2019

    6.31       1,018,000       1,040,000  

Due in 2020 through 2024

    3.44       44,432,000       43,437,000  

Due in 2025 and beyond

    3.63       86,637,000       80,834,000  

Mortgage-backed securities

    5.14       11,544,000       12,615,000  

Mutual funds

    2.11       1,393,000       1,370,000  
                         
      3.73 %   $ 146,794,000     $ 141,097,000  

Securities issued by the State of Michigan and all its political subdivisions had a combined amortized cost of $17.4 million and estimated market value of $17.8 million at March 31, 2014 and December 31, 2013. Total securities of any other specific issuer, other than the U.S. Government and its agencies, did not exceed 10% of shareholders’ equity.


The carrying value of U.S. Government agency debt obligations and mortgage-backed securities that are pledged to secure repurchase agreements was $105.2 million and $94.4 million at March 31, 2014 and December 31, 2013, respectively. In addition, substantially all of our municipal bonds have been pledged to the Discount Window of the Federal Reserve Bank of Chicago. Investments in Federal Home Loan Bank stock are restricted and may only be resold or redeemed by the issuer.