Note 4 - Investment Securities

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Investments in Debt and Equity Instruments, Cash and Cash Equivalents, Unrealized and Realized Gains (Losses) [Text Block]

(4)

           INVESTMENT SECURITIES

Debt and equity securities have been classified in the consolidated balance sheets according to management’s intent. Investment securities at

December

31,

2016

and

2015

are summarized as follows:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
December 31, 2016:
Securities available for sale:
Agency mortgage-backed securities	$	110,493	$	93	$	2,349	$	108,237
Agency CMO		16,293		23		288		16,028
Other debt securities:
Agency notes and bonds		69,407		14		759		68,662
Municipal obligations		63,189		783		1,129		62,843
Subtotal – debt securities		259,382		913		4,525		255,770
Mutual funds		74		0		0		74
Total securities available for sale	$	259,456	$	913	$	4,525	$	255,844
Securities held to maturity:
Agency mortgage-backed securities	$	2	$	0	$	0	$	2
Total securities held to maturity	$	2	$	0	$	0	$	2
December 31, 2015:
Securities available for sale:
Agency mortgage-backed securities	$	42,158	$	123	$	271	$	42,010
Agency CMO		9,391		41		101		9,331
Other debt securities:
Agency notes and bonds		84,797		11		355		84,453
Municipal obligations		49,527		1,372		60		50,839
Subtotal – debt securities		185,873		1,547		787		186,633
Mutual funds		118		0		0		118
Total securities available for sale	$	185,991	$	1,547	$	787	$	186,751
Securities held to maturity:
Agency mortgage-backed securities	$	4	$	0	$	0	$	4
Total securities held to maturity	$	4	$	0	$	0	$	4

The amortized cost and fair value of debt securities as of

December

31,

2016,

by contractual maturity, are shown below. Expected maturities of mortgage-backed securities and CMO

may

differ from contractual maturities because the mortgages underlying the obligations

may

be prepaid without penalty.

	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
(In thousands)
Due in one year or less	$	3,047	$	3,049	$	0	$	0
Due after one year through five years		76,481		75,767		0		0
Due after five years through ten years		18,692		18,479		0		0
Due after ten years		34,376		34,210		0		0
		132,596		131,505		0		0
Mortgage-backed securities and CMO		126,786		124,265		2		2
	$	259,382	$	255,770	$	2	$	2

At

December

31,

2016,

certain securities available for sale with an amortized cost and fair value of

$44.5

million were pledged to secure public fund deposits.

At

December

31,

2016

and

2015,

there were

no

holdings of securities of any

one

issuer, other than the U.S. Government and its agencies, with an aggregate book value greater that

10%

of stockholders’ equity.

Information pertaining to investment securities available for sale with gross unrealized losses at

December

31,

2016,

aggregated by investment category and the length of time that individual investment securities have been in a continuous loss position, follows. At

December

31,

2016,

the Company did not have any securities held to maturity with an unrealized loss.

(Dollars in thousands)	Number of Investment Positions		Fair  Value		Gross Unrealized Losses
Continuous loss position less than twelve months:
Agency mortgage-backed securities		78	$	101,838	$	2,336
Agency CMO		13		11,767		239
Agency notes and bonds		20		59,126		759
Municipal obligations		54		28,414		1,129
Total less than twelve months		165		201,145		4,463
Continuous loss position more than twelve months:
Agency mortgage-backed securities		1		531		13
Agency CMO		5		2,502		49
Total more than twelve months		6		3,033		62
Total securities available for sale		171	$	204,178	$	4,525

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to

(1)

the length of time and the extent to which the fair value has been less than cost,

(2)

the financial condition and near-term prospects of the issuer, and

(3)

the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

At

December

31,

2016,

the municipal obligations and U.S. government agency debt securities, including agency mortgage-backed securities, agency CMOs, and agency notes and bonds, in a loss position had depreciated approximately

2.2%

from the amortized cost basis. All of the U.S. government agency securities and municipal securities are issued by U.S. government agencies, government-sponsored enterprises, or municipal governments, and are secured by

first

mortgage loans or municipal project revenues. These unrealized losses related principally to current interest rates for similar types of securities. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government, its agencies or other governments, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer’s financial condition. As the Company has the ability to hold the U.S. government agency debt securities and municipal securities in an unrealized loss position until maturity, no declines are deemed to be other-than-temporary.

While management does not anticipate any credit-related impairment losses at

December

31,

2016,

additional deterioration in market and economic conditions

may

have an adverse impact on the credit quality in the future.

During the year ended

December

31,

2016,

the Company realized gross gains of

$176,000

on the sale of available for sale municipal obligations with gross proceeds of

$4.6

million. During the year ended

December

31,

2015,

the Company realized no gains or losses on the sale of securities. Securities acquired from Peoples with a fair value of

$45.4

million were sold within a short period of time following the merger, resulting in no gain or loss for financial reporting purposes.

At

December

31,

2015,

the Company held

131,750

shares of common stock in another financial institution, representing approximately

9%

of the outstanding common stock of the entity, for a total investment of

$711,000.

The investment was accounted for using the cost method of accounting and was included in other assets in the consolidated balance sheet. The Company’s investment was sold for

$856,000

in

July

2016,

resulting in a gain of

$145,000

which is included in other income in the consolidated statement of income.