Note 3 - Investment Securities

3 Months Ended

Mar. 31, 2013

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

Note 3 — Investment Securities

Investment securities have been classified in the consolidated balance sheets as available for sale according to management’s intent.  The amortized cost of securities and their approximate fair values as of the balance sheet dates were as follows:

(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
March 31, 2013:
U.S. Government agencies	$	21,643	$	567	$	(61	)	$	22,149
Residential mortgage-backed securities		79,686		851		(309	)		80,228
Municipal securities		19,377		138		(66	)		19,449
Corporate debt securities		4,254		18		-			4,272
Asset-backed securities		16,775		82		(37	)		16,820
	$	141,735	$	1,656	$	(473	)	$	142,918
December 31, 2012:
U.S. Government agencies	$	30,007	$	589	$	(7	)	$	30,589
Residential mortgage-backed securities		60,550		1,159		(49	)		61,660
Municipal securities		19,247		132		(106	)		19,273
Corporate debt securities		3,015		2		(21	)		2,996
Asset-backed securities		13,202		112		(10	)		13,304
	$	126,021	$	1,994	$	(193	)	$	127,822
March 31, 2012:
U.S. Government agencies	$	26,650	$	360	$	(12	)	$	26,998
Residential mortgage-backed securities		85,474		1,404		-			86,878
Municipal securities		4,596		219		(2	)		4,813
Corporate debt securities		3,048		3		(12	)		3,039
Asset-backed securities		6,871		32		(9	)		6,894
	$	126,639	$	2,018	$	(35	)	$	128,622

The scheduled maturities of investment securities at March 31, 2013, were as follows.  Actual maturities may differ from contractual maturities because some investment securities may allow the right to call or prepay the obligation with or without call or prepayment penalties.

(in thousands)	Available-for-Sale Securities
	Amortized Cost		Fair Value
Within one year	$	2,363	$	2,365
Due in one year to five years		9,648		9,677
Due in five years to ten years		33,948		34,186
Due in greater than ten years		95,776		96,690
	$	141,735	$	142,918

Investment securities in a temporary unrealized loss position as of each balance sheet date are shown in the following table, based on the length of time they have been continuously in an unrealized loss position:

(in thousands)	Less than 12 Months				12 Months or Longer				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2013:
U.S. Government agencies	$	6,062	$	61	$	-	$	-	$	6,062	$	61
Residential mortgage-backed securities		39,444		309		-		-		39,444		309
Municipal securities		12,584		66		-		-		12,584		66
Asset-backed securities		3,022		37		-		-		3,022		37
	$	61,112	$	473	$	-	$	-	$	61,112	$	473
December 31, 2012:
U.S. Government agencies	$	3,005	$	7	$	-	$	-	$	3,005	$	7
Residential mortgage-backed securities		7,605		49		-		-		7,605		49
Municipal securities		12,168		106		-		-		12,168		106
Corporate debt securities		1,979		21		-		-		1,979		21
Asset-backed securities		3,174		10		-		-		3,174		10
	$	27,931	$	193	$	-	$	-	$	27,931	$	193
March 31, 2012:
U.S. Government agencies	$	2,988	$	12	$	-	$	-	$	2,988	$	12
Residential mortgage-backed securities		-		-		-		-		-		-
Municipal securities		240		2		-		-		240		2
Corporate debt securities		988		12		-		-		988		12
Asset-backed securities		3,221		9		-		-		3,221		9
	$	7,437	$	35	$	-	$	-	$	7,437	$	35

As of March 31, 2013, the Company held 53 securities that had been in an unrealized loss position for less than 12 months.  No securities have been in an unrealized loss position for 12 months or longer as of March 31, 2013.  The unrealized losses relate principally to changes in market interest rate conditions.  All of the securities continue to pay as scheduled.  When analyzing the issuer’s financial condition, management considers the length of time and extent to which the market value has been less than cost; the historical and implied volatility of the security; the financial condition of the issuer of the security; and the Bank’s intent and ability to hold the security to recovery.  As of March 31, 2013, management does not have the intent to sell these securities nor does it believe it is more likely than not that it will be required to sell these securities before maturity or the recovery of amortized cost basis.  Based on the Bank’s evaluation of the above and other relevant factors, the Bank does not believe the securities that are in an unrealized loss position as of March 31, 2013, are other than temporarily impaired.

No securities were sold in the first three months of 2012.  Gains totaling $153,000 were recognized in the first quarter of 2013 on sales of $25,725,000 of securities.

As of March 31, 2013, investment securities carried at $22,322,000 were pledged to secure public deposits, as required by law.  Investment securities carried at $12,417,000 as of March 31, 2013, were pledged to secure potential borrowings from the Federal Home Loan Bank of San Francisco.  Securities carried at $2,006,000 as of March 31, 2013, were pledged to secure potential intra-day overdrafts at the Federal Reserve Bank of San Francisco (“FRB”).