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]

Note 2. Investment Securities

Amortized cost and fair value of securities available for sale are as follows:

(Dollars In Thousands)	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government agency securities	$	26,385	$	242	$	(191	)	$	26,436
Mortgage-backed securities		8,803		60		(90	)		8,773
Municipal securities		16,756		594		(15	)		17,335
	$	51,944	$	896	$	(296	)	$	52,544

(Dollars In Thousands)	December 31, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Government agency securities	$	26,812	$	333	$	(180	)	$	26,965
Mortgage-backed securities		9,678		125		(64	)		9,739
Municipal securities		17,423		531		(55	)		17,899
	$	53,913	$	989	$	(299	)	$	54,603

The primary purpose of the investment portfolio is to generate income, diversify earning assets, and meet liquidity needs of the Company through readily saleable financial instruments. The portfolio is made up primarily of fixed rate bonds, whose prices move inversely with rates. At the end of any accounting period, the investment portfolio has unrealized gains and losses. The Company monitors the portfolio, which is subject to liquidity needs, market rate changes, and credit risk changes, to see if adjustments are needed. The primary concern in a loss situation is the credit quality of the business or entity behind the instrument. The primary cause of unrealized losses is the increase in market interest rates over the yields available at the time the securities were purchased.

At December 31, 2015, the Company does not consider any security in an unrealized loss position to be other-than-temporarily impaired.

U.S. Government and federal agency securities. The unrealized losses on twenty-five of the Company’s investments in obligations of the U.S. government were caused by increases in market interest rates over the yields available at the time the securities were purchased.  The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. The Company does not consider those investments to be other-than-temporarily impaired at December 31, 2015.

Mortgage-backed securities. The unrealized losses on fourteen of the Company’s investments in government-sponsored entity mortgage-backed securities were caused by increases in market interest rates over the yields available at the time the securities were purchased.  Because the decline in market value is attributable to changes in interest rates and not credit quality, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2015.

Municipal securities. The unrealized losses on five of the Company’s investments in obligations of municipal securities were caused by increases in market interest rates over the yields available at the time the securities were purchased. All municipal securities are investment grade. Because the decline in market value is attributable to changes in interest rates, credit spreads, and not credit quality, the Company does not consider those investments to be other-than-temporarily impaired at December 31, 2015.

The following tables demonstrate the unrealized loss position of securities available for sale at December 31, 2015 and 2014.

	December 31, 2015
	Less than 12 months					12 months or more					Total
(Dollars In Thousands)	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Government agency securities	$	8,878	$	(106	)	$	5,275	$	(85	)	$	14,153	$	(191	)
Mortgage-backed securities		3,447		(32	)		2,718		(58	)		6,165		(90	)
Municipal securities		805		(10	)		526		(5	)		1,331		(15	)
	$	13,130	$	(148	)	$	8,519	$	(148	)	$	21,649	$	(296	)

	December 31, 2014
	Less than 12 months					12 months or more					Total
(Dollars In Thousands)	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
U.S. Government agency securities	$	5,568	$	(48	)	$	7,078	$	(132	)	$	12,646	$	(180	)
Mortgage-backed securities		742		(6	)		4,058		(58	)		4,800		(64	)
Municipal securities		1,625		(20	)		2,186		(35	)		3,811		(55	)
	$	7,935	$	(74	)	$	13,322	$	(225	)	$	21,257	$	(299	)

The amortized cost and estimated fair value of securities at December 31, 2015, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to prepay obligations with or without call or prepayment penalties.

(Dollars In Thousands)	Amortized Cost		Fair Value
Less than one year	$	-	$	-
Over one through five years		1,809		1,825
Over five through ten years		10,363		10,424
Greater than 10 years		39,772		40,295
	$	51,944	$	52,544

Proceeds from the sales, maturities and calls of securities available for sale in 2015 and 2014 were $10.8 million and $13.9 million, respectively. The Company realized $52 thousand in net gains on sales of six available for sale securities in 2015, compared to $128 thousand from the sales of twelve securities in the prior year.  The net gain in 2015 included gross gains of $67 thousand and gross losses of $15 thousand. The prior year included gross gains of $163 thousand and gross losses of $35 thousand. Total pledged securities had a fair market value of $7.4 million at December 31, 2015 and $8.8 million at December 31, 2014. Securities having a fair market value of $4.4 million were pledged to secure public deposits, while securities pledged to secure Federal Home Loan Bank borrowings totaled $1.4 million. $1.6 million in securities were pledged for other purposes at December 31, 2015.