Note 4 - Investment Securities

3 Months Ended

Mar. 31, 2013

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

Note 4 - Investment Securities

The amortized cost, unrealized gains and losses, and estimated fair value of securities available-for-sale at March 31, 2013 and December 31, 2012 are as follows:

Amortized Cost and Fair Value of Investment Portfolio

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in thousands)
March 31, 2013
Securities available-for-sale:
U.S. Government agencies	$	517	$	61	$	-		$	578
Municipal securities		16,227		1,449		-			17,676
Residential agency mortgage-backed securities		135,271		2,954		(230	)		137,995
Commercial mortgage-backed securities		37,538		-		(710	)		36,828
All other debt securities		105,217		1,164		(386	)		105,996
Total investment securities	$	294,770	$	5,629	$	(1,326	)	$	299,073
December 31, 2012
Securities available-for-sale:
U.S. Government agencies	$	518	$	65	$	-		$	583
Municipal securities		16,258		1,727		-			17,986
Residential agency mortgage-backed securities		156,492		3,188		(567	)		159,113
Commercial mortgage-backed securities		-		-		-			-
All other debt securities		67,181		1,017		(309	)		67,889
Total investment securities	$	240,450	$	5,997	$	(876	)	$	245,571

At March 31, 2013 and December 31, 2012, investment securities with a fair market value of $109.8 million and $102.5 million, respectively, were pledged to secure public and trust deposits, to secure interest rate swaps, and for other purposes as required and permitted by law.

The amortized cost and fair value of investment securities available-for-sale at March 31, 2013 by contractual maturity are shown below. 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. All of the Company’s residential mortgage-backed securities are backed by an agency of the U.S. government.  None of our residential mortgage-backed securities are private label securities.

Maturities of Investment Portfolio

	March 31, 2013
	Amortized Cost		Fair Value
	(Dollars in thousands)
U.S. Government agencies
Due after one year through five years	$	517	$	578
Municipal securities
Due under one year		690		702
Due after one year through five years		150		150
Due after ten years		15,387		16,824
Residential agency mortgage-backed securities
Due after five years through ten years		31,685		31,848
Due after ten years		103,586		106,147
Commercial mortgage-backed securities
Due after five years through ten years		37,538		36,828
All other debt securities
Due after five years through ten years		500		415
Due after ten years		104,717		105,581
Total investment securities	$	294,770	$	299,073

There were no sales of securities during the three months ended March 31, 2013 or 2012.

Management periodically evaluates each investment security for other than temporary impairment, relying primarily on industry analyst reports, observation of market conditions and interest rate fluctuations. The following table shows gross unrealized losses and fair value, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, for investment securities with unrealized losses at March 31, 2013 and December 31, 2012. Since none of the unrealized losses relate to the marketability of the securities or the issuer’s ability to honor redemption obligations, and it is more likely than not that the Company will not have to sell the investments before recovery of their amortized cost basis, none of the securities are deemed to be other than temporarily impaired. At March 31, 2013 and December 31, 2012, one corporate debt security has been in a continuous loss position for twelve months or more. This unrealized loss is due to market volatility and uncertainty since the securities were purchased. Management believes that the unrealized losses are more likely than not to reverse as confidence returns to investment markets.

 Investment Portfolio Gross Unrealized Losses and Fair Value

	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
	(Dollars in thousands)
March 31, 2013
Securities available-for-sale:
Residential agency mortgage-backed securities	$	28,112	$	(230	)	$	-	$	-		$	28,112	$	(230	)
Commercial mortgage-backed securities		37,538		(710	)		-		-			37,538		(710	)
All other debt securities		56,880		(301	)		415		(85	)		57,295		(386	)
Total temporarily impaired securities	$	122,530	$	(1,241	)	$	415	$	(85	)	$	122,945	$	(1,326	)
December 31, 2012
Securities available-for-sale:
Residential agency mortgage-backed securities	$	40,041	$	(567	)	$	-	$	-		$	40,041	$	(567	)
All other debt securities		30,931		(224	)		415		(85	)		31,346		(309	)
Total temporarily impaired securities	$	70,972	$	(791	)	$	415	$	(85	)	$	71,387	$	(876	)

The Company has nonmarketable equity securities consisting of investments in several financial institutions and the investments in CSBC Statutory Trust I and Community Capital Corporation Statutory Trust I. These investments totaled $5.9 million at March 31, 2013 and $7.4 million December 31, 2012. Included in these amounts at March 31, 2013 and December 31, 2012 was $4.9 million and $6.3 million, respectively, of Federal Home Loan Bank (“FHLB”) stock. All nonmarketable equity securities were evaluated for impairment as of March 31, 2013 and December 31, 2012. The following factors have been considered in determining the carrying amount of FHLB stock: (1) management’s current belief that the Company has sufficient liquidity to meet all operational needs in the foreseeable future and would not need to dispose of the stock below recorded amounts, (2) management’s belief that the FHLB has the ability to absorb economic losses given the expectation that the FHLB has a high degree of government support and (3) redemptions and purchases of the stock are at the discretion of the FHLB. At March 31, 2013 and December 31, 2012, the Company estimated that the fair values of nonmarketable equity securities equaled or exceeded the cost of each of these investments, and, therefore, the investments were not impaired.