Note 5 - Securities

3 Months Ended

Mar. 31, 2015

Investments, Debt and Equity Securities [Abstract]

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

NOTE 5. SECURITIES

Securities are classified as available-for-sale if the Company intends and has the ability to hold those securities for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available-for-sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Securities available-for-sale are carried at fair value. Unrealized holding gains or losses are included in other comprehensive income (loss) as a separate component of shareholders’ equity, net of tax. Realized gains or losses, determined on the basis of the cost of specific securities sold, are included in earnings. Premiums and discounts are amortized or accreted over the life of the related investment security as an adjustment to yield using the effective interest method. Dividend and interest income are recognized when earned.

Debt securities are classified as held-to-maturity if the Company has both the intent and ability to hold those securities to maturity regardless of changes in market conditions, liquidity needs or changes in general economic conditions. These securities are carried at cost adjusted for amortization of premium and accretion of discount, computed by the effective interest method over their contractual lives.

Transfers of securities from available-for-sale to held-to-maturity are accounted for at fair value as of the date of the transfer. The difference between the fair value and the amortized cost at the date of transfer is considered a premium or discount and is accounted for accordingly. Any unrealized gain or loss at the date of the transfer is reported in other comprehensive income (loss), and is amortized over the remaining life of the security as an adjustment of yield in a manner consistent with the amortization of any premium or discount, and will offset or mitigate the effect on interest income of the amortization of the premium or discount for that held-to-maturity security. The Company did not have any transfers in or out of the various securities classifications for the three months ended March 31, 2015 and twelve months ended December 31, 2014.

The following table presents the amortized costs, unrealized gains, unrealized losses and approximate fair values of investment securities as of March 31, 2015, and December 31, 2014:

	As of March 31, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
(Amounts in thousands)	Costs		Gains		Losses			Fair Value
Available-for-sale securities:
U.S. government & agencies	$	6,290	$	132	$	—		$	6,422
Obligations of state and political subdivisions		51,365		2,134		(8	)		53,491
Residential mortgage backed securities and collateralized mortgage obligations		41,603		415		(167	)		41,851
Corporate securities		31,128		578		(46	)		31,660
Commercial mortgage backed securities		6,808		47		(56	)		6,799
Other asset backed securities		26,572		278		(183	)		26,667
Total	$	163,766	$	3,584	$	(460	)	$	166,890
Held-to-maturity securities:
Obligations of state and political subdivisions	$	36,609	$	952	$	(336	)	$	37,225

	As of December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
(Amounts in thousands)	Costs		Gains		Losses			Fair Value
Available-for-sale securities:
U.S. government & agencies	$	6,351	$	58	$	(16	)	$	6,393
Obligations of state and political subdivisions		52,629		1,788		(54	)		54,363
Residential mortgage backed securities and collateralized mortgage obligations		46,727		457		(169	)		47,015
Corporate securities		37,392		475		(133	)		37,734
Commercial mortgage backed securities		10,402		60		(73	)		10,389
Other asset backed securities		30,896		393		(197	)		31,092
Total	$	184,397	$	3,231	$	(642	)	$	186,986
Held-to-maturity securities:
Obligations of state and political subdivisions	$	36,806	$	712	$	(400	)	$	37,118

The amortized cost and estimated fair value of available-for-sale and held-to-maturity securities as of March 31, 2015, are shown below. The amortized cost and fair value of residential mortgage backed, collateralized mortgage obligations and commercial mortgage securities are presented by their expected average life, rather than contractual maturity, in the following table. Expected maturities may differ from contractual.

	Available-For-Sale				Held-To-Maturity
(Amounts in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Amounts maturing in:
One year or less	$	3,328	$	3,330	$	—	$	—
One year through five years		57,795		58,605		1,489		1,508
Five years through ten years		41,652		42,536		15,476		15,878
After ten years		60,991		62,419		19,644		19,839
Total	$	163,766	$	166,890	$	36,609	$	37,225

The Company held $49.2 million in securities with safekeeping institutions for pledging purposes. Of this amount, $19.9 million were pledged as of March 31, 2015. The following table presents the fair value of the securities held, segregated by purpose, as of March 31, 2015:

(Amounts in thousands)	Amount
Public funds collateral	$	24,721
Federal Home Loan Bank of San Francisco borrowings		20,177
Interest rate swap contracts		4,339
Total securities held for pledging purposes	$	49,237

The following table presents the cash proceeds from sales of securities and their associated gross realized gains and gross realized losses that have been included in earnings for the three months ended March 31, 2015 and 2014.

	Three Months Ended March 31,
(Amounts in thousands)	2015			2014
Proceeds from sales of securities	$	25,215		$	36,686
Gross realized gains on sales of securities:
U.S. government & agencies	$	32		$	—
Obligations of state and political subdivisions		13			157
Residential mortgage backed securities and collateralized mortgage obligations		82			6
Corporate securities		4			141
Commercial mortgage backed securities		93			—
Other asset backed securities		—			23
Total gross realized gains on sales of securities		224			327
Gross realized losses on sales of securities:
Obligations of state and political subdivisions		—			(90	)
Residential mortgage backed securities and collateralized mortgage obligations		(9	)		(469	)
Commercial mortgage backed securities		—			(1	)
Other asset backed securities		—			(12	)
Total gross realized losses on sales of securities		(9	)		(572	)
Gain (loss) on investment securities, net	$	215		$	(245	)

The following tables present the current fair value and associated unrealized losses on investments with unrealized losses as of March 31, 2015, and December 31, 2014. The tables also illustrate whether these securities have had unrealized losses for less than 12 months or for 12 months or longer.

	As of March 31, 2015
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Amounts in thousands)	Value		Losses			Value		Losses			Value		Losses
Available-for-sale securities:
Obligations of states and political subdivisions	$	2,152	$	(8	)	$	—	$	—		$	2,152	$	(8	)
Residential mortgage backed securities and collateralized mortgage obligations		6,233		(70	)		5,242		(97	)		11,475		(167	)
Corporate securities		3,016		(15	)		3,777		(31	)		6,793		(46	)
Commercial mortgage backed securities		2,106		(10	)		1,986		(46	)		4,092		(56	)
Other asset backed securities		2,670		(6	)		6,045		(177	)		8,715		(183	)
Total temporarily impaired securities	$	16,177	$	(109	)	$	17,050	$	(351	)	$	33,227	$	(460	)
Held-to-maturity securities:
Obligations of states and political subdivisions	$	5,801	$	(62	)	$	5,291	$	(274	)	$	11,092	$	(336	)

	As of December 31, 2014
	Less Than 12 Months					12 Months or More					Total
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
(Amounts in thousands)	Value		Losses			Value		Losses			Value		Losses
Available-for-sale securities:
U.S. government & agencies	$	—	$	—		$	1,269	$	(16	)	$	1,269	$	(16	)
Obligations of states and political subdivisions		3,952		(34	)		2,078		(20	)		6,030		(54	)
Residential mortgage backed securities and collateralized mortgage obligations		10,193		(66	)		5,365		(103	)		15,558		(169	)
Corporate securities		7,058		(36	)		6,542		(97	)		13,600		(133	)
Commercial mortgage backed securities		4,912		(14	)		1,542		(59	)		6,454		(73	)
Other asset backed securities		4,891		(16	)		6,088		(181	)		10,979		(197	)
Total temporarily impaired securities	$	31,006	$	(166	)	$	22,884	$	(476	)	$	53,890	$	(642	)
Held-to-maturity securities:
Obligations of states and political subdivisions	$	1,556	$	(14	)	$	12,726	$	(386	)	$	14,282	$	(400	)

At March 31, 2015, 50 securities were in unrealized loss positions and at December 31, 2014, 73 securities were in unrealized loss positions.

The available-for-sale residential mortgage backed securities, commercial backed securities, and collateralized mortgage obligations portfolio in an unrealized loss position at March 31, 2015, were issued by both public and private agencies. The unrealized losses on residential mortgage backed securities and collateralized mortgage obligations were caused by changes in market interest rates and or the widening of market spreads subsequent to the initial purchase of these securities, and not by the underlying credit of the issuers or the underlying collateral. It is expected that these securities will not be settled at a price less than the amortized cost of each investment. Because the decline in fair value is attributable to changes in interest rates and or widening market spreads and not credit quality, and because the Company does not intend to sell the securities in this class, and it is more likely than not the Company will not be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until contractual maturity, these investments are not considered other-than-temporarily impaired.

For the three months ended March 31, 2015, the Company did not recognize impairment losses. For the year ended December 31, 2014, the Company recognized an OTTI of $22 thousand for securities that were in a loss position at December 31, 2014 and sold in January of 2015.