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Note 3 - Securities
 9 Months Ended
Sep. 30, 2017
Notes to Financial Statements  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]
NOTE
3.
SECURITIES
 
The following table presents the amortized costs, unrealized gains, unrealized losses and estimated fair values of our investment securities as of
September 30, 2017,
and
December 31, 2016.
 
   
As of September 30, 2017
  
   
 
 
 
  
Gross
    
Gross
    
 
 
 
   
Amortized
    
Unrealized
    
Unrealized
    
Estimated
  
(Amounts in thousands)
  
Cost
    
Gain
    
Loss
    
Fair Value
  
Available-for-sale securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
U.S. government & agencies
   $
36,437
     $
122
     $
(85
 )   $
36,474
  
Obligations of state and political subdivisions
    
52,609
      
1,343
      
(102
 )    
53,850
  
Residential mortgage-backed securities and collateralized mortgage obligations
    
105,755
      
165
      
(696
 )    
105,224
  
Corporate securities
    
6,945
      
97
      
(74
 )    
6,968
  
Commercial mortgage-backed securities
    
26,272
      
29
      
(153
 )    
26,148
  
Other asset-backed securities
    
3,846
      
6
      
(22
 )    
3,830
  
Total
   $
231,864
     $
1,762
     $
(1,132
 )   $
232,494
  
                                 
Held-to-maturity securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Obligations of state and political subdivisions
   $
30,724
     $
1,238
     $
(80
 )   $
31,882
  
 
   
As of December 31, 2016
  
   
 
 
 
  
Gross
    
Gross
    
 
 
 
   
Amortized
    
Unrealized
    
Unrealized
    
Estimated
  
(Amounts in thousands)
  
Cost
    
Gain
    
Loss
    
Fair Value
  
Available-for-sale securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
U.S. government & agencies
   $
10,427
     $
10
     $
(83
 )   $
10,354
  
Obligations of state and political subdivisions
    
58,847
      
1,001
      
(420
 )    
59,428
  
Residential mortgage-backed securities and collateralized mortgage obligations
    
71,068
      
33
      
(1,497
 )    
69,604
  
Corporate securities
    
16,153
      
103
      
(140
 )    
16,116
  
Commercial mortgage-backed securities
    
15,786
      
9
      
(281
 )    
15,514
  
Other asset-backed securities
    
4,237
      
8
      
(87
 )    
4,158
  
Total
   $
176,518
     $
1,164
     $
(2,508
 )   $
175,174
  
                                 
Held-to-maturity securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Obligations of state and political subdivisions
   $
31,187
     $
710
     $
(523
 )   $
31,374
  
 
 
The following table presents the expected maturities of investment securities at
September 30, 2017.
 
   
Available-For-Sale
    
Held-To-Maturity
  
(Amounts in thousands)
  
Amortized Cost
    
Fair Value
    
Amortized Cost
    
Fair Value
  
Amounts maturing in:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
One year or less
   $
1,379
     $
1,382
     $
95
     $
98
  
After one year through five years
    
75,268
      
75,183
      
9,834
      
10,354
  
After five years through ten years
    
72,459
      
72,951
      
7,656
      
7,838
  
After ten years
    
82,758
      
82,978
      
13,139
      
13,592
  
Total
   $
231,864
     $
232,494
     $
30,724
     $
31,882
  
 
The amortized cost and fair value of residential mortgage-backed securities, collateralized mortgage obligations and commercial mortgage securities are presented by their expected average life, rather than contractual maturity, because the underlying loans
may
be repaid without prepayment penalties.
 
At
September 30, 2017
and
December 31, 2016
securities with a fair value of
$65.6
million and
$39.2
million, respectively, were pledged as collateral to secure public fund deposits, Federal Home Loan Bank of San Francisco borrowings and for other purposes as required by law.
 
The following table presents the cash proceeds from sales of securities and the associated gross
realized gains and gross realized losses that have been included in earnings for the
three
and
nine
months ended
September 30, 2017
and
2016.
 
   
Three Months Ended September 30,
    
Nine Months Ended September 30,
  
(Amounts in thousands)
  
2017
    
2016
    
2017
    
2016
  
Proceeds from sales of securities
   $
20,640
     $
12,310
     $
47,892
     $
46,699
  
                                 
Gross realized gains on sales of securities:
                                
U.S. government & agencies
   $
—
     $
9
     $
—
     $
17
  
Obligations of state and political subdivisions
    
31
      
25
      
112
      
136
  
Residential mortgage-backed securities and collateralized mortgage obligations
    
16
      
12
      
53
      
14
  
Corporate securities
    
20
      
29
      
30
      
105
  
Commercial mortgage-backed securities
    
3
      
—
      
3
      
4
  
Other asset-backed securities
    
—
      
1
      
—
      
14
  
Total gross realized gains on sales of securities
    
70
      
76
      
198
      
290
  
Gross realized losses on sales of securities:
                                
U.S. government & agencies
    
—
      
—
      
—
      
(4
 )
Obligations of state and political subdivisions
    
(10
 )    
(3
 )    
(10
 )    
(3
 )
Residential mortgage-backed securities and collateralized mortgage obligations
    
(22
 )    
—
      
(46
 )    
(64
 )
Corporate securities
    
—
      
(2
 )    
(3
 )    
(27
 )
Commercial mortgage-backed securities
    
—
      
(1
 )    
—
      
—
  
Other asset-backed securities
    
—
      
—
      
—
      
—
  
Total gross realized losses on sales of securities
    
(32
 )    
(6
 )    
(59
 )    
(98
 )
Gain on investment securities, net
   $
38
     $
70
     $
139
     $
192
  
 
 
Investment securities that were in an unrealized loss position as of
September 30, 2017
and
December 31, 2016
are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position.
 
   
As of September 30, 2017
  
   
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
   $
15,565
     $
(85
 )   $
—
     $
—
     $
15,565
     $
(85
 )
Obligations of states and political subdivisions
    
7,535
      
(39
 )    
4,644
      
(63
 )    
12,179
      
(102
 )
Residential mortgage-backed securities and collateralized mortgage obligations
    
57,273
      
(293
 )    
23,194
      
(403
 )    
80,467
      
(696
 )
Corporate securities
    
2,029
      
(14
 )    
940
      
(60
 )    
2,969
      
(74
 )
Commercial mortgage-backed securities
    
10,481
      
(48
 )    
9,672
      
(105
 )    
20,153
      
(153
 )
Other asset-backed securities
    
2,163
      
(20
 )    
1,268
      
(2
 )    
3,431
      
(22
 )
Total temporarily impaired securities
   $
95,046
     $
(499
 )   $
39,718
     $
(633
 )   $
134,764
     $
(1,132
 )
                                                 
Held-to-maturity securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Obligations of states and political subdivisions
   $
1,019
     $
(3
 )   $
1,965
     $
(77
 )   $
2,984
     $
(80
 )
 
   
As of December 31, 2016
  
   
Less Than 12 Months
    
12 Months or More
    
Total
  
   
Fair
    
Unrealized
    
Fair
    
Unrealized
    
Fair
    
Unrealized
  
(Amounts in thousands)
  
Value
    
Loss
    
Value
    
Loss
    
Value
    
Loss
  
Available-for-sale securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
U.S. government & agencies
   $
9,139
     $
(83
 )   $
—
     $
—
     $
9,139
     $
(83
 )
Obligations of states and political subdivisions
    
20,329
      
(420
 )    
—
      
—
      
20,329
      
(420
 )
Residential mortgage-backed securities and collateralized mortgage obligations
    
52,345
      
(1,396
 )    
4,108
      
(101
 )    
56,453
      
(1,497
 )
Corporate securities
    
8,908
      
(140
 )    
—
      
—
      
8,908
      
(140
 )
Commercial mortgage-backed securities
    
12,041
      
(191
 )    
2,849
      
(90
 )    
14,890
      
(281
 )
Other asset-backed securities
    
2,280
      
(28
 )    
1,346
      
(59
 )    
3,626
      
(87
 )
Total temporarily impaired securities
   $
105,042
     $
(2,258
 )   $
8,303
     $
(250
 )   $
113,345
     $
(2,508
 )
                                                 
Held-to-maturity securities:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Obligations of states and political subdivisions
   $
11,639
     $
(425
 )   $
933
     $
(98
 )   $
12,572
     $
(523
 )
 
 
At
September 30, 2017
and
December 31, 2016,
the number of securities were in unrealized loss position was
99
and
119,
respectively. In the opinion of management, these securities are considered only temporarily impaired due to changes in market interest rates or widening of market spreads subsequent to the initial purchase of the securities, and
not
due to concerns regarding the underlying credit of the issuers or the underlying collateral. Management monitors the published credit ratings of our available-for-sale investment portfolio for material rating or outlook changes. For all securities collateralized by mortgages, management also monitors the credit characteristics of the underlying mortgages to identify potential credit losses, if any, in the portfolio. Because the decline in fair value is
not
due to credit quality concerns, and because we have
no
plans to sell the securities before the recovery of their amortized cost, and we believe the bank has the ability to hold the securities to maturity these investments are
not
considered other-than-temporarily impaired.
 
Our Investment Policy requires that at the time of purchase,
 securities purchased to be rated
A3/A
- or higher by Moody’s, S&P and Fitch rating agencies.
 
The following table presents the characteristics of our securities that are in unrealized loss positions at
September 30, 2017
and
December 31, 2016.
 
     
     
   
Characteristics of securities in unrealized loss positions a
t
Available-for-sale securities
:
  
September 30, 2017
and
December 31,
201
6
U.S. government & agencie
s
  
Direct obligations of the U.S. Government or obligations guaranteed by U.S. Government agencies
.
Obligations of States and political subdivision
s
  
General obligation issuances or revenue securities secured by revenues from specific sources issued by
 municipalities and political subdivisions located within the U.S.
Residential mortgage-backed securities and collateralized mortgage obligation
s
  
Obligations of U.S. government sponsored entities or non-governmental entities collateralized by high quality mortgages on residential properties. Issuances by non-governmental entities usually include with good credit enhancements. Of the residential mortgage-backed securities and collateralized mortgage obligations that we owned at
September 30, 2017
and
December 31, 2016,
54%
and
49%
were issued or guaranteed by U.S. government sponsored entities, respectively.
Corporate securitie
s
  
Debt obligations generally issued or guaranteed by large U.S. corporate institutions.
Commercial mortgage-backed securitie
s
  
Obligations of U.S. government sponsored entities or non-governmental entities
 collateralized by high quality mortgages on commercial properties. Issuances by non-governmental entities usually include good credit enhancements.
Other asset-backed securitie
s
  
Obligations secured by high quality loans with good credit enhancements issued by non-governmental issuers.
 
 
Other-Than-Temporary Impairment
F
or the
nine
months ended
September 30, 2017,
we did
not
recognize any other-than-temporary impairment losses. We recognized
one
impairment loss of
$546
thousand during the
second
quarter of
2016
related to our investment in AgriBank and there were
no
other impairment losses recognized during the year ended
December 31, 2016.