Note 3 - Investment Securities

12 Months Ended

Dec. 31, 2014

Investments, Debt and Equity Securities [Abstract]

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

3. Investment Securities

A summary of the amortized cost and market value of securities available for sale and securities held to maturity at December 31, 2014 and 2013 is as follows:

	At December 31, 2014
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Collateralized mortgage obligations	$	98,626	$	692	$	(96	)	$	99,222
Mortgage-backed securities		13,271		564		(33	)		13,802
Municipal securities		15,784		363		(40	)		16,107
Corporate bonds		33,840		621		(34	)		34,427
Asset-backed securities		18,353		152		-			18,505
Trust preferred securities		5,261		-		(2,068	)		3,193
Other securities		115		8		-			123
Total securities available for sale	$	185,250	$	2,400	$	(2,271	)	$	185,379
U.S. Government agencies	$	1	$	-	$	-		$	1
Collateralized mortgage obligations		67,845		531		(144	)		68,232
Other securities		20		-		-			20
Total securities held to maturity	$	67,866	$	531	$	(144	)	$	68,253

	At December 31, 2013
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Collateralized mortgage obligations	$	127,242	$	665	$	(4,467	)	$	123,440
Mortgage-backed securities		15,669		623		(111	)		16,181
Municipal securities		9,737		68		(162	)		9,643
Corporate bonds		32,174		1,079		-			33,253
Asset-backed securities		19,089		318		-			19,407
Trust preferred securities		5,277		-		(2,427	)		2,850
Other securities		115		2		-			117
Total securities available for sale	$	209,303	$	2,755	$	(7,167	)	$	204,891
U.S. Government agencies	$	1	$	-	$	-		$	1
Other securities		20		-		-			20
Total securities held to maturity	$	21	$	-	$	-		$	21

The maturity distribution of the amortized cost and estimated market value of investment securities by contractual maturity at December 31, 2014 is as follows:

	Available for Sale				Held to Maturity
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in 1 year or less	$	15,105	$	15,291	$	-	$	-
After 1 year to 5 years		70,661		71,584		40,604		40,974
After 5 years to 10 years		88,885		87,663		27,262		27,279
After 10 years		10,599		10,841		-		-
Total	$	185,250	$	185,379	$	67,866	$	68,253

Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without prepayment penalties.

As of December 31, 2014 and December 31, 2013, the collateralized mortgage obligations and mortgage backed securities included in the investment securities portfolio consist solely of securities issued by U.S. government sponsored agencies.  There were no private label mortgage securities held in the investment securities portfolio as of those dates. The Company did not hold any mortgage-backed securities that were rated “Alt-A” or “Subprime” as of December 31, 2014 and December 31, 2013.  In addition, the Company did not hold any private label CMO’s as of December 31, 2014 and December 31, 2013.  As of December 31, 2014 and December 31, 2013, the asset-backed securities held in the investment securities portfolio consist solely of Sallie Mae bonds collateralized by student loans which are guaranteed by the U.S. Department of Education.

In instances when a determination is made that an other-than-temporary impairment exists with respect to a debt security but the investor does not intend to sell the debt security and it is more likely than not that the investor will not be required to sell the debt security prior to its anticipated recovery, accounting standards require the other-than-temporary impairment to be separated into (a) the amount of the total other-than-temporary impairment related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount of the total other-than-temporary impairment related to all other factors.  The amount of the total other-than-temporary impairment related to other factors is recognized in other comprehensive income. Impairment charges (credit losses) on trust preferred securities for the years ended December 31, 2014, 2013, and 2012 amounted to $7,000, $0 and $34,000, respectively.

 The Company realized gross gains on the sale of securities of $458,000 in 2014.  The related sale proceeds amounted to $5.7 million.  The tax provision applicable to these gross gains in 2014 amounted to approximately $165,000.  The Company realized gross gains on the sale of securities of $703,000 in 2013.  The related sale proceeds amounted to $7.9 million.  The tax provision applicable to these gross gains in 2013 amounted to approximately $253,000.  The Company realized gross gains on the sale of securities of $737,000 in 2012.  The related sale proceeds amounted to $25.8 million.  The tax provision applicable to these gross gains in 2012 amounted to approximately $265,000.

At December 31, 2014 and 2013, investment securities in the amount of approximately $149.0 million and $113.1 million, respectively, were pledged as collateral for public deposits and certain other deposits as required by law.

The following table presents a roll-forward of the balance of credit-related impairment losses on securities held at December 31, 2014 and 2013 for which a portion of OTTI was recognized in other comprehensive income:

(dollars in thousands)	2014		2013
Beginning Balance, January 1st	$	3,959	$	3,959
Additional credit-related impairment loss on securities for which an other-than-temporary impairment was previously recognized		7		-
Reductions for securities paid off during the period		-		-
Reductions for securities for which the amount previously recognized in other comprehensive income was recognized in earnings because the Company intends to sell the security		-		-
Ending Balance, December 31st	$	3,966	$	3,959

The following tables show the fair value and gross unrealized losses associated with the investment portfolio, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2014 and 2013:

	At December 31, 2014
	Less than 12 months				12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Collateralized  mortgage obligations	$	17,331	$	96	$	-	$	-	$	17,331	$	96
Mortgage-backed securities		3,997		2		1,069		31		5,066		33
Municipal securities		1,298		10		1,395		30		2,693		40
Corporate bonds		4,880		34		-		-		4,880		34
Trust preferred securities		-		-		3,193		2,068		3,193		2,068
Total Available for Sale	$	27,506	$	142	$	5,657	$	2,129	$	33,163	$	2,271

	At December 31, 2014
	Less than 12 months				12 months or more					Total
(dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Collateralized mortgage obligations	$	19,766		92		$	9,232		52		$	28,998		144
Total Held to Maturity	$	19,766	$	92		$	9,232	$	52		$	28,998	$	144

	At December 31, 2013
	Less than 12 months				12 months or more				Total
(dollars in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Collateralized  mortgage obligations	$	73,137	$	3,923	$	8,697	$	544	$	81,834	$	4,467
Mortgage-backed securities		1,450		41		1,123		70		2,573		111
Municipal securities		5,108		162		-		-		5,108		162
Trust preferred securities		-		-		2,850		2,427		2,850		2,427
Total Available for Sale	$	79,695	$	4,126	$	12,670	$	3,041	$	92,365	$	7,167

The impairment of the investment portfolio totaled $2.4 million with a total fair value of $62.2 million at December 31, 2014.  The most significant components of this impairment are related to the trust preferred securities and collateralized mortgage obligations held in the portfolio. The unrealized losses on the CMO’s are primarily related to the recent movement in market interest rates rather than the underlying credit quality of the issuers.   The Company does not currently intend to sell these securities prior to maturity or recovering the cost bases and does not believe it will be forced to sell these securities prior to maturity or recovering the cost bases.

At December 31, 2014, the investment portfolio included thirty-four collateralized mortgage obligations with a total market value of $167.5 million.  Nine of these securities carried an unrealized loss at December 31, 2014.  At December 31, 2014, the investment portfolio included forty-three mortgage-backed securities with a total market value of $13.8 million.  Two of these securities carried an unrealized loss at December 31, 2014. Management found no evidence of OTTI on any of these securities and the unrealized losses are due to changes in market value resulting from changes in market interest rates and are considered temporary as of December 31, 2014.

The unrealized losses on the trust preferred securities are primarily the result of the secondary market for such securities becoming inactive and are also considered temporary at this time.

The following table provides additional detail about trust preferred securities as of December 31, 2014.

(dollars in thousands)	Class / Tranche	Amortized Cost		Fair Value		Unrealized Losses		Lowest Credit Rating Assigned	Number of Banks Currently Performing	Deferrals / Defaults as % of Current Balance	Conditional Default Rates for 2013 and beyond	Cumulative OTTI Life to Date
Preferred Term Securities IV	Mezzanine Notes	$	49	$	41	$	(8)	B1	6	18%	0.31%	$	-
Preferred Term Securities VII	Mezzanine Notes		979		890		(89)	D	11	54	0.36		2,173
TPREF Funding II	Class B Notes		732		372		(360)	C	18	41	0.35		267
TPREF Funding III	Class B2 Notes		1,521		752		(769)	C	15	36	0.27		480
Trapeza CDO I, LLC	Class C1 Notes		556		312		(244)	C	9	49	0.29		470
ALESCO Preferred Funding IV	Class B1 Notes		604		402		(202)	C	40	8	0.31		396
ALESCO Preferred    Funding V	Class C1 Notes		820		424		(396)	C	41	15	0.35		180
Total		$	5,261	$	3,193	$	(2,068)		140	30%		$	3,966

At December 31, 2014, the investment portfolio included twenty-eight municipal securities with a total market value of $16.1 million.  Three of these securities carried an unrealized loss at December 31, 2014.  Each of the municipal securities are reviewed quarterly for impairment. Research on each issuer is completed to ensure the financial stability of the municipal entity. The largest geographic concentration was in Pennsylvania and New Jersey where twenty-one municipal securities had a market value of $11.6 million.  As of December 31, 2014, management found no evidence of OTTI on any of the municipal securities held in the investment securities portfolio.

 In July 2014, thirteen CMOs with a fair value of $70.1 million that were previously classified as available-for-sale were transferred to the held-to-maturity category.  These securities were transferred at fair value.  Unrealized losses of $1.2 million associated with the transferred securities will remain in other comprehensive income and be amortized as an adjustment to yield over the remaining life of those securities.  At December 31, 2014, the fair market value of the securities transferred to held-for-maturity is $68.2 million and the unrealized losses are $728,000.