Note 5 - Investment 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: Investment Securities

A summary of the amortized cost and market value of securities available for sale and securities held to maturity at March 31, 2015 and December 31, 2014 is as follows:

	At March 31, 2015
(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Collateralized mortgage obligations	$	99,421	$	1,508	$	(142	)	$	100,787
Mortgage-backed securities		12,474		549		(45	)		12,978
Municipal securities		17,031		404		(47	)		17,388
Corporate bonds		33,817		555		(51	)		34,321
Asset-backed securities		18,164		222		-			18,386
Trust preferred securities		5,240		-		(2,198	)		3,042
Other securities		115		7		-			122
Total securities available for sale	$	186,262	$	3,245	$	(2,483	)	$	187,024
U.S. Government agencies	$	1	$	-	$	-		$	1
Collateralized mortgage obligations		66,721		1,136		-			67,857
Other securities		20		-		-			20
Total securities held to maturity	$	66,742	$	1,136	$	-		$	67,878

	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

       The maturity distribution of the amortized cost and estimated market value of investment securities by contractual maturity at March 31, 2015 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	$	13,398	$	13,498	$	-	$	-
After 1 year to 5 years		86,809		87,202		43,315		44,104
After 5 years to 10 years		75,048		75,062		23,427		23,774
After 10 years		11,007		11,262		-		-
Total	$	186,262	$	187,024	$	66,742	$	67,878

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

As of March 31, 2015 and December 31, 2014, 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 March 31, 2015 and December 31, 2014. In addition, the Company did not hold any private issued CMO’s as of March 31, 2015 and December 31, 2014. As of March 31, 2015 and December 31, 2014, the asset-backed securities 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 three months ended March 31, 2015 amounted to $3,000. There were no impairment charges (credit losses) on trust preferred securities for the three months ended March 31, 2014.    

The following table presents a roll-forward of the balance of credit-related impairment losses on securities held at March 31, 2015 and 2014 for which a portion of OTTI was recognized in other comprehensive income:

(dollars in thousands)	2015		2014
Beginning Balance, January 1st	$	3,966	$	3,959
Additional credit-related impairment loss on securities for which an other-than-temporary impairment was previously recognized		3		-
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, March 31st	$	3,969	$	3,959

No securities were sold during the three months ended March 31, 2015 and March 31, 2014.

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 in the available for sale and held to maturity section:

	At March 31, 2015
	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	$	22,105	$	142	$	-	$	-	$	22,105	$	142
Mortgage-backed securities		5,128		24		1,057		21		6,185		45
Municipal securities		2,064		26		1,405		21		3,469		47
Corporate bonds		4,951		51		-		-		4,951		51
Trust preferred securities		-		-		3,042		2,198		3,042		2,198
Total Available for Sale	$	34,248	$	243	$	5,504	$	2,240	$	39,752	$	2,483

At March 31, 2015

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

$

-

-

$

-

-

$

-

-

Total Held to Maturity

$

-

$

-

$

-

$

-

$

-

$

-

	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

The impairment of the investment portfolio amounted to $2.5 million on securities with a total fair value of $39.8 million at March 31, 2015. The most significant components of this impairment are related to the trust preferred securities held in the portfolio. The Company does not currently intend to sell these securities prior to their maturity or the recovery of their cost bases and does not believe it will be forced to sell these securities prior to maturity or recovering the cost bases.

At March 31, 2015, the investment portfolio included thirty-five collateralized mortgage obligations with a total market value of $168.6 million. Four of these securities carried an unrealized loss at March 31, 2015. At March 31, 2015, the investment portfolio included forty-two mortgage-backed securities with a total market value of $13.0 million. Three of these securities carried an unrealized loss at March 31, 2015. At March 31, 2015, the investment portfolio included two asset-backed securities with a total market value of $18.4 million. None of these securities carried an unrealized loss at March 31, 2015. 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 March 31, 2015.

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 the trust preferred securities held in the portfolio as of March 31, 2015.

(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 2014 and beyond			Cumulative OTTI Life to Date
Preferred Term Securities IV	Mezzanine Notes	$	49	$	39	$	(10	)	B1		6		18	%		0.32	%	$	-
Preferred Term Securities VII	Mezzanine Notes		961		788		(173	)	D		12		50			0.45			2,173
TPREF Funding II	Class B Notes		732		371		(361	)	C		18		39			0.38			267
TPREF Funding III	Class B2 Notes		1,518		739		(779	)	C		15		36			0.30			483
Trapeza CDO I, LLC	Class C1 Notes		556		295		(261	)	C		8		50			0.31			470
ALESCO Preferred Funding IV	Class B1 Notes		604		396		(208	)	C		41		6			0.33			396
ALESCO Preferred Funding V	Class C1 Notes		820		414		(406	)	C		39		17			0.34			180
Total		$	5,240	$	3,042	$	(2,198	)			139		31	%				$	3,969

At March 31, 2015, the investment portfolio included thirty municipal securities with a total market value of $17.4 million. Four of these securities carried an unrealized loss at March 31, 2015. Each of the municipal securities is 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-three municipal securities had a market value of $12.9 million. As of March 31, 2015, 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 March 31, 2015, the fair market value of the securities transferred to held-for-maturity is $67.9 million and the unrealized gains are $79,000.