Note 5 - Stockholders' Equity and Earnings Per Common Share

3 Months Ended

Mar. 31, 2013

Other Comprehensive Income And Earnings Per Common Share Disclosure [Text Block]

NOTE 5: Stockholders’ Equity and Earnings Per Common Share

Stockholders’ Equity - Other Comprehensive Income

The following table presents the cumulative balances of the components of other comprehensive income, net of deferred tax assets of $2.24 million and $1.86 million as of March 31, 2013 and 2012, respectively.

(Dollars in thousands)	March 31,
	2013			2012
Net unrealized gains on securities	$	5,414		$	4,721
Net unrecognized loss on cash flow hedges		(283	)		(311	)
Net unrecognized losses on defined benefit pension plan		(913	)		(891	)
Total cumulative other comprehensive income	$	4,218		$	3,519

The following tables present the changes in accumulated other comprehensive income, by category, net of tax.

(Dollars in thousands)	Unrealized Loss on Cash Flow Hedging Instruments			Unrealized Holding Gains on Securities			Defined Benefit Pension Plan Assets and Benefit Obligations			Total
Balance December 31, 2012	$	(313	)	$	5,951		$	(922	)	$	4,716
Net change for the three months ended March 31, 2013		30			(537	)		9			(498	)
Balance at March 31, 2013	$	(283	)	$	5,414		$	(913	)	$	4,218

(Dollars in thousands)	Unrealized Loss on Cash Flow Hedging Instruments			Unrealized Holding Gains on Securities		Defined Benefit Pension Plan Assets and Benefit Obligations			Total
Balance December 31, 2011	$	(314	)	$	4,596	$	(898	)	$	3,384
Net change for the three months ended March 31, 2012		3			125		7			135
Balance at March 31, 2012	$	(311	)	$	4,721	$	(891	)	$	3,519

The following tables present the change in each component of other comprehensive income on a pre-tax and after-tax basis for the three months ended March 31, 2013 and 2012.

(Dollars in thousands)	Three Months Ended March 31, 2013
	Pre-Tax			Tax Expense (Benefit)			Net-of-Tax
Defined benefit pension plan:
Net loss1	$	30		$	10		$	20
Amortization of prior service costs1		(17	)		(6	)		(11	)
Defined benefit pension plan assets and benefit obligations, net1		13			4			9
Unrealized gain on cash flow hedging instruments		49			19			30
Unrealized holding losses on securities		(827	)		(290	)		(537	)
Total increase in other comprehensive (loss)	$	(765	)	$	(267	)	$	(498	)

1  These items are included in the computation of net periodic benefit cost. See Note 6, Employee Benefit Plans, for additional information.

(Dollars in thousands)	Three Months Ended March 31, 2012
	Pre-Tax			Tax Expense (Benefit)			Net-of-Tax
Defined benefit pension plan:
Net loss	$	26		$	8		$	18
Amortization of prior service costs		(17	)		(6	)		(11	)
Defined benefit pension plan assets and benefit obligations, net		9			2			7
Unrealized loss on cash flow hedging instruments		5			2			3
Unrealized holding gains on securities		193			68			125
Total increase in other comprehensive income	$	207		$	72		$	135

The Corporation had $2,000 and $0 of net gains from securities reclassified from other comprehensive income to earnings for the three months ended March 31, 2013 and 2012.

Earnings Per Common Share

The components of the Corporation’s earnings per common share calculations are as follows:

(Dollars in thousands)	Three Months Ended March 31,
	2013		2012
Net income	$	4,006	$	3,780
Accumulated dividends on Series A Preferred Stock		—		(125	)
Accretion of Series A Preferred Stock discount		—		(21	)
Net income available to common shareholders	$	4,006	$	3,634
Weighted average number of common shares used in earnings per common share – basic		3,266,712		3,190,518
Effect of dilutive securities:
Stock option awards and Warrant		104,565		74,457
Weighted average number of common shares used in earnings per common share – assuming dilution		3,371,277		3,264,975

Potential common shares that may be issued by the Corporation for its stock option awards and Warrant (defined below) are determined using the treasury stock method. Approximately 69,000 and 277,000 shares issuable upon exercise of options were not included in computing diluted earnings per common share for the three months ended March 31, 2013 and 2012, respectively, because they were anti-dilutive.

In January 2009, the Corporation issued to the United States Department of the Treasury (Treasury) under the Capital Purchase Program (CPP) $20.00 million of its Fixed Rate Cumulative Perpetual Preferred Stock, Series A (the Preferred Stock) and a warrant to purchase 167,504 shares of the Corporation’s common stock (the Warrant). On July 27, 2011, the Corporation redeemed $10.00 million of the Preferred Stock, and on April 12, 2012, the Corporation redeemed the remaining $10.00 million of the Preferred Stock.  As a result of this redemption, the Corporation will pay no future dividends on the Preferred Stock. Further, in connection with this redemption, the Corporation accelerated the accretion of the remaining preferred stock discount during April 2012, which reduced net income available to common shareholders by approximately $151,000.