|12 Months Ended|
Jun. 30, 2013
|Investments, Debt and Equity Securities [Abstract]|
|Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]||
The following table summarizes the amortized cost and fair value of securities available-for-sale and securities held-to-maturity at June 30, 2013 and 2012 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses:
Proceeds from sales of debt securities during 2013 and 2012 were as follows:
The amortized cost and fair values of debt securities at June 30, 2013 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily mortgage-backed securities, collateralized mortgage obligations and the trust preferred security are shown separately.
Securities with a carrying value of approximately $27,781 and $35,411 were pledged at June 30, 2013 and 2012, respectively, to secure public deposits and commitments as required or permitted by law. At June 30, 2013 and 2012, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, with an aggregate book value greater than 10% of shareholders’ equity.
The following table summarizes the securities with unrealized and unrecognized losses at June 30, 2013 and 2012, aggregated by investment category and length of time the individual securities have been in a continuous unrealized or unrecognized loss position:
Management evaluates securities for other-than-temporary impairment (OTTI) on a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. The securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities are generally evaluated for OTTI under FASB ASC Topic 320, Accounting for Certain Investments in Debt and Equity Securities. However, the trust preferred security is evaluated using the model outlined in FASB ASC Topic 325, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests that Continue to be Held by a Transfer in Securitized Financial Assets.
In determining OTTI under the ASC Topic 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the entity has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.
Under the ASC Topic 325 model, the present value of the remaining cash flows as estimated at the preceding evaluation date are compared to the current expected remaining cash flows. An OTTI is deemed to have occurred if there has been an adverse change in the remaining expected future cash flows. The analysis of the trust preferred security falls within the scope of ASC Topic 325.
As of June 30, 2013, the Corporation’s securities portfolio consisted of $97,229 available-for-sale securities, of which $56,045 were in an unrealized loss position and a $3,000 held-to-maturity security with a $74 unrecognized loss. The majority of the unrealized losses are related to the Corporation’s obligations of states and political subdivisions and residential mortgage-backed securities, as discussed below:
Obligations of States and Political Subdivisions: At June 30, 2013, approximately 95.7% of the obligations of states and political subdivisions classified as available-for-sale were general obligation bonds and 4.3% were revenue bonds. The $3,000 security held-to-maturity is a revenue bond made to a local municipality. The unrealized and unrecognized losses were mainly attributable to the spreads for these types of securities being wider at June 30, 2013 than when these securities were purchased and changes in interest rates. Management monitors the financial data of the individual municipalities to ensure they meet minimum credit standards. Since the Corporation does not intend to sell these securities and it is not likely the Corporation will be required to sell these securities at an unrealized loss position prior to any anticipated recovery in fair value, which may be maturity, management does not believe there is any other-than-temporary impairment related to these securities at June 30, 2013.
Mortgage-Backed Securities and Collateralized Mortgage Obligations: At June 30, 2013, all of the mortgage-backed securities and collateralized mortgage obligations held by the Corporation were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae, Freddie Mac and Ginnie Mae, institutions which the government has affirmed its commitment to support. Because the decline in fair value is attributable to higher interest rates and higher than projected prepayment speeds increasing the premium amortization, and not credit quality, and because the Corporation does not have the intent to sell nor is it likely that it will be required to sell the securities before their anticipated recovery, the Corporation does not consider these securities to be other-than-temporarily impaired.
Trust Preferred Security: The Corporation owns a trust preferred security, which represents collateralized debt obligations (CDOs) issued by other banks, bank holding companies and insurance companies. The security is part of a pool of issuers that support a more senior tranche of securities. The cash interest payments for the trust preferred security are being deferred as a result of an increase in principal and/or interest deferrals by the issuers of the underlying securities during the period of 2008 through 2011. The accumulated other-than-temporary impairment loss recognized in earnings in periods prior to 2012 was $780. According to the June 30, 2013 cash flow analysis, the expected cash flows were above the recorded amortized cost of the trust preferred security and the Corporation has received pricing indications that are very near the securities adjusted amortized cost of $202. Therefore, management does not believe there is any additional other-than-temporary impairment related to this security at June 30, 2013.
The entire disclosure for investments in certain debt and equity securities.
Reference 1: http://www.xbrl.org/2003/role/presentationRef