We have been strategically reinvesting our cash flow runoff from our investment portfolio, carefully weighing current rates and overall interest rate risk. During the fourth quarter, we purchased $59.7 million in mortgage backed securities with an average yield of 2.09% and an average duration of approximately 4 years. We also purchased $6.3 million in municipal securities during the fourth quarter, with an average tax equivalent yield of about 3.82%. Prepayment speeds in our investment portfolio have been somewhat stabilized. And based upon current interest rates, we anticipate receiving approximately $35 million in monthly cash flow from our portfolio. If interest rates remain low we may see faster prepayment speeds which could increase our estimated monthly cash flow.
Now turning to our capital position. Our capital ratios are well above regulatory standards, and we believe they still remain above our peer group average. Our December 31st, 2014, capital ratios will be released soon, concurrently with year end form 10-K.
Shareholders’ equity increased a $106.2 million in 2014. The year over year increase was due to $104 million in net earnings, a $40.4 million increase in unrealized gain on available for sale investment securities and $4.2 million of various stock based compensation items. This was offset by $42.4 million in cash dividends. I will now turn the call back to Chris for some closing remarks.
Chris Myers – President & Chief Executive Officer
Thanks, Rich. Now let’s talk about economic conditions. In terms of the dairy industry, milk future prices are decreasing and profit margins appear to be narrowing. Notwithstanding 2014 with a highly profitable year for the dairy industry. According to the California Department of Food and Agriculture, the CDFA, feed costs in California represented 62.2% of total milk production costs for the third quarter of 2014 down from 65.4% of total milk production costs for the second quarter.
Thanks to a reported bumper corn crop for the past two years dairy farmers saw significant drop in corn prices. It remains difficult however to project the future cost of feed as feed costs continue to be dependent upon many factors one of which is weather.
Turning to other items related to the California economy according to various economic reports. California’s employment development division reported the unemployment rate was 7.2% in November 2014 compared with 7.3% in October and 8.4% back in November 2013. Virtually every sector in California posted job growth over the past year with solid growth in both lower wage industries such as administrative support, leisure and hospitality as well as higher wage industries such as information, management and professional scientific technical.
Plummeting oil prices brining relief at fuel pumps may soon have the opposite effect on a portion of California central valley economy. Many oil executives are now tough decisions about whether to go forward with expensive projects such as new drilling. While layouts have been limited so far economists [inaudible] of major work force reductions if prices fall below and stay below producer’s breakeven points.
Employment growth as it’s still expected to increase 2.5% over the next year and the unemployment rate is expected to dip to the low 6% range by 2016. Home prices are forecast to taper to an annual growth rate of 3% to 5% over the next few years. California’s chronic under supply of housing is a major driver of increasing prices. New residential construction is expected to continue on its upward trend although the additional stock is not expected to be enough to completely offset demand.
