Annual report pursuant to Section 13 and 15(d)

INVESTMENT SECURITIES

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INVESTMENT SECURITIES
 12 Months Ended
Dec. 31, 2011
Investments, Debt and Equity Securities [Abstract]  
INVESTMENT SECURITIES

Note 2

INVESTMENT SECURITIES

 

Investment Portfolio Composition. The amortized cost and related market value of investment securities available-for-sale at December 31, were as follows:

 

  2011  
(Dollars in Thousands)

Amortized

Cost

    

Unrealized

Gains

    

Unrealized

Losses

    

Market

Value

  
U.S. Government Treasury $ 168,001     $ 1,463     $ -     $ 169,464  
U.S. Government Agency   14,758       27       48       14,737  
States and Political Subdivisions   58,946       186       38       59,094  
Mortgage-Backed Securities   51,775       809       87       52,497  
Other Securities(1)   11,957       -       600       11,357  
Total Investment Securities $ 305,437     $ 2,485     $ 773     $ 307,149  

 

  2010  
(Dollars in Thousands)

Amortized

Cost

    

Unrealized

Gains

    

Unrealized

Losses

    

Market

Value

  
U.S. Government Treasury $   160,913     $      1,371     $ 134     $        162,150  
U.S. Government Agency         -            -       -               -  
States and Political Subdivisions     78,990       319       9            79,300  
Mortgage-Backed Securities       56,099       678       560             56,217  
Other Securities(1)       12,664       -       600              12,064  
Total Investment Securities $   308,666     $ 2,368     $ 1,303     $ 309,731  

 

(1) Includes Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank stock recorded at cost of $6.5 million and $4.8 million, respectively, at December 31, 2011 and $7.2 million and $4.8 million, respectively, at December 31, 2010. No ready market exists for these stocks, and they have no quoted market value.  However, redemption of these stocks has historically been at par value.

 

Securities with an amortized cost of $102.1 million and $131.6 million at December 31, 2011 and 2010, respectively, were pledged to secure public deposits and for other purposes.

 

The Company’s subsidiary, CCB, as a member of the FHLB of Atlanta, is required to own capital stock in the FHLB of Atlanta based generally upon the balances of residential and commercial real estate loans, and FHLB advances.  FHLB stock of $6.5 million which is included in other securities is pledged to secure FHLB advances.

 

Investment Sales. The total proceeds from the sale or call of investment securities and the gross realized gains and losses from the sale or call of such securities for each of the last three years are as follows:

  

(Dollars in Thousands) Year  

Total

Proceeds

    

Gross

Realized Gains

    

Gross

Realized Losses

  
   2011   $ 321     $ -     $ -  
   2010   $ 3,640     $ 8     $ -  
   2009   $ 5,316     $ 10     $ -  

 

Maturity Distribution. As of December 31, 2011, the Company's investment securities had the following maturity distribution based on contractual maturities:

 

(Dollars in Thousands)   Amortized Cost   Market Value
Due in one year or less $ 127,800    $ 128,164  
Due after one through five years         164,490                 166,340  
Due after five through ten years           1,190                   1,288  
Due over ten years                   -                             -    
No Maturity           11,957                   11,357  
Total Investment Securities $    305,437    $        307,149  

 

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

Other Than Temporarily Impaired Securities. The following table summarizes the investment securities with unrealized losses at December 31, aggregated by major security type and length of time in a continuous unrealized loss position:

 

      2011      
 

Less Than

12 Months

  

Greater Than

12 Months

   Total  
(Dollars in Thousands)

Market

Value

  

Unrealized

Losses

  

Market

Value

  

Unrealized

Losses

  

Market

Value

  

Unrealized

Losses

  
U.S. Government Treasury   $ 9,698     $ 48     $ -     $ -     $ 9,698     $ 48  
    U.S. Government Agency     -       -       -       -       -       -  
    States and Political Subdivisions     14,597       38       -       -       14,597       38  
    Mortgage-Backed Securities      11,612       87       37       -       11,649       87  
    Other Securities     -       -       600       600       600       600  
    Total Investment Securities   $ 35,907     $ 173     $ 637     $ 600     $ 36,544     $ 773  

 

      2010      
 

Less Than

12 Months

  

Greater Than

12 Months

   Total  
(Dollars in Thousands)

Market

Value

  

Unrealized

Losses

  

Market

Value

  

Unrealized

Losses

  

Market

Value

  

Unrealized

Losses

  
U.S. Government Treasury   $ 36,103     $ 134     $ -     $ -     $ 36,103     $ 134  
    U.S. Government Agency     -       -       -       -       -       -  
    States and Political Subdivisions     4,622       9       -       -       4,622       9  
    Mortgage-Backed Securities      33,990        560        -        -       33,990        560  
Other Securities     -       -       600       600       600       600  
    Total Investment Securities   $ 74,715     $ 703     $   600     $   600     $ 75,315     $ 1,303  

 

Management evaluates securities for other than temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to: 1) the length of time and the extent to which the fair value has been less than amortized cost, 2) the financial condition and near-term prospects of the issuer, and 3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for recovery in the fair value above amortized cost. In analyzing an issuer’s financial condition, management considers whether the securities are issued by the federal government or its agencies, whether downgrades by rating agencies have occurred, regulatory and analysts’ report.

 

At December 31, 2011, the Company had securities of $305.4 million with net pre-tax unrealized gains of $1.7 million on these securities, of which $36.5 million have unrealized losses totaling $0.8 million. Approximately $0.2 million of these securities have been in a loss position for less than 12 months. These securities are primarily in a loss position because they were acquired when the general level of interest rates was lower than that on December 31, 2011. The Company believes that the losses in these securities are temporary in nature and that the full principal will be collected as anticipated. Because the declines in the market value of these investments are attributable to changes in interest rates and not credit quality and because the Company has the ability and intent to hold these investments until there is a recovery in fair value, which may be at maturity, the Company does not consider these investments to be other-than-temporarily impaired at December 31, 2011. One preferred bank stock issue for $0.6 million has been in a loss position for greater than 12 months.