Quarterly report pursuant to Section 13 or 15(d)

INVESTMENT SECURITIES

 v2.3.0.11
INVESTMENT SECURITIES
 6 Months Ended
Jun. 30, 2011
INVESTMENT SECURITIES [Abstract]  
INVESTMENT SECURITIES
NOTE 2 - INVESTMENT SECURITIES

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

 
June 30, 2011
  
(Dollars in Thousands)
Amortized
Cost
    
Unrealized
Gains
    
Unrealized
Losses
    
Market
Value
  
U.S. Treasury
$
  168,585
    
$
    1,625
    
$
3
    
$
       170,207
  
U.S. Government Agencies and Corporations
  
      10,367
      
     -
      
4
      
        10,363
  
States and Political Subdivisions
  
56,577
      
255
      
14
      
     56,818
  
Mortgage-Backed Securities
  
    54,149
      
985
      
59
      
      55,075
  
Other Securities(1)
  
    12,450
      
-
      
600
      
       11,850
  
Total Investment Securities
$
  302,128
    
$
2,865
    
$
680
    
$
304,313
  

 
December 31, 2010
  
(Dollars in Thousands)
Amortized
Cost
    
Unrealized
Gains
    
Unrealized
Losses
    
Market
Value
  
U.S. Treasury
$
  160,913
    
$
     1,371
    
$
134
    
$
       162,150
  
U.S. Government Agencies and Corporations
  
      -
      
     -
      
-
      
        -
  
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 and Federal Reserve Bank stock recorded at cost of $7.0 million and $4.8 million, respectively, at June 30, 2011 and $7.2 million and $4.8 million, respectively, at December 31, 2010.

Securities with an amortized cost of $130.8 million and $131.6 million at June 30, 2011 and December 31, 2010, respectively, were pledged to secure public deposits and for other purposes.

The Company’s subsidiary, Capital City Bank, as a member of the Federal Home Loan Bank (“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 $7.0 million, which is included in other securities, is pledged to secure FHLB advances.  No ready market exists for this stock, and it has no quoted market value.  However, redemption of this stock has historically been at par value.

Maturity Distribution. As of June 30, 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
  
$
               107,175
    
$
                107,682
  
Due after one through five years
    
               169,954
      
                172,110
  
Due after five through 10 years
    
                 10,797
      
                  10,926
  
Due after 10 years
    
1,752
      
1,745
  
No Maturity
    
                   12,450
      
11,850
  
Total Investment Securities
  
$
302,128
    
$
304,313
  

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 June 30, 2011 aggregated by major security type and length of time in a continuous unrealized loss position:

     
June 30, 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. Treasury
  
$
3,481
    
$
3
    
$
-
    
$
-
    
$
3,481
    
$
3
  
    U.S. Government Agencies and Corporations
    
10,367
      
4
      
-
      
-
      
10,367
      
4
  
    States and Political Subdivisions
    
3,716
      
14
      
-
      
-
      
3,716
      
14
  
    Mortgage-Backed Securities 
    
 7,011
      
 59
      
-
      
-
      
7,011
      
59
  
    Other Securities
    
-
      
-
      
-
      
600
      
-
      
600
  
    Total Investment Securities
  
$
24,575
    
$
80
    
$
  -
    
$
 600
    
$
24,575
    
$
680
  

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 the nature of the securities, the underlying collateral, the financial condition of the issuer, the extent and duration of the loss, our intent related to the individual securities, and the likelihood that we will have to sell the securities prior to the expected recovery.  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 issues, and analysts’ reports.

At June 30, 2011, the Company had securities of $302.1 million with net pre-tax unrealized gains of $2.2 million on these securities, of which $25.0 million have unrealized losses totaling $0.1 million and 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 June 30, 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 June 30, 2011.  One preferred bank stock issue for $0.6 million has been in a loss position for greater than 12 months.  The Company continues to closely monitor the fair value of this security as the subject bank continues to experience negative operating trends.