Quarterly report pursuant to Section 13 or 15(d)

INVESTMENT SECURITIES

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INVESTMENT SECURITIES
 3 Months Ended
Mar. 31, 2012
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:

 
March 31, 2012
  
(Dollars in Thousands)
Amortized
Cost
    
Unrealized
Gains
    
Unrealized
Losses
    
Market
Value
  
U.S. Treasury
$
143,726
    
$
1,093
    
$
-
    
$
144,819
  
U.S. Government Agency
  
22,715
      
45
      
35
      
22,725
  
States and Political Subdivisions
  
58,323
      
164
      
28
      
58,459
  
Mortgage-Backed Securities
  
46,453
      
739
      
62
      
47,130
  
Other Securities(1)
  
11,957
      
-
      
600
      
11,357
  
Total Investment Securities
$
283,174
    
$
2,041
    
$
725
    
$
284,490
  

 
December 31, 2011
  
(Dollars in Thousands)
Amortized
Cost
    
Unrealized
Gains
    
Unrealized
Losses
    
Market
Value
  
U.S. 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
  

 (1)
Includes Federal Home Loan Bank and Federal Reserve Bank stock recorded at cost of $6.5 million and $4.8 million, respectively, at March 31, 2012 and December 31, 2011.
 
 
 
Securities with an amortized cost of $153.8 million and $102.1 million at March 31, 2012 and December 31, 2011, 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 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 March 31, 2012, 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
  
$
118,346
    
$
118,646
  
Due after one through five years
    
151,800
      
153,329
  
Due after five through ten years
    
1,071
      
1,158
  
Due over ten years
    
                        -
      
                        -
  
No Maturity
    
11,957
      
11,357
  
Total Investment Securities
  
$
283,174
    
$
284,490
  

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

     
March 31, 2012
      
 
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
  
$
-
    
$
-
    
$
-
    
$
-
    
$
-
    
$
-
  
    U.S. Government Agency
    
9,210
      
35
      
-
      
-
      
9,210
      
35
  
    States and Political Subdivisions
    
12,687
      
28
      
-
      
-
      
12,687
      
28
  
    Mortgage-Backed Securities 
    
7,309
      
55
      
1,412
      
7
      
8,721
      
62
  
    Other Securities
    
-
      
-
      
600
      
600
      
600
      
600
  
    Total Investment Securities
  
$
29,206
    
$
118
    
$
2,012
    
$
607
    
$
31,218
    
$
725
  

     
December 31, 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.U.S. 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
  

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 any anticipated recovery in 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 issues, and analysts' reports.
 
At March 31, 2012, the Company had securities of $283.2 million with net pre-tax unrealized gains of $1.3 million on these securities, of which $31.2 million have unrealized losses totaling $0.7 million.  Approximately $0.1 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 March 31, 2012.  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 March 31, 2012.  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.