Quarterly report pursuant to Section 13 or 15(d)

INVESTMENT SECURITIES

v3.2.0.727
INVESTMENT SECURITIES
6 Months Ended
Jun. 30, 2015
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 were as follows:

 

    June 30, 2015   December 31, 2014
    Amortized
Cost
  Unrealized
Gains
  Unrealized
Losses
  Market
Value
  Amortized
Cost
  Unrealized
Gain
  Unrealized
Losses
  Market
Value
Available for Sale                                                                
U.S. Government Treasury   $ 242,833     $ 1,157     $ —       $ 243,990     $ 185,830     $ 220     $ 19     $ 186,031  
U.S. Government Agency     102,700       414       116       102,998       95,950       289       142       96,097  
States and Political Subdivisions     75,961       78       165       75,874       48,405       65       82       48,388  
Mortgage-Backed Securities     1,946       185       —         2,131       2,094       193       —         2,287  
Equity Securities(1)     8,695       —         —         8,695       8,745       —         —         8,745  
Total   $ 432,135     $ 1,834     $ 281     $ 433,688     $ 341,024     $ 767     $ 243     $ 341,548  
                                                                 
Held to Maturity                                                                
U.S. Government Treasury   $ 134,786     $ 580     $ 8     $ 135,358     $ 76,179     $ 144     $ 6     $ 76,317  
U.S. Government Agency     10,077       40       —         10,117       19,807       29       19       19,817  
States and Political Subdivisions     22,883       19       12       22,890       26,717       36       6       26,747  
Mortgage-Backed Securities     34,059       26       521       33,564       40,878       33       380       40,531  
Total   $ 201,805     $ 665     $ 541     $ 201,929     $ 163,581     $ 242     $ 411     $ 163,412  
                                                                 
Total Investment Securities   $ 633,940     $ 2,499     $ 822     $ 635,617     $ 504,605     $ 1,009     $ 654     $ 504,960  

 

  (1) Includes Federal Home Loan Bank, Federal Reserve Bank, and FNBB, Inc stock recorded at cost of $3.7 million, $4.8 million, and $0.2 million, respectively, at June 30, 2015 and Federal Home Loan Bank, Federal Reserve Bank, and Bankers Bancorporation of Florida, Inc. stock recorded at cost of $3.9 million, $4.8 million, and $0.1 million, respectively, at December 31, 2014.

 

Securities with an amortized cost of $286.6 million and $337.9 million at June 30, 2015 and December 31, 2014, respectively, were pledged to secure public deposits and for other purposes.

 

The Bank, as a member of the Federal Home Loan Bank of Atlanta (“FHLB”), is required to own capital stock in the FHLB 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 June 30, 2015, the Company’s investment securities had the following maturity distribution based on contractual maturity. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations. Mortgage-backed securities and certain amortizing U.S. government agency securities are shown separately because they are not due at a certain maturity date.

 

    Available for Sale   Held to Maturity
(Dollars in Thousands)   Amortized
Cost
  Market
Value
  Amortized
Cost
  Market
Value
Due in one year or less   $ 56,181     $ 56,257     $ 16,625     $ 16,644  
Due after one through five years     294,554       295,594       151,121       151,720  
Mortgage-Backed Securities     1,946       2,131       34,059       33,565  
U.S. Government Agency     70,759       71,011       —         —    
Equity Securities     8,695       8,695       —         —    
Total   $ 432,135     $ 433,688     $ 201,805     $ 201,929  

 

Unrealized Losses on Investment Securities. The following table summarizes the investment securities with unrealized losses at June 30, 2015, aggregated by major security type and length of time in a continuous unrealized loss position:

 

    Less Than
12 Months
  Greater Than
12 Months
  Total
(Dollars in Thousands)   Market
Value
  Unrealized
Losses
  Market
Value
  Unrealized
Losses
  Market
Value
  Unrealized
Losses
    June 30, 2015                                                
    Available for Sale                                                
    U.S. Government Agency   $ 16,480     $ 50     $ 12,642     $ 66     $ 29,122     $ 116  
    States and Political Subdivisions     40,727       162       782       3       41,509       165  
    Total     57,207       212       13,424       69       70,631       281  

 

Held to Maturity

                                               
    U.S. Government Treasury     5,053       8       —         —         5,053       8  
    States and Political Subdivisions     4,986       12       154       —         5,140       12  
    Mortgage-Backed Securities     13,386       278       14,332       243       27,718       521  
    Total   $ 23,425     $ 298     $ 14,486     $ 243     $ 37,911     $ 541  
                                                 
    December 31, 2014                                                
Available for Sale                                                
    U.S. Government Treasury   $ 35,838     $ 19     $ —       $ —       $ 35,838     $ 19  
    U.S. Government Agency     18,160       54       18,468       88       36,628       142  
    States and Political Subdivisions     16,497       77       505       5       17,002       82  
    Total     70,495       150       18,973       93       89,468       243  

 

Held to Maturity

                                               
    U.S. Government Treasury     15,046       6       —         —         15,046       6  
    U.S. Government Agency     10,002       19       —         —         10,002       19  
    States and Political Subdivisions     3,788       6       —         —         3,788       6  
    Mortgage-Backed Securities     15,066       149       18,155       231       33,221       380  
    Total   $ 43,902     $ 180     $ 18,155     $ 231     $ 62,057     $ 411  

 

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.

 

Approximately $13.4 million of investment securities, with an unrealized loss of approximately $69,000, have been in a loss position for greater than 12 months. These debt securities are in a loss position because they were acquired when the general level of interest rates was lower than that on June 30, 2015. The Company believes that the unrealized losses in these debt 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 does not intend to sell the investments and it is more likely than not that the Company will not be required to sell the investments before recovery of their amortized costs bases, which may be at maturity, the Company does not consider these investments to be other-than-temporarily impaired at June 30, 2015. For the second quarter of 2015, we recognized a permanent impairment loss of $90,000 related to an equity investment (Bankers Bancorporation of Florida, Inc.).