Quarterly report pursuant to Section 13 or 15(d)

INVESTMENT SECURITIES

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INVESTMENT SECURITIES
3 Months Ended
Mar. 31, 2014
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:

 

 

    March 31, 2014   December 31, 2013
    Amortized
Cost
  Unrealized
Gains
  Unrealized
Losses
  Market
Value
  Amortized
Cost
  Unrealized
Gain
  Unrealized
Losses
  Market
Value
Available for Sale                                                                
U.S. Treasury   $ 64,258     $ 50     $ 22     $ 64,286     $ 71,791     $ 82     $ 40     $ 71,833  
U.S. Government Agency     80,102       160       265       79,997       75,275       127       256       75,146  
States and Political Subdivisions     73,632       147       15       73,764       91,605       167       19       91,753  
Mortgage-Backed Securities     2,509       213       —         2,722       2,583       212       —         2,795  
Other Securities(1)     8,846       —         —         8,846       9,893       —         —         9,893  
Total     229,347     $ 570     $ 302     $ 229,615     $ 251,147     $ 588     $ 315     $ 251,420  
                                                                 
Held to Maturity                                                                
U.S. Treasury   $ 71,417     $ 88     $ 87     $ 71,418     $ 43,533     $ 84     $ 38     $ 43,579  
U.S. Government Agency     33,854       47       48       33,853       15,794       38       22       15,810  
States and Political Subdivisions     34,410       63       14       34,459       33,216       53       4       33,265  
Mortgage-Backed Securities     51,964       12       722       51,254       55,668       12       1,373       54,307  
Other Securities     —         —         —         —         —         —         —         —    
Total   $ 191,645     $ 210     $ 871     $ 190,984     $ 148,211     $ 187     $ 1,437     $ 146,961  

 

 

 

 

  (1) Includes Federal Home Loan Bank and Federal Reserve Bank stock recorded at cost of $4.0 million and $4.8 million, respectively, at March 31, 2014 and $5.0 million and $4.8 million, respectively, at December 31, 2013.

 

Securities with an amortized cost of $252.4 million and $258.5 million at March 31, 2014 and December 31, 2013, 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 March 31, 2014, 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   $ 96,559     $ 96,670     $ 15,374     $ 15,392  
Due after one through five years     56,260       56,327       124,307       124,338  
No Maturity     8,846       8,846       —         —    
U.S. Government Agency     65,173       65,050       —         —    
Mortgage-Backed Securities     2,509       2,722       51,964       51,254  
Total   $ 229,347     $ 229,615     $ 191,645     $ 190,984  

 

Unrealized Losses on Investment Securities. The following table summarizes the investment securities with unrealized losses at March 31, 2014, 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
March 31, 2014                                                
Available for Sale                                                
U.S. Government Treasury   $ 19,952     $ 22     $ —       $ —       $ 19,952     $ 22  
U.S. Government Agency     31,184       223       6,133       42       37,317       265  
States and Political Subdivisions     529       —         1,258       15       1,787       15  
Total   $ 51,665     $ 245     $ 7,391     $ 57     $ 59,056     $ 302  
                                                 
Held to Maturity                                                
U.S. Government Treasury     39,968       88       —         —         39,968       88  
U.S. Government Agency     23,178       48       —         —         23,178       48  
States and Political Subdivisions     4.637       14       —         —         4.637       14  
Mortgage-Backed Securities     40,969       721       —         —         40,969       721  
Total   $ 108,752     $ 871     $ —       $ —       $ 108,752     $ 871  
                                                 
December 31, 2013                                                
Available for Sale                                                
U.S. Government Treasury   $ 24,924     $ 40     $ —       $ —       $ 24,924     $ 40  
U.S. Government Agency     40,944       235       4,842       21       45,786       256  
States and Political Subdivisions     4,101       7       511       12       4,612       19  
Total   $ 69,969     $ 282     $ 5,353     $ 33     $ 75,322     $ 315  
                                                 
Held to Maturity                                                
U.S. Government Treasury     10,054       38       —         —         10,054       38  
U.S. Government Agency     5,676       22       —         —         5,676       22  
States and Political Subdivisions     3,316       4       —         —         3,316       4  
Mortgage-Backed Securities     44,031       1,373       —         —         44,031       1,373  
Total   $ 63,077     $ 1,437     $ —       $ —       $ 63,077     $ 1,437  

 

 

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 $7.4 million of investment securities, with an unrealized loss of approximately $57,000, 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 March 31, 2014. 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 has the present 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, 2014.