Quarterly report pursuant to Section 13 or 15(d)

Securities

v2.4.0.6
Securities
6 Months Ended
Jun. 30, 2012
Securities [Abstract]  
SECURITIES

11. SECURITIES

The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities as of June 30, 2012 and December 31, 2011 are summarized as follows (dollars in thousands):

 

                                 
    Amortized     Gross Unrealized     Estimated Fair  
    Cost     Gains     (Losses)     Value  

June 30, 2012

                               

U.S. government and agency securities

  $ 3,264     $ 312     $ —       $ 3,576  

Obligations of states and political subdivisions

    194,203       13,781       (202     207,782  

Corporate and other bonds

    9,503       308       (420     9,391  

Mortgage-backed securities

    393,954       9,838       (281     403,511  

Other securities

    3,183       100       —         3,283  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities

  $ 604,107     $ 24,339     $ (903   $ 627,543  
   

 

 

   

 

 

   

 

 

   

 

 

 

December 31, 2011

                               

U.S. government and agency securities

  $ 3,933     $ 351     $ —       $ 4,284  

Obligations of states and political subdivisions

    189,117       11,337       (247     200,207  

Corporate and other bonds

    12,839       188       (787     12,240  

Mortgage-backed securities

    390,329       10,434       (445     400,318  

Other securities

    3,044       77       (4     3,117  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities

  $ 599,262     $ 22,387     $ (1,483   $ 620,166  
   

 

 

   

 

 

   

 

 

   

 

 

 

Due to restrictions placed upon the Company’s common stock investment in the Federal Reserve Bank of Richmond and Federal Home Loan Bank of Atlanta (“FHLB”), these securities have been classified as restricted equity securities and carried at cost. These restricted securities are not subject to the investment security classifications. The FHLB requires the Bank to maintain stock in an amount equal to 4.5% of outstanding borrowings and a specific percentage of the member’s total assets. The Federal Reserve Bank of Richmond requires the Company to maintain stock with a par value equal to 6% of its outstanding capital. Restricted equity securities consist of Federal Reserve Bank stock in the amount of $6.8 million and $6.7 million and FHLB stock in the amount of $12.5 million and $13.9 million as of June 30, 2012 and December 31, 2011.

The following table shows the gross unrealized losses and fair value (in thousands) of the Company’s investments with unrealized losses that are not deemed to be other-than-temporarily impaired. These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position and are as follows:

 

                                                 
    Less than 12 months     More than 12 months     Total  
    Fair value     Unrealized
Losses
    Fair
value
    Unrealized
Losses
    Fair value     Unrealized
Losses
 

June 30, 2012

                                               

Obligations of states and political subdivisions

  $ 10,060     $ (132   $ 1,484     $ (70   $ 11,544     $ (202

Mortgage-backed securities

    60,822       (281     —         —         60,822       (281

Corporate bonds and other securities

    100       —         1,447       (420     1,547       (420
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Totals

  $ 70,982     $ (413   $ 2,931     $ (490   $ 73,913     $ (903
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

December 31, 2011

                                               

Obligations of states and political subdivisions

  $ 5,429     $ (152   $ 1,090     $ (95   $ 6,519     $ (247

Mortgage-backed securities

    97,203       (445     —         —         97,203       (445

Corporate bonds and other securities

    2,342       (165     3,790       (626     6,132       (791
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Totals

  $ 104,974     $ (762   $ 4,880     $ (721   $ 109,854     $ (1,483
   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

As of June 30, 2012, there were $2.9 million, or 6 issues, of individual securities that had been in a continuous loss position for more than 12 months. Additionally, these securities had an unrealized loss of $490,000 and consisted of corporate and municipal obligations.

 

The following table presents the amortized cost and estimated fair value of securities as of June 30, 2012, by contractual maturity (dollars in thousands). 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.

 

                                 
    June 30, 2012     December 31, 2011  
    Amortized     Estimated     Amortized     Estimated  
    Cost     Fair Value     Cost     Fair Value  

Due in one year or less

  $ 5,611     $ 5,683     $ 6,046     $ 6,098  

Due after one year through five years

    17,735       18,498       18,771       19,408  

Due after five years through ten years

    70,786       75,127       76,044       80,214  

Due after ten years

    506,792       524,952       495,357       511,329  

Other securities

    3,183       3,283       3,044       3,117  
   

 

 

   

 

 

   

 

 

   

 

 

 

Total securities available for sale

  $ 604,107     $ 627,543     $ 599,262     $ 620,166  
   

 

 

   

 

 

   

 

 

   

 

 

 

Securities with an amortized cost of $171.3 million and $172.1 million as of June 30, 2012 and December 31, 2011, respectively, were pledged to secure public deposits, repurchase agreements and for other purposes.

During each quarter the Company conducts an assessment of the securities portfolio for other-than-temporary impairment (“OTTI”) consideration. The assessment considers factors such as external credit ratings, delinquency coverage ratios, market price, management’s judgment, expectations of future performance, and relevant industry research and analysis. An impairment is OTTI if any of the following conditions exists: the entity intends to sell the security; it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis; or the entity does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell). If a credit loss exists, but an entity does not intend to sell the impaired debt security and is not more likely than not to be required to sell before recovery, the impairment is other-than-temporary and should be separated into a credit portion to be recognized in earnings and the remaining amount relating to all other factors recognized as other comprehensive loss. Based on the assessment for the quarter ended June 30, 2012, and in accordance with the guidance, no OTTI was recognized.

Based on the assessment for the quarter ended September 30, 2011 and in accordance with the guidance, the Company determined that a single issuer Trust Preferred security incurred credit-related OTTI of $400,000, which was recognized in earnings for the quarter ended September 30, 2011. There is a possibility that the Company will sell the security before recovering all unamortized costs. The significant inputs the Company considered in determining the amount of the credit loss are as follows:

 

   

The assessment of security credit rating agencies and research performed by third parties;

 

   

The continued interest payment deferral by the issuer;

 

   

The lack of improving asset quality of the issuer and worsening economic conditions; and

 

   

The security is thinly traded and trading at its historical low, below par.

OTTI recognized for the periods presented is summarized as follow (dollars in thousands):

 

         
    OTTI Losses  

Cumulative credit losses on investment securities, through December 31, 2011

  $ 400  

Cumulative credit losses on investment securities

    —    

Additions for credit losses not previously regognized

    —    
   

 

 

 

Cumulative credit losses on investment securities, through June 30, 2012

  $ 400