INVESTMENT SECURITIES

12 Months Ended

Dec. 31, 2013

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 at December 31 were as follows:

	2013								2012
	Amortized Cost		Unrealized Gains		Unrealized Losses		Market Value		Amortized Cost		Unrealized Gain		Unrealized Losses		Market Value
Available for Sale
U.S. Government Treasury	$	71,791	$	82	$	40	$	71,833	$	96,745	$	504	$	—	$	97,249
U.S. Government Agency		75,275		127		256		75,146		51,468		221		25		51,664
States and Political Subdivisions		91,605		167		19		91,753		79,818		124		63		79,879
Mortgage-Backed Securities		2,583		212		—		2,795		56,217		805		40		56,982
Other Securities(1)		9,893		—		—		9,893		11,811		—		600		11,211
Total	$	251,147	$	588	$	315	$	251,420	$	296,059	$	1,654	$	728	$	296,985
Held to Maturity
U.S. Government Treasury	$	43,533	$	84	$	38	$	43,579	$	—	$	—	$	—	$	—
U.S. Government Agency		15,794		38		22		15,810		—		—		—		—
States and Political Subdivisions		33,216		53		4		33,265		—		—		—		—
Mortgage-Backed Securities		55,668		12		1,373		54,307		—		—		—		—
Total	$	148,211	$	187	$	1,437	$	146,961	$	—	$	—	$	—	$	—
Total Investment Securities	$	399,358	$	775	$	1,752	$	398,381	$	296,059	$	1,654	$	728	$	296,985

⁽¹⁾ Includes Federal Home Loan Bank and Federal Reserve Bank stock recorded at cost of $5.0 million and $4.8 million, respectively, at December 31, 2013 and $6.4 million and $4.8 million, respectively, at December 31, 2012.

During the third quarter of 2013, the Company transferred certain securities from available for sale to held to maturity. Transfers of securities into the held to maturity categories from available for sale are made at fair value on the date of the transfer. The securities had an aggregate fair value of $63.0 million with an aggregate net unrealized loss of $523,000 on the date of the transfer. The net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive income in the accompanying balance sheet as of December 31, 2013 totaled $498,000. This amount will be amortized out of accumulated other comprehensive income over the remaining life of the underlying securities as an adjustment of the yield on those securities.

Securities with an amortized cost of $258.5 million and $152.3 million at December 31, 2013 and December 31, 2012, 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.

Investment Sales. The total proceeds from the sale of investment securities and the gross realized gains and losses from the sale of such securities for each of the last three years are as follows:

(Dollars in Thousands)	Year		Total Proceeds		Gross Realized Gains		Gross Realized Losses
		2013	$	7,506	$	3	$	—
		2012		805		—		—
		2011	$	—	$	—	$	—

Maturity Distribution. As of December 31, 2013, 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 since 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	$	97,227	$	97,361	$	13,980	$	14,003
Due after one through five years		81,107		81,172		78,563		78,651
No Maturity		9,893		9,893		—		—
U.S. Government Agency		60,337		60,199		—		—
Mortgage-Backed Securities		2,583		2,795		55,668		54,307
Total	$	251,147	$	251,420	$	148,211	$	146,961

Other Than Temporarily Impaired Securities. The following table summarizes the investment securities with unrealized losses at December 31, 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
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
2012
Available for Sale
U.S. Government Agency	$	8,464	$	23	$	790	$	2	$	9,254	$	25
States and Political Subdivisions		30,302		55		5,028		8		35,330		63
Mortgage-Backed Securities		3,921		15		1,624		25		5,545		40
Other Securities		—		—		600		600		600		600
Total	$	42,687	$	93	$	8,042	$	635	$	50,729	$	728

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 $5.4 million of investment securities, with an unrealized loss of approximately $33,000, 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 December 31, 2013. 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 December 31, 2013.