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Securities
9 Months Ended
Sep. 30, 2014
Securities [Abstract]  
Securities
Note 3 – Securities

The amortized cost and estimated fair value of investments in debt and equity securities at September 30, 2014 and December 31, 2013 were as follows:

 
 
September 30, 2014
 
(in thousands)
 
Amortized
Cost
  
Unrealized
Gains
  
Unrealized
Losses
  
Estimated
Fair Value
 
Securities available for sale:
 
  
  
  
 
Federal agencies and GSEs
 
$
69,911
  
$
177
  
$
145
  
$
69,943
 
Mortgage-backed and CMOs
  
59,916
   
1,197
   
241
   
60,872
 
State and municipal
  
180,340
   
7,985
   
128
   
188,197
 
Corporate
  
8,478
   
13
   
82
   
8,409
 
Equity securities
  
1,000
   
113
   
-
   
1,113
 
Total securities available for sale
 
$
319,645
  
$
9,485
  
$
596
  
$
328,534
 

 
 
December 31, 2013
 
(in thousands)
 
Amortized
Cost
  
Unrealized
Gains
  
Unrealized
Losses
  
Estimated
Fair Value
 
Securities available for sale:
 
  
  
  
 
Federal agencies and GSEs
 
$
66,241
  
$
126
  
$
486
  
$
65,881
 
Mortgage-backed and CMOs
  
69,168
   
1,085
   
645
   
69,608
 
State and municipal
  
193,251
   
5,999
   
517
   
198,733
 
Corporate
  
10,959
   
4
   
164
   
10,799
 
Equity securities
  
1,000
   
103
   
-
   
1,103
 
Total securities available for sale
 
$
340,619
  
$
7,317
  
$
1,812
  
$
346,124
 

Restricted Stock

Due to restrictions placed upon the Bank's common stock investment in the Federal Reserve Bank of Richmond ("FRB") and Federal Home Loan Bank of Atlanta ("FHLB"), these securities have been classified as restricted equity securities and carried at cost.  The restricted securities are not subject to the investment security classification and are included as a separate line item on the Company's balance sheet.  The FRB requires the Bank to maintain stock with a par value equal to 6.0% of its common stock and paid-in surplus.  One-half of this amount is paid to the Federal Reserve Bank and the remaining half is subject to call when deemed necessary by the Board of Governors of the Federal Reserve System.  The FHLB requires the Bank to maintain stock in an amount equal to a specific percentage of the Bank's total assets and 4.5% of outstanding borrowings. The Bank also owns common stock in CBB Financial Corporation, a Community Bankers Bank located in Richmond, Virginia which provides services to community banks that was inherited from the merger with Community First Financial Corporation in 2006 and common stock in Danville Community Development Corporation, a corporation formed by local banks in the Danville, Virginia area that restores dilapidated properties for resale.  The cost of restricted stock at September 30, 2014 and December 31, 2013 were as follows:

(in thousands)
 
September 30,
  
December 31,
 
 
 
2014
  
2013
 
FRB stock
 
$
1,625
  
$
2,722
 
FHLB stock
  
2,737
   
2,000
 
CBB Financial Corporation stock
  
101
   
101
 
Danville Community Development Corporation stock
  
66
   
66
 
   Total restricted stock
 
$
4,529
  
$
4,889
 

Temporarily Impaired Securities

The following table shows estimated fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2014.  The reference point for determining when securities are in an unrealized loss position is month-end.  Therefore, it is possible that a security's market value exceeded its amortized cost on other days during the past twelve-month period.


 
 
Total
  
Less than 12 Months
  
12 Months or More
 
(in thousands)
 
Estimated
Fair
Value
  
Unrealized
Loss
  
Estimated
Fair
Value
  
Unrealized
Loss
  
Estimated
Fair
Value
  
Unrealized
Loss
 
Federal agencies and GSEs
 
$
30,126
  
$
145
  
$
10,613
  
$
30
  
$
19,513
  
$
115
 
Mortgage-backed and CMOs
  
14,362
   
241
   
8,315
   
28
   
6,047
   
213
 
State and municipal
  
14,539
   
128
   
8,217
   
66
   
6,322
   
62
 
Corporate
  
5,039
   
82
   
2,285
   
11
   
2,754
   
71
 
Total
 
$
64,066
  
$
596
  
$
29,430
  
$
135
  
$
34,636
  
$
461
 

GSE debt securities: The unrealized losses on the Company's investment in 14 government sponsored entities ("GSE") were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2014.

Mortgage-backed securities and CMOs: The unrealized losses on the Company's investment in 14 GSE mortgage-backed securities and collateralized mortgage obligations ("CMOs") were caused by interest rate increases. The contractual cash flows of those investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company's investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2014.

State and municipal securities:  The unrealized losses on 15 state and municipal securities were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2014.

Corporate securities:  The unrealized losses on five investments in corporate securities were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2014.

Restricted stock: When evaluating restricted stock for impairment, its value is based on the ultimate recoverablity of the par value rather than by recognizing temporary declines in value. The company does not consider restricted stock to be other-than-temoraily impaired at September 30, 2014, and no impairment has been recognized.


The table below shows gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position, at December 31, 2013.

 
 
Total
  
Less than 12 Months
  
12 Months or More
 
(in thousands)
 
Estimated
Fair
Value
  
Unrealized
Loss
  
Estimated
Fair
Value
  
Unrealized
Loss
  
Estimated
Fair
Value
  
Unrealized
Loss
 
Federal agencies and GSEs
 
$
41,586
  
$
486
  
$
41,586
  
$
486
  
$
-
  
$
-
 
Mortgage-backed and CMOs
  
23,916
   
645
   
19,042
   
577
   
4,874
   
68
 
State and municipal
  
33,192
   
517
   
29,732
   
462
   
3,460
   
55
 
Corporate
  
7,347
   
164
   
7,347
   
164
   
-
   
-
 
Total
 
$
106,041
  
$
1,812
  
$
97,707
  
$
1,689
  
$
8,334
  
$
123
 

Other-Than-Temporary-Impaired Securities

As of September 30, 2014 and December 31, 2013, there were no securities classified as having other-than-temporary impairment.