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Investment securities | 12 Months Ended
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Dec. 31, 2018
Investment securities |
Investment securities | 3. Investment securities: The amortized cost and fair value of investment securities aggregated by investment category at December 31, 2018 and 2017 are summarized as follows:
|  |  |  |  | Gross |  | Gross |  |  |  |
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair |
December 31, 2018 |  | Cost |  | Gains |  | Losses |  | Value |
Available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 25,948 |  | $ | 9 |  | $ | 365 |  | $ | 25,592 |
U.S. Government-sponsored enterprises |  |  | 94,999 |  |  | 2 |  |  | 2,183 |  |  | 92,818 |
State and municipals: |  |  |  |  |  |  |  |  |  |  |  |  |
Taxable |  |  | 13,544 |  |  | 309 |  |  |  |  |  | 13,853 |
Tax-exempt |  |  | 86,361 |  |  | 338 |  |  | 745 |  |  | 85,954 |
Residential Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  |  | 12,663 |  |  | 50 |  |  | 84 |  |  | 12,629 |
U.S. Government-sponsored enterprises |  |  | 33,149 |  |  | 49 |  |  | 401 |  |  | 32,797 |
Commercial Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government-sponsored enterprises |  |  | 6,269 |  |  |  |  |  | 230 |  |  | 6,039 |
Total |  | $ | 272,933 |  | $ | 757 |  | $ | 4,008 |  | $ | 269,682 |
Held-to-maturity: |  |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt state and municipals |  | $ | 6,855 |  | $ | 12 |  | $ | 43 |  | $ | 6,824 |
Residential Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  |  | 42 |  |  |  |  |  |  |  |  | 42 |
U.S. Government-sponsored enterprises |  |  | 1,464 |  |  | 55 |  |  | 5 |  |  | 1,514 |
Total |  | $ | 8,361 |  | $ | 67 |  | $ | 48 |  | $ | 8,380 |
|  |  |  |  | Gross |  | Gross |  |  |  |
|  | Amortized |  | Unrealized |  | Unrealized |  | Fair |
December 31, 2017 |  | Cost |  | Gains |  | Losses |  | Value |
Available-for-sale: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury securities |  | $ | 20,042 |  |  |  |  | $ | 228 |  | $ | 19,814 |
U.S. Government-sponsored enterprises |  |  | 95,358 |  | $ | 30 |  |  | 1,740 |  |  | 93,648 |
State and municipals: |  |  |  |  |  |  |  |  |  |  |  |  |
Taxable |  |  | 14,559 |  |  | 488 |  |  |  |  |  | 15,047 |
Tax-exempt |  |  | 103,199 |  |  | 1,136 |  |  | 502 |  |  | 103,833 |
Residential Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  |  | 14,517 |  |  | 2 |  |  | 85 |  |  | 14,434 |
U.S. Government-sponsored enterprises |  |  | 19,752 |  |  | 10 |  |  | 231 |  |  | 19,531 |
Commercial Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government-sponsored enterprises |  |  | 6,315 |  |  |  |  |  | 120 |  |  | 6,195 |
Total |  | $ | 273,742 |  | $ | 1,666 |  | $ | 2,906 |  | $ | 272,502 |
Held-to-maturity: |  |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt state and municipals |  | $ | 6,859 |  | $ | 152 |  | $ | 13 |  | $ | 6,998 |
Residential Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  |  | 54 |  |  |  |  |  |  |  |  | 54 |
U.S. Government-sponsored enterprises |  |  | 2,361 |  |  | 138 |  |  | 4 |  |  | 2,495 |
Total |  | $ | 9,274 |  | $ | 290 |  | $ | 17 |  | $ | 9,547 |
The Company had net unrealized losses on available-for-sale securities of $2,568, net of deferred income taxes of $683 at December 31, 2018, and net unrealized losses on available-for-sale securities of $977, net of deferred income taxes of $260, at December 31, 2017. There were no investment securities sales in 2018 and 2017. Proceeds from the sale of investment securities available-for-sale amounted to $27,408 in 2016. Our equity securities portfolio consists of stock of two other financial institutions. At December 31, 2018 and December 31, 2017, we had $291 thousand and $46 thousand, respectively, in equity securities recorded at fair value. Prior to January 1, 2018, equity securities were stated at fair value with unrealized gains and losses reported as a separate component of Accumulated Other Comprehensive Income (“AOCI”), net of tax. At December 31, 2017, net unrealized gains of $3 thousand had been recognized in AOCI. On January 1, 2018, these unrealized gains, net of income tax were reclassified out of AOCI and into retained earnings with subsequent changes in fair value being recognized in net income. At December 31, 2018, the fair value of our equity portfolio exceeded the cost basis by $14. The following is a summary of unrealized and realized gains and losses recognized in net income on equity securities during 2018.
Year Ended December 31, |  |  | 2018 |
Net gains recognized during the period on equity securities |  | $ | 14 |
Less: Net gains and (losses) recognized during the period on equity securities sold during the period |  |  |  |
Unrealized gains recognized during the reporting period on equity securities still held at the reporting date |  | $ | 14 |
There were no realized gains or losses on sold investment securities in 2018 or 2017. Gross realized gains totaled $623 in 2016. There were no gross losses in 2016. The maturity distribution of the fair value, which is the net carrying amount, of the debt securities classified as available-for-sale at December 31, 2018, is summarized as follows:
December 31, 2018 |  |  |
Within one year |  | $ | 38,925 |
After one but within five years |  |  | 152,806 |
After five but within ten years |  |  | 15,900 |
After ten years |  |  | 10,586 |
|  |  | 218,217 |
Mortgage-backed securities |  |  | 51,465 |
Total |  | $ | 269,682 |
Expected maturities will differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. The maturity distribution of the amortized cost and fair value, of debt securities classified as held-to-maturity at December 31, 2018, is summarized as follows:
|  | Amortized |  | Fair |
December 31, 2018 |  | Cost |  | Value |
Within one year |  |  |  |  |  |  |
After one but within five years |  |  |  |  |  |  |
After five but within ten years |  |  |  |  |  |  |
After ten years |  | $ | 6,855 |  | $ | 6,824 |
|  |  | 6,855 |  |  | 6,824 |
Mortgage-backed securities |  |  | 1,506 |  |  | 1,556 |
Total |  | $ | 8,361 |  | $ | 8,380 |
Securities with a carrying value of $161,647 and $163,936 at December 31, 2018 and 2017, respectively, were pledged to secure public deposits and certain other deposits as required or permitted by law. Securities and short-term investment activities are conducted with a diverse group of government entities, corporations and state and local municipalities. The counterparty’s creditworthiness and type of collateral is evaluated on a case-by-case basis. At December 31, 2018 and 2017, there were no significant concentrations of credit risk from any one issuer, with the exception of U.S. Government agencies and sponsored enterprises that exceeded 10.0 percent of stockholders’ equity. The fair value and gross unrealized losses of investment securities with unrealized losses for which an OTTI has not been recognized at December 31, 2018 and 2017, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, are summarized as follows:
|  | Less Than 12 Months |  | 12 Months or More |  | Total |
|  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized |
December 31, 2018 |  | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses |
U.S. Treasury securities |  | $ | 1,995 |  | $ | 2 |  | $ | 19,671 |  | $ | 363 |  | $ | 21,666 |  | $ | 365 |
U.S. Government-sponsored enterprises |  |  | 2,037 |  |  | 1 |  |  | 89,729 |  |  | 2,182 |  |  | 91,766 |  |  | 2,183 |
State and municipals: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt |  |  | 9,022 |  |  | 74 |  |  | 52,352 |  |  | 714 |  |  | 61,374 |  |  | 788 |
Residential Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  |  |  |  |  |  |  |  | 7,800 |  |  | 84 |  |  | 7,800 |  |  | 84 |
U.S. Government-sponsored enterprises |  |  | 12,851 |  |  | 55 |  |  | 13,881 |  |  | 351 |  |  | 26,732 |  |  | 406 |
Commercial Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government-sponsored enterprises |  |  |  |  |  |  |  |  | 6,039 |  |  | 230 |  |  | 6,039 |  |  | 230 |
Total |  | $ | 25,905 |  | $ | 132 |  | $ | 189,472 |  | $ | 3,924 |  | $ | 215,377 |  | $ | 4,056 |
|  | Less Than 12 Months |  | 12 Months or More |  | Total |
|  | Fair |  | Unrealized |  | Fair |  | Unrealized |  | Fair |  | Unrealized |
December 31, 2017 |  | Value |  | Losses |  | Value |  | Losses |  | Value |  | Losses |
U.S. Treasury securities |  | $ | 17,350 |  | $ | 170 |  | $ | 2,464 |  | $ | 58 |  | $ | 19,814 |  | $ | 228 |
U.S. Government-sponsored enterprises |  |  | 39,096 |  |  | 445 |  |  | 51,365 |  |  | 1,295 |  |  | 90,461 |  |  | 1,740 |
State and municipals: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Tax-exempt |  |  | 54,788 |  |  | 454 |  |  | 3,808 |  |  | 61 |  |  | 58,596 |  |  | 515 |
Residential Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government agencies |  |  | 9,484 |  |  | 39 |  |  | 3,968 |  |  | 46 |  |  | 13,452 |  |  | 85 |
U.S. Government-sponsored enterprises |  |  | 12,537 |  |  | 103 |  |  | 6,504 |  |  | 132 |  |  | 19,041 |  |  | 235 |
Commercial Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. Government-sponsored enterprises |  |  | 6,195 |  |  | 120 |  |  |  |  |  |  |  |  | 6,195 |  |  | 120 |
Total |  | $ | 139,450 |  | $ | 1,331 |  | $ | 68,109 |  | $ | 1,592 |  | $ | 207,559 |  | $ | 2,923 |
The Company had 187 investment securities, consisting of 104 tax-exempt state and municipal obligations, 8 U.S. Treasury securities, 37 U.S. Government-sponsored enterprise securities and 38 mortgage-backed securities that were in unrealized loss positions at December 31, 2018. Of these securities, 7 U.S. Treasury securities, 35 U.S. Government–sponsored enterprise securities, 33 mortgage-backed securities and 88 tax-exempt state and municipal securities were in a continuous unrealized loss position for twelve months or more. Management does not consider the unrealized losses on the debt securities, as a result of changes in interest rates, to be OTTI based on historical evidence that indicates the cost of these securities is recoverable within a reasonable period of time in relation to normal cyclical changes in the market rates of interest. Moreover, because there has been no material change in the credit quality of the issuers or other events or circumstances that may cause a significant adverse impact on the fair value of these securities, and management does not intend to sell these securities and it is unlikely that the Company will be required to sell these securities before recovery of their amortized cost basis, which may be maturity, the Company does not consider the unrealized losses to be OTTI at December 31, 2018. There was no OTTI recognized for each of the years in the three-year period ended December 31, 2018. Other assets include the Company’s investment in Visa Class B stock. The Company’s ownership includes shares acquired at no cost related to the Company’s prior ownership in Visa's network while Visa operated as a cooperative. The Company holds 44,982 shares of Visa Class B stock which, following resolution of Visa litigation, will be converted to Visa Class A shares (the conversion rate as of December 31, 2018 is 1.6298 shares of Class A stock for each share of Class B stock) for a total of 73,312 shares of Visa Class A stock. There is a very limited market for this stock, as only current owners of Class B shares are permitted to transact in Class B. Due to the lack of orderly trades and public information of such trades, Visa Class B stock has no readily determinable fair value.

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