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.