Securities

The Company invests in U.S. agency and mortgage-backed securities, obligations of states and political subdivisions, corporate equity securities, and corporate debt securities. Amortized costs and fair values of securities at December 31, 2017 and 2016 were as follows (in thousands):



	2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Securities available for sale:
U.S. agency and mortgage-backed securities	$	76,074	$	67	$	(1,337	)	$	74,804
Obligations of states and political subdivisions	14,520		86		(155		)	14,451
Total securities available for sale	$	90,594	$	153	$	(1,492	)	$	89,255
Securities held to maturity:
U.S. agency and mortgage-backed securities	$	32,149	$	—	$	(551	)	$	31,598
Obligations of states and political subdivisions	14,559		74		(45		)	14,588
Corporate debt securities	1,500		16		—			1,516
Total securities held to maturity	$	48,208	$	90	$	(596	)	$	47,702
Total securities	$	138,802	$	243	$	(2,088	)	$	136,957



	2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Securities available for sale:
U.S. agency and mortgage-backed securities	$	81,451	$	177	$	(1,457	)	$	80,171
Obligations of states and political subdivisions	14,654		146		(180		)	14,620
Corporate equity securities	1		10		—			11
Total securities available for sale	$	96,106	$	333	$	(1,637	)	$	94,802
Securities held to maturity:
U.S. agency and mortgage-backed securities	$	37,269	$	1	$	(483	)	$	36,787
Obligations of states and political subdivisions	14,629		18		(211		)	14,436
Corporate debt securities	1,500		—		(14		)	1,486
Total securities held to maturity	$	53,398	$	19	$	(708	)	$	52,709
Total securities	$	149,504	$	352	$	(2,345	)	$	147,511

At December 31, 2017 and 2016, investments in an unrealized loss position that were temporarily impaired were as follows (in thousands):



	2017
	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)
Securities available for sale:
U.S. agency and mortgage-backed securities	$	29,963	$	(286	)	$	30,362	$	(1,051	)	$	60,325	$	(1,337	)
Obligations of states and political subdivisions	4,469		(53		)	1,961		(102		)	6,430		(155		)
Total securities available for sale	$	34,432	$	(339	)	$	32,323	$	(1,153	)	$	66,755	$	(1,492	)
Securities held to maturity:
U.S. agency and mortgage-backed securities	$	18,301	$	(205	)	$	13,297	$	(346	)	$	31,598	$	(551	)
Obligations of states and political subdivisions	6,889		(45		)	—		—			6,889		(45		)
Total securities held to maturity	$	25,190	$	(250	)	$	13,297	$	(346	)	$	38,487	$	(596	)
Total securities	$	59,622	$	(589	)	$	45,620	$	(1,499	)	$	105,242	$	(2,088	)



	2016
	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)			Fair Value		Unrealized (Loss)
Securities available for sale:
U.S. agency and mortgage-backed securities	$	60,943	$	(1,249	)	$	5,499	$	(208	)	$	66,442	$	(1,457	)
Obligations of states and political subdivisions	5,130		(180		)	—		—			5,130		(180		)
Total securities available for sale	$	66,073	$	(1,429	)	$	5,499	$	(208	)	$	71,572	$	(1,637	)
Securities held to maturity:
U.S. agency and mortgage-backed securities	$	34,770	$	(483	)	$	—	$	—		$	34,770	$	(483	)
Obligations of states and political subdivisions	12,724		(211		)	—		—			12,724		(211		)
Corporate debt securities	$	1,486	$	(14	)	$	—	$	—		$	1,486	$	(14	)
Total securities held to maturity	$	48,980	$	(708	)	$	—	$	—		$	48,980	$	(708	)
Total securities	$	115,053	$	(2,137	)	$	5,499	$	(208	)	$	120,552	$	(2,345	)

The tables above provide information about securities that have been in an unrealized loss position for less than twelve consecutive months and securities that have been in an unrealized loss position for twelve consecutive months or more. Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Impairment is considered to be other-than-temporary if the Company (1) intends to sell the security, (2) more likely than not will be required to sell the security before recovering its cost, or (3) does not expect to recover the security’s entire amortized cost basis. Presently, the Company does not intend to sell any of these securities, does not expect to be required to sell these securities, and expects to recover the entire amortized cost of all the securities.

At December 31, 2017, there were sixty-eight out of eighty-two U.S. agency and mortgage-backed securities and thirty-nine out of eighty obligations of states and political subdivisions in an unrealized loss position. One hundred percent of the Company’s investment portfolio is considered investment grade. The weighted-average re-pricing term of the portfolio was 4.7 years at December 31, 2017. At December 31, 2016, there were sixty-four out of eighty-three U.S. agency and mortgage-backed securities, fifty out of seventy-eight obligations of states and political subdivisions, and one corporate debt security in an unrealized loss position. One hundred percent of the Company’s investment portfolio was considered investment grade at December 31, 2016. The weighted-average re-pricing term of the portfolio was 4.7 years at December 31, 2016. The unrealized losses at December 31, 2017 in the U.S. agency and mortgage-backed securities portfolio and the obligations of states and political subdivisions portfolio were related to changes in market interest rates and not credit concerns of the issuers.

The amortized cost and fair value of securities at December 31, 2017 by contractual maturity are shown below (in thousands). Expected maturities of mortgage-backed securities will differ from contractual maturities because borrowers may have the right to prepay obligations with or without call or prepayment penalties.



	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	600	$	601	$	—	$	—
Due after one year through five years	9,040		9,048		6,186		6,144
Due after five years through ten years	8,920		8,774		14,160		14,158
Due after ten years	72,034		70,832		27,862		27,400
	$	90,594	$	89,255	$	48,208	$	47,702

Proceeds from maturities, calls, principal payments, and sales of securities available for sale during 2017 and 2016 were $28.2 million and $22.8 million, respectively. Gross gains of $49 thousand and $22 thousand were realized on calls and sales during 2017 and 2016, respectively. Gross losses of $152 thousand and $14 thousand were realized on calls and sales during 2017 and 2016, respectively. For the year ended December 31, 2017, the Company donated one security from the available for sale portfolio to a not-for-profit organization. The Company recognized a gross gain of $13 thousand related to the charitable donation of the available for sale security during 2017. There were no donations of securities from the available for sale portfolio for the year ended December 31, 2016.

Proceeds from maturities, calls, principal payments, and sales of securities held to maturity during 2017 and 2016 were $5.0 million and $12.8 million, respectively. There were zero sales of securities from the held to maturity portfolio for the year ended December 31, 2017. For the year ended December 31, 2016, the Company sold one security from the held to maturity portfolio. The Company recognized no gain or loss related to the sale as the carrying value of the security sold equaled the proceeds from the sale of $657 thousand. The sale of this security was in response to credit deterioration of the issuer. The Company did not realize any gross gains or gross losses on held to maturity securities during 2017 or 2016.

Securities having a fair value of $35.2 million and $27.7 million at December 31, 2017 and 2016 were pledged to secure public deposits and for other purposes required by law.

Federal Home Loan Bank, Federal Reserve Bank, and Community Bankers’ Bank stock are generally viewed as long-term investments and as restricted securities, which are carried at cost, because there is a minimal market for the stock. Therefore, when evaluating restricted securities for impairment, their value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Company does not consider these investments to be other-than-temporarily impaired at December 31, 2017, and no impairment has been recognized.

The composition of restricted securities at December 31, 2017 and 2016 was as follows (in thousands):



	2017		2016
Federal Home Loan Bank stock	$	645	$	623
Federal Reserve Bank stock	875		875
Community Bankers’ Bank stock	50		50
	$	1,570	$	1,548