Securities

The Company invests in U.S. agency and mortgage-backed securities, obligations of states and political subdivisions, and corporate debt securities. Amortized costs and fair values of securities at December 31, 2018 and 2017 were as follows (in thousands):



	2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Fair Value
Securities available for sale:
U.S. agency and mortgage-backed securities	$	86,944	$	44	$	(2,066	)	$	84,922
Obligations of states and political subdivisions	15,203		31		(299		)	14,935
Total securities available for sale	$	102,147	$	75	$	(2,365	)	$	99,857
Securities held to maturity:
U.S. agency and mortgage-backed securities	$	27,420	$	—	$	(869	)	$	26,551
Obligations of states and political subdivisions	14,488		20		(174		)	14,334
Corporate debt securities	1,500		9		—			1,509
Total securities held to maturity	$	43,408	$	29	$	(1,043	)	$	42,394
Total securities	$	145,555	$	104	$	(3,408	)	$	142,251



	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

At December 31, 2018 and 2017, investments in an unrealized loss position that were temporarily impaired were as follows (in thousands):



	2018
	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	$	26,350	$	(215	)	$	49,652	$	(1,851	)	$	76,002	$	(2,066	)
Obligations of states and political subdivisions	3,761		(25		)	5,127		(274		)	8,888		(299		)
Total securities available for sale	$	30,111	$	(240	)	$	54,779	$	(2,125	)	$	84,890	$	(2,365	)
Securities held to maturity:
U.S. agency and mortgage-backed securities	$	—	$	—		$	26,551	$	(869	)	$	26,551	$	(869	)
Obligations of states and political subdivisions	5,326		(37		)	6,115		(137		)	11,441		(174		)
Total securities held to maturity	$	5,326	$	(37	)	$	32,666	$	(1,006	)	$	37,992	$	(1,043	)
Total securities	$	35,437	$	(277	)	$	87,445	$	(3,131	)	$	122,882	$	(3,408	)



	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	)

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, 2018, there were eighty-three out of ninety U.S. agency and mortgage-backed securities and fifty-six out of eighty-two 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 4.6 years at December 31, 2018. 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 was considered investment grade at December 31, 2017. The weighted-average re-pricing term of the portfolio was 4.7 years at December 31, 2017. The unrealized losses at December 31, 2018 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, 2018 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	$	2,102	$	2,112	$	627	$	629
Due after one year through five years	5,777		5,715		6,768		6,644
Due after five years through ten years	13,602		13,266		13,523		13,379
Due after ten years	80,666		78,764		22,490		21,742
	$	102,147	$	99,857	$	43,408	$	42,394

Proceeds from maturities, calls, principal payments, and sales of securities available for sale during 2018 and 2017 were $15.7 million and $28.2 million, respectively. The Company did not realize any gross gains on calls and sales during 2018. Gross gains of $49 thousand were realized on calls and sales during and 2017. Gross losses of $1 thousand and $152 thousand were realized on calls and sales during 2018 and 2017, 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, 2018.

Proceeds from maturities, calls, and principal payments of securities held to maturity during 2018 and 2017 were $4.6 million and $5.0 million, respectively. There were no sales of securities from the held to maturity portfolio for the years ended December 31, 2018 or 2017. The Company did not realize any gross gains or gross losses on held to maturity securities during 2018 or 2017.

Securities having a fair value of $43.1 million and $35.2 million at December 31, 2018 and 2017 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, 2018, and no impairment has been recognized.

The composition of restricted securities at December 31, 2018 and 2017 was as follows (in thousands):



	2018		2017
Federal Home Loan Bank stock	$	763	$	645
Federal Reserve Bank stock	875		875
Community Bankers’ Bank stock	50		50
	$	1,688	$	1,570