INVESTMENTS

The aggregate carrying and approximate market values of investment securities follow (in thousands). Fair values are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable financial instruments.



	December 31, 2018								December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	5,713	$	20	$	—	$	5,733	$	2	$	—	$	—	$	2
Obligations of states and
political subdivisions	128,089		1,033		1,052		128,070		94,552		2,051		407		96,196
Mortgage-backed securities:
U.S. government agencies	561,799		1,950		12,991		550,758		425,559		1,093		7,305		419,347
Private label	11,948		95		—		12,043		649		3		—		652
Trust preferred securities	4,774		25		—		4,799		4,764		26		54		4,736
Corporate securities	16,795		30		167		16,658		21,916		475		123		22,268
Total Debt Securities	729,118		3,153		14,210		718,061		547,442		3,648		7,889		543,201
Marketable equity securities	—		—		—		—		2,136		3,563		—		5,699
Certificates of deposit held for investment	3,735		—		—		3,735		—		—		—		—
Investment funds	1,525		—		67		1,458		1,525		—		36		1,489
Total Securities
Available-for-Sale	$	734,378	$	3,153	$	14,277	$	723,254	$	551,103	$	7,211	$	7,925	$	550,389



Securities held-to-maturity:
U.S. government agencies	$	56,827	$	173	$	294	$	56,706	$	60,449	$	1,222	$	25	$	61,646
Trust preferred securities	4,000		—		—		4,000		4,000		—		—		4,000
Total Securities
Held-to-Maturity	$	60,827	$	173	$	294	$	60,706	$	64,449	$	1,222	$	25	$	65,646

Other investment securities:
Marketable equity securities	$	10,313	$	—	$	—	$	10,313	$	—	$	—	$	—	$	—
Non-marketable equity securities	$	18,497	$	—	$	—	$	18,497	$	14,147	$	—	$	—	$	14,147
Total Other Investment
Securities	$	28,810	$	—	$	—	$	28,810	$	14,147	$	—	$	—	$	14,147

The Company's mortgage-backed U.S. government agency securities consist of both residential and commercial securities, all of which are guaranteed by Fannie Mae ("FNMA"), Freddie Mac ("FHLMC"), or Ginnie Mae ("GNMA"). Marketable equity securities consist of investments made by the Company in equity positions of various community banks. Included within this portfolio are ownership positions in the following community bank holding companies: First National Corporation (FXNC) (4%) and Eagle Financial Services, Inc. (EFSI) (1.5%). Securities with limited marketability, such as stock in the Federal Reserve Bank ("FRB") or the Federal Home Loan Bank ("FHLB"), are carried at cost and are reported as non-marketable equity securities in the table above. The Company's certificates of deposit consist of domestically issued certificates of deposits in denominations of less than the FDIC insurance limit of $250,000.

At December 31, 2018 and 2017, there were no securities of any non-governmental issuer whose aggregate carrying value or estimated fair value exceeded 10% of shareholders' equity.

Certain investment securities owned by the Company were in an unrealized loss position (i.e., amortized cost basis exceeded the estimated fair value of the securities) as of December 31, 2018 and 2017. The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):



	December 31, 2018
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	11,837	$	272	$	22,068	$	780	$	33,905	$	1,052
Mortgage-backed securities:
U.S. Government agencies	84,975		1,593		282,560		11,398		367,535		12,991
Corporate securities	12,995		167		—		—		12,995		167
Investment funds	1,500		67		—		—		1,500		67
Total available-for-sale	$	111,307	$	2,099	$	304,628	$	12,178	$	415,935	$	14,277

Securities held-to-maturity:
Mortgage-backed securities:
U.S. Government agencies	$	28,274	$	126	$	5,960	$	168	$	34,234	$	294
Total held-to-maturity	$	28,274	$	126	$	5,960	$	168	$	34,234	$	294



	December 31, 2017
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	4,913	$	28	$	19,440	$	379	$	24,353	$	407
Mortgage-backed securities:
U.S. Government agencies	172,807		1,887		140,226		5,418		313,033		7,305
Trust preferred securities	4,475		54		—		—		4,475		54
Corporate securities	3,357		49		2,350		74		5,707		123
Investment funds	1,500		36		—		—		1,500		36
Total available-for-sale	$	187,052	$	2,054	$	162,016	$	5,871	$	349,068	$	7,925

Securities held-to-maturity:
Mortgage-backed securities:
U.S. Government agencies	$	7,182	$	25	$	—	$	—	$	7,182	$	25
Total held-to-maturity	$	7,182	$	25	$	—	$	—	$	7,182	$	25

During the years ended December 31, 2018 and 2017, the Company had no credit-related net investment impairment losses. During the year ended December 31, 2016, the Company recorded $0.5 million in credit-related net investment impairment losses. The charges deemed to be other-than-temporary were related to pooled bank trust preferred securities and were based on the Company’s quarterly reviews of its investment securities for indications of losses considered to be other-than-temporary. At December 31, 2018, the cumulative amount of credit-related investment impairment losses that have been recognized by the Company on investments that remain in the Company's investment portfolio as of that date was $1.6 million.

Declines in the fair value of held-to-maturity and available-for-sale securities below their respective cost that are deemed to be other-than-temporary would be reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers, among other things (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition, capital strength, and near-term (within 12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; or (v) the intent to sell the investment security and if it’s more likely than not that the Company will not have to sell the security before recovery of its cost basis. In addition, management also employs a continuous monitoring process in regards to its marketable equity securities, specifically its portfolio of regional community bank holdings. Although the regional community bank stocks that are owned by the Company are publicly traded, the trading activity for these stocks is minimal, with trading volumes of less than 0.2% of each respective company being traded on a daily basis. As part of management’s review process for these securities, management reviews the financial condition of each respective regional community bank for any indications of financial weakness.

Management has the ability and intent to hold the securities classified as held-to-maturity until they mature, at which time the Company expects to receive full value for the securities. Furthermore, as of December 31, 2018, management does not intend to sell an impaired security and it is not more than likely that it will be required to sell the security before the recovery of its amortized cost basis. The unrealized losses on debt securities are primarily the result of interest rate changes, credit spread fluctuations on agency-issued mortgage related securities, general financial market uncertainty and unprecedented market volatility. These conditions should not prohibit the Company from receiving its contractual principal and interest payments on its debt securities. The fair value is expected to recover as the securities approach their maturity date or repricing date. As of December 31, 2018, management believes the unrealized losses detailed in the table above are temporary and no additional impairment loss has been recognized in the Company’s consolidated income statement. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss will be recognized in net income in the period the other-than-temporary impairment is identified, while any noncredit loss will be recognized in other comprehensive income.

The amortized cost and estimated fair value of debt securities at December 31, 2018, by contractual maturity, are shown in the following table (in thousands). Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties. Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.



	Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	5,592	$	5,572
Due after one year through five years	24,793		24,879
Due after five years through ten years	132,761		130,569
Due after ten years	565,972		557,041
	$	729,118	$	718,061
Securities Held-to-Maturity
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	4,927		5,053
Due after ten years	55,900		55,653
	$	60,827	$	60,706

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands):



	For the year ended December 31,
	2018			2017		2016

Gross unrealized gains recognized on securities still held	$	208		—		—
Gross unrealized losses recognized on securities still held	(298		)	—		—
Net unrealized (losses) gains recognized on securities still held	$	(90	)	$	—	$	—

Gross realized gains	—			$	4,476	$	3,978
Gross realized losses	—			—		(465		)
Net realized investment security gains	$	—		$	4,476	$	3,513

The carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law approximated $510 million and $429 million at December 31, 2018 and 2017, respectively.