Securities

The amortized cost and fair value of investments in debt and equity securities at September 30, 2018 and December 31, 2017 were as follows (dollars in thousands):



	September 30, 2018
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Securities available for sale:
Federal agencies and GSEs	$	117,159	$	—	$	4,991	$	112,168
Mortgage-backed and CMOs	104,595		121		3,554		101,162
State and municipal	75,929		287		928		75,288
Corporate	7,151		30		22		7,159
Total securities available for sale	$	304,834	$	438	$	9,495	$	295,777

The Company adopted ASU 2016-01 effective January 1, 2018 and had equity securities with a fair value of $2,087,000 at September 30, 2018 and recognized in income $312,000 of unrealized holding gains in the first nine months of 2018. During the nine months ended September 30, 2018, the Company sold $431,000 in equity securities at fair value.



	December 31, 2017
	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
Securities available for sale:
Federal agencies and GSEs	$	114,246	$	8	$	2,127	$	112,127
Mortgage-backed and CMOs	106,163		293		1,140		105,316
State and municipal	92,711		1,262		347		93,626
Corporate	7,842		234		14		8,062
Equity securities	1,383		823		—		2,206
Total securities available for sale	$	322,345	$	2,620	$	3,628	$	321,337

Restricted Stock

Due to restrictions placed upon the Bank's common stock investment in the Federal Reserve Bank of Richmond ("FRB") and Federal Home Loan Bank of Atlanta ("FHLB"), these securities have been classified as restricted equity securities and carried at cost. The restricted securities are not subject to the investment security classification and are included as a separate line item on the Company's consolidated balance sheets. The FRB requires the Bank to maintain stock with a par value equal to 3.00% of its outstanding capital and an additional 3.00% is on call. The FHLB requires the Bank to maintain stock in an amount equal to 4.25% of outstanding borrowings and a specific percentage of the Bank's total assets. The cost of restricted stock at September 30, 2018 and December 31, 2017 was as follows (dollars in thousands):



	September 30, 2018		December 31, 2017
FRB stock	$	3,613	$	3,587
FHLB stock	1,626		2,523
Total restricted stock	$	5,239	$	6,110

Temporarily Impaired Securities

The following table shows estimated fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2018. The reference point for determining when securities are in an unrealized loss position is month-end. Therefore, it is possible that a security's market value exceeded its amortized cost on other days during the past twelve-month period.

Available for sale securities that have been in a continuous unrealized loss position are as follows (dollars in thousands):



	Total				Less than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Federal agencies and GSEs	$	112,168	$	4,991	$	34,414	$	469	$	77,754	$	4,522
Mortgage-backed and CMOs	95,154		3,554		36,050		840		59,104		2,714
State and municipal	51,631		928		38,892		407		12,739		521
Corporate	829		22		—		—		829		22
Total	$	259,782	$	9,495	$	109,356	$	1,716	$	150,426	$	7,779

Federal agencies and GSEs: The unrealized losses on the Company's investment in 25 government sponsored entities ("GSE") securities were caused by interest rate increases. Eighteen of these securities were in an unrealized loss position for 12 months or more. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2018.

Mortgage-backed securities: The unrealized losses on the Company's investment in 71 GSE mortgage-backed securities were caused by interest rate increases. Thirty-nine of these securities were in an unrealized loss position for 12 months or more. The contractual cash flows of those investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company's investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2018.

Collateralized Mortgage Obligations: The unrealized losses associated with three private GSE collateralized mortgage obligations ("CMO") were due to normal market fluctuations. One of these securities was in an unrealized loss position for 12 months or more. The contractual cash flows of those investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost basis of the Company's investments. Because the decline in market value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of its amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2018.

State and municipal securities: The unrealized losses on 72 state and municipal securities were caused by interest rate increases. Twenty of these securities were in an unrealized loss position for 12 months or more. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2018.

Corporate securities: The unrealized losses on two corporate securities were caused by interest rate increases. Both of these two securities were in an unrealized loss position for 12 months or more. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost basis of the investments. Because the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at September 30, 2018.

Restricted stock: When evaluating restricted stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. The Company does not consider restricted stock to be other-than-temporarily impaired at September 30, 2018, and no impairment has been recognized.

The table below shows estimated fair value and gross unrealized losses, aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position, at December 31, 2017 (dollars in thousands):



	Total				Less than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Federal agencies and GSEs	$	99,133	$	2,127	$	45,474	$	321	$	53,659	$	1,806
Mortgage-backed and CMOs	90,806		1,140		64,449		533		26,357		607
State and municipal	34,550		347		27,442		159		7,108		188
Corporate	1,529		14		495		5		1,034		9
Total	$	226,018	$	3,628	$	137,860	$	1,018	$	88,158	$	2,610

Other-Than-Temporarily-Impaired Securities

As of September 30, 2018 and December 31, 2017, there were no securities classified as other-than-temporarily impaired.

Realized Gains and Losses

The following table presents the gross realized gains and losses on and the proceeds from the sale of securities available for sale during the three and nine months ended September 30, 2018 and 2017 (dollars in thousands):



	Three Months Ended September 30, 2018			Nine Months Ended September 30, 2018
Realized gains (losses):
Gross realized gains	$	237		$	342
Gross realized losses	(164		)	(261		)
Net realized gains	$	73		$	81
Proceeds from sales of securities	$	35,541		$	57,607

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
Realized gains (losses):
Gross realized gains	$	—		$	605
Gross realized losses	—			(15		)
Net realized gains	$	—		$	590
Proceeds from sales of securities	$	—		$	55,403