Note

Securities

The amortized costs, gross unrealized gains, gross unrealized losses and fair values for securities available for sale by major security type are as follows.

	September 30, 2018
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for S ale:
U.S. Government agencies and corporations	$	329,455	$	267	$	9,751	$	319,971
States and political subdivisions		121,515		1,272		1,704		121,083
Mortgage-backed securities		632		47		---		679
Corporate debt securities		7,003		14		265		6,752
Total securities available for sale	$	458,605	$	1,600	$	11,720	$	448,485

	December 31, 2017
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Available for S ale:
U.S. Government agencies and corporations	$	312,604	$	609	$	5,494	$	307,719
States and political subdivisions		16,853		100		119		16,834
Mortgage-backed securities		602		57		---		659
Corporate debt securities		6,016		188		29		6,175
Total securities available for sale	$	336,075	$	954	$	5,642	$	331,387

The amortized cost and fair value of single maturity securities available for sale at

September 30, 2018,

by contractual maturity, are shown below. Expected maturities

may

differ from contractual maturities because borrowers

may

have the right to call or prepay obligations with or without call or prepayment penalties. Mortgage-backed securities included in these totals are categorized by final maturity.

	September 30 , 2018
	Amortized Cost		Fair Value
Available for S ale:
Due in one year or less	$	81,642	$	81,455
Due after one year through five years		184,604		179,518
Due after five years through ten years		97,187		94,744
Due after ten years		95,172		92,768
Total securities available for sale	$	458,605	$	448,485

Prior to the

second

quarter of

2018,

the Company designated securities in its portfolio as either available for sale or held to maturity. During the

second

quarter of

2018,

the Company re-designated all of its held to maturity securities to available for sale. The securities were re-designated to provide opportunities to maximize asset utilization. At the time of transfer, the securities had a fair value of

$119,790

and an amortized cost of

$118,662,

resulting in an unrealized gain of

$1,128

which was added to accumulated other comprehensive income.

The amortized costs, gross unrealized gains, gross unrealized losses and fair values for securities held to maturity as of

December 31, 2017

by major security type are as follows.

	December 31, 2017
	Amortized Costs		Gross Unrealized Gains		Gross Unrealized Losses		Fair Values
Held to M aturity:
U.S. Government agencies and corporations	$	3,934	$	167	$	---	$	4,101
States and political subdivisions		122,039		2,929		173		124,795
Mortgage-backed securities		209		21		---		230
Corporate debt securities		982		5		---		987
Total securities held to maturity	$	127,164	$	3,122	$	173	$	130,113

Information pertaining to securities with gross unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows.

	September 30, 2018
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Temporarily I mpaired S ecurities:
U.S. Government agencies and corporations	$	68,197	$	2,570	$	244,485	$	7,181
States and political subdivisions		42,422		1,293		5,514		411
Corporate debt securities		4,870		164		877		101
Total	$	115,489	$	4,027	$	250,876	$	7,693

	December 31, 2017
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Temporarily I mpaired S ecurities:
U.S. Government agencies and corporations	$	68,380	$	871	$	225,738	$	4,623
States and political subdivisions		18,688		194		2,989		98
Corporate debt securities		---		---		948		29
Total	$	87,068	$	1,065	$	229,675	$	4,750

The Company had

413

securities with a fair value of

$366,365

that were temporarily impaired at

September 30, 2018.

The total unrealized loss on these securities was

$11,720.

Of the temporarily impaired total,

263

securities with a fair value of

$250,876

and an unrealized loss of

$7,693

have been in a continuous loss position for

twelve

months or more. The Company has determined that these securities are temporarily impaired at

September 30, 2018

for the reasons set out below.

U.S. Government ag

encies

. The unrealized losses of

$7,181

on US Government agency securities stemmed from

252

securities with a fair value of

$244,485.

The unrealized losses were caused by interest rate and market fluctuations. The contractual term of the investment does

not

permit the issuer to settle the security at a price less than the cost basis of the investment. The Company is monitoring bond market trends to develop strategies to address unrealized losses. Because the Company does

not

intend to sell the investments and it is

not

likely that the Company will be required to sell the investments before recovery of the amortized cost basis, which

may

be at maturity, the Company does

not

consider these investments to be other-than-temporarily impaired.

States and political subdivisions.

This category’s unrealized loss of

$411

securities with a fair value of

$5,514

is primarily the result of interest rate and market fluctuations. The Company reviewed financial statements and cash flows for each of the securities in continuous loss position for more than

months. The Company’s analysis determined that the unrealized losses are primarily the result of interest rate and market fluctuations and

not

associated with impaired financial status. The contractual terms of the investments do

not

permit the issuer to settle the securities at a price less than the cost basis of each investment. Because the Company does

not

intend to sell any of the investments and it is

not

likely that the Company will be required to sell any of the investments before recovery of its amortized cost basis, which

may

be at maturity, the Company does

not

consider these investments to be other-than-temporarily impaired.

Corporate debt securities.

The unrealized loss of

$101

one

corporate debt security with a fair value of

$877

was caused by market and interest rate fluctuations and is

not

associated with impaired financial status. The contractual terms of the investments do

not

permit the issuer to settle the securities at a price less than the cost basis of each investment. Because the Company does

not

intend to sell the investment and it is

not

likely that the Company will be required to sell the investment before recovery of its amortized cost basis, which

may

be at maturity, the Company does

not

consider the investment to be other-than-temporarily impaired.

Restricted stock.

The Company held restricted stock of

$2,708

as of

September 30, 2018

and

$1,200

as of

December 31, 2017.

Restricted stock is reported separately from available-for-sale securities and held-to-maturity securities. As a member of the Federal Reserve and the Federal Home Loan Bank (“FHLB”) of Atlanta, NBB is required to maintain certain minimum investments in the common stock of those entities. Required levels of investment are based upon NBB’s capital, current borrowings, and a percentage of qualifying assets. The Company purchases stock from or sells stock back to the correspondents based on their calculations. The stock is held by member institutions only and is

not

actively traded.

Redemption of FHLB stock is subject to certain limitations and conditions. At its discretion, the FHLB

may

declare dividends on the stock. In addition to dividends, NBB also benefits from its membership with FHLB through eligibility to borrow from the FHLB, using as collateral NBB’s capital stock investment in the FHLB and qualifying NBB real estate mortgage loans totaling

$503,690

September 30, 2018.

Management reviews for impairment based upon the ultimate recoverability of the cost basis of the FHLB stock, and at

September 30, 2018,

management did

not

determine any impairment.

Management regularly monitors the credit quality of the investment portfolio. Changes in ratings are noted and follow-up research on the issuer is undertaken when warranted. Management intends to carefully monitor any changes in bond quality.