Note

: Securities

The amortized cost and fair value of securities available for sale, with gross unrealized gains and losses, follows:

	December 31, 2018
Available for sale:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Government agencies and corporations	$	306,264	$	449	$	6,666	$	300,047
States and political subdivisions		118,564		1,218		1,166		118,616
Mortgage-backed securities		586		42		---		628
Corporate debt securities		6,014		---		295		5,719
Total securities available for sale	$	431,428	$	1,709	$	8,127	$	425,010

	December 31, 2017
Available for sale:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
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

December 31, 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 at

December 31, 2018.

	December 31, 20 1 8
Available for sale:	Amortized Cost		Fair Value
Due in one year or less	$	71,303	$	71,013
Due after one year through five years		181,186		177,141
Due after five years through ten years		85,379		84,584
Due after ten years		93,560		92,272
Total securities available for sale	$	431,428	$	425,010

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 at the date of re-designation.

December 31, 2017,

the amortized cost and fair value of securities held to maturity, with gross unrealized gains and losses, follows:

	December 31, 20 1 7
Held to maturity:	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
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 at

December 31, 2018

and

2017

aggregated by investment category and length of time that individual securities have been in a continuous loss position, follows:

	December 31, 2018
	Less Than 12 Months				12 Months or More
	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
U. S. Government agencies and corporations	$	17,730	$	216	$	259,992	$	6,450
State and political subdivisions		16,882		352		20,758		814
Corporate debt securities		4,842		194		876		101
Total temporarily impaired securities	$	39,454	$	762	$	281,626	$	7,365

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

The Company had

359

securities with a fair value of

$321,080

that were temporarily impaired at

December 31, 2018.

The total unrealized loss on these securities was

$8,127.

Of the temporarily impaired total,

309

securities with a fair value of

$281,626

and an unrealized loss of

$7,365

have been in a continuous loss position for

twelve

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

December 31, 2018

for the reasons set out below.

U.S. Government agencies.

The unrealized losses of

$6,450

on US Government agency securities stemmed from

267

securities with a fair value of

$259,992.

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

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 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 this investment to be other-than-temporarily impaired.

States and political subdivisions.

This category exhibits unrealized losses of

$814

securities with a fair value of

$20,758.

The Company reviewed financial statements and cash flows for the 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 investment 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

$876

was caused by market and interest rate fluctuations and is

not

associated with impaired financial status. The contractual terms of the investment 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 holds restricted stock of

$1,220

as of

December 31, 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 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

$513,578

December 31, 2018.

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

December 31, 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.

Pledged Securities

December 31, 2018

and

2017,

securities with a carrying value of

$196,062

and

$194,980,

respectively, were pledged to secure municipal deposits and for other purposes as required or permitted by law.

Realized

ecurities

Gains and L

osses

During

2018,

the Company sold

one

security for that resulted in a gain of

$16.

During

2017,

the Company sold a small investment in community bank stock that resulted in a gain of

$4.

The investment was classified as available for sale and had a book value of

$189.

All other realized gains and losses on securities during

2018,

2017

and

2016

resulted from calls of securities. Information pertaining to realized gains and losses on sold and called securities follows:

	For the year ended December 31, 2018
	Proceeds		Book Value		Gross Gain		Gross Loss		Net Gain
Available for sale	$	17,287	$	17,270	$	17	$	---	$	17
Held to maturity		6,430		6,430		---		---		---

	For the year ended December 31, 2017
	Proceeds		Book Value		Gross Gain		Gross Loss		Net Gain
Available for sale	$	13,620	$	13,614	$	10	$	---	$	10
Held to maturity		8,975		8,971		4		---		4

	For the year ended December 31, 201 6
	Proceeds		Book Value		Gross Gain		Gross Loss		Net Gain
Available for sale	$	220,520	$	220,334	$	186	$	---	$	186
Held to maturity		16,160		16,114		46		---		46