Securities

9 Months Ended

Sep. 30, 2019

Investments, Debt and Equity Securities [Abstract]

The book values and approximate fair values of investment securities at September 30, 2019 and December 31, 2018 are summarized as follows:



($ in thousands)	September 30, 2019						December 31, 2018
	Amortized Cost		Fair Value	Unrealized			Amortized Cost	Fair Value	Unrealized
	Amortized Cost		Fair Value	Gains	(Losses)		Amortized Cost	Fair Value	Gains	(Losses)
Securities available for sale:
Government-sponsored enterprise securities	$	30,000	30,053	55	(2	)	82,995	82,662	63	(396	)
Mortgage-backed securities	634,176		640,488	7,794	(1,482	)	396,995	385,551	39	(11,483	)
Corporate bonds	33,721		34,683	1,052	(90	)	33,751	33,138	76	(689	)
Total available for sale	$	697,897	705,224	8,901	(1,574	)	513,741	501,351	178	(12,568	)

Securities held to maturity:
Mortgage-backed securities	$	43,968	43,801	—	(167	)	52,048	50,241	—	(1,807	)
State and local governments	30,297		30,664	369	(2	)	49,189	49,665	525	(49	)
Total held to maturity	$	74,265	74,465	369	(169	)	101,237	99,906	525	(1,856	)

All of the Company’s mortgage-backed securities were issued by government-sponsored corporations, except for private mortgage-backed securities with a fair value of $1.0 million as of September 30, 2019 and December 31, 2018.

The following table presents information regarding securities with unrealized losses at September 30, 2019:



($ in thousands)	Securities in an Unrealized Loss Position for Less than 12 Months			Securities in an Unrealized Loss Position for More than 12 Months		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Government-sponsored enterprise securities	$	4,998	2	—	—	4,998	2
Mortgage-backed securities	123,726		625	118,579	1,024	242,305	1,649
Corporate bonds	—		—	910	90	910	90
State and local governments	—		—	940	2	940	2
Total temporarily impaired securities	$	128,724	627	120,429	1,116	249,153	1,743

The following table presents information regarding securities with unrealized losses at December 31, 2018:



($ in thousands)	Securities in an Unrealized Loss Position for Less than 12 Months			Securities in an Unrealized Loss Position for More than 12 Months		Total
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses	Fair Value	Unrealized Losses
Government-sponsored enterprise securities	$	4,921	78	13,682	318	18,603	396
Mortgage-backed securities	82,525		351	294,305	12,939	376,830	13,290
Corporate bonds	20,704		433	5,817	256	26,521	689
State and local governments	595		1	6,641	48	7,236	49
Total temporarily impaired securities	$	108,745	863	320,445	13,561	429,190	14,424

In the above tables, all of the securities that were in an unrealized loss position at September 30, 2019 and December 31, 2018 were bonds that the Company has determined are in a loss position due primarily to interest rate factors and not credit quality concerns. The Company evaluated the collectability of each of these bonds and concluded that there was no other-than-temporary impairment. The Company does not intend to sell these securities, and it is more likely than not that the Company will not be required to sell these securities before recovery of the amortized cost.

The book values and approximate fair values of investment securities at September 30, 2019, by contractual maturity, are summarized in the table below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.



	Securities Available for Sale			Securities Held to Maturity
($ in thousands)	Amortized Cost		Fair Value	Amortized Cost	Fair Value
Securities
Due within one year	$	—	—	1,165	1,168
Due after one year but within five years	58,721		59,661	21,645	21,925
Due after five years but within ten years	—		—	6,673	6,718
Due after ten years	5,000		5,075	814	853
Mortgage-backed securities	634,176		640,488	43,968	43,801
Total securities	$	697,897	705,224	74,265	74,465

At September 30, 2019 and December 31, 2018 investment securities with carrying values of $287,418,000 and $234,382,000, respectively, were pledged as collateral for public deposits.

In the three and nine months ended September 2019, the Company received proceeds from sales of securities of $39,797,000 and recorded gains of $97,000 from the sales. There were no securities sales in the first nine months of 2018.

Included in “other assets” in the Consolidated Balance Sheets are cost-method investments in Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank of Richmond (“FRB”) stock totaling $33,380,000 and $37,468,000 at September 30, 2019 and December 31, 2018, respectively. The FHLB stock had a cost of $15,789,000 and $20,036,000 at September 30, 2019 and December 31, 2018, respectively, and serves as part of the collateral for the Company’s line of credit with the FHLB and is also a requirement for membership in the FHLB system. The FRB stock had a cost of $17,591,000 and $17,432,000 at September 30, 2019 and December 31, 2018, respectively, and is a requirement for FRB member bank qualification. Periodically, both the FHLB and FRB recalculate the Company’s required level of holdings, and the Company either buys more stock or redeems a portion of the stock at cost. The Company determined that neither stock was impaired at either period end.

The Company owns 12,356 Class B shares of Visa, Inc. (“Visa”) stock that were received upon Visa’s initial public offering. These shares are expected to convert into Class A Visa shares subsequent to the settlement of certain litigation against Visa. The Class B shares have transfer restrictions, and the conversion rate into Class A shares is periodically adjusted as Visa settles litigation. The conversion rate at September 30, 2019 was approximately 1.62, which means the Company would receive approximately 20,051 Class A shares if the stock had converted on that date. This stock does not have a readily determinable fair value and is therefore carried at its cost basis of zero. If a readily determinable fair value becomes available for the Class B shares, or upon the conversion to Class A shares, the Company will adjust the carrying value of the stock to its market value with a credit to earnings.