Securities

The amortized cost and estimated fair value of debt securities available-for-sale and held-to-maturity at September 30, 2018, and December 31, 2017, are as follows (in thousands):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
At September 30, 2018
Debt securities available-for-sale:
Investment securities - U.S. agency obligations	$	100,450	$	—	$	(1,577	)	$	98,873
Mortgage-backed securities - FNMA	1,153		—		(11		)	1,142
Total debt securities available-for-sale	$	101,603	$	—	$	(1,588	)	$	100,015
Debt securities held-to-maturity:
Investment securities:
U.S. agency obligations	$	14,974	$	—	$	(192	)	$	14,782
State and municipal obligations	134,988		—		(2,885		)	132,103
Corporate debt securities	64,819		921		(3,035		)	62,705
Total investment securities	214,781		921		(6,112		)	209,590
Mortgage-backed securities:
FHLMC	249,884		45		(8,126		)	241,803
FNMA	289,210		755		(9,382		)	280,583
GNMA	130,847		176		(2,858		)	128,165
SBA	4,126		—		(94		)	4,032
Total mortgage-backed securities	674,067		976		(20,460		)	654,583
Total debt securities held-to-maturity	$	888,848	$	1,897	$	(26,572	)	$	864,173
Total debt securities	$	990,451	$	1,897	$	(28,160	)	$	964,188
At December 31, 2017
Debt securities available-for-sale:
Investment securities - U.S. agency obligations	$	82,378	$	—	$	(797	)	$	81,581
Debt securities held-to-maturity:
Investment securities:
U.S. agency obligations	$	14,968	$	—	$	(65	)	$	14,903
State and municipal obligations	149,958		219		(1,475		)	148,702
Corporate debt securities	76,024		312		(3,962		)	72,374
Total investment securities	240,950		531		(5,502		)	235,979
Mortgage-backed securities:
FHLMC	186,921		151		(2,937		)	184,135
FNMA	263,103		1,193		(3,000		)	261,296
GNMA	75,243		64		(928		)	74,379
SBA	5,843		28		—			5,871
Total mortgage-backed securities	531,110		1,436		(6,865		)	525,681
Total debt securities held-to-maturity	$	772,060	$	1,967	$	(12,367	)	$	761,660
Total debt securities	$	854,438	$	1,967	$	(13,164	)	$	843,241

During the third quarter 2013, the Bank transferred $536.0 million of previously designated available-for-sale securities to a held-to-maturity designation at estimated fair value. The securities transferred had an unrealized net loss of $13.3 million at the time of transfer which continues to be reflected in accumulated other comprehensive loss on the consolidated balance sheet, net of subsequent amortization, which is being recognized over the life of the securities. The carrying value of the debt securities held-to-maturity at September 30, 2018, and December 31, 2017, is as follows (in thousands):



	September 30, 2018			December 31, 2017
Amortized cost	$	888,848		$	772,060
Net loss on date of transfer from available-for-sale	(13,347		)	(13,347		)
Accretion of net unrealized loss on securities reclassified as held-to-maturity	8,039			5,349
Carrying value	$	883,540		$	764,062

Realized gains were $0 and $248,000 for the three and nine months ended September 30, 2018, respectively, and there were no realized gains or losses on the sale of securities for the three and nine months ended September 30, 2017.

The amortized cost and estimated fair value of investment securities at September 30, 2018 by contractual maturity are shown below (in thousands). Actual maturities may differ from contractual maturities in instances where issuers have the right to call or prepay obligations with or without call or prepayment penalties. At September 30, 2018, corporate debt securities with an amortized cost of $53.8 million and estimated fair value of $51.8 million were callable prior to the maturity date.



September 30, 2018	Amortized Cost		Estimated Fair Value
Less than one year	$	56,753	$	56,522
Due after one year through five years	156,879		153,904
Due after five years through ten years	90,804		86,373
Due after ten years	10,795		11,664
	$	315,231	$	308,463

Mortgage-backed securities are excluded from the above table since their effective lives are expected to be shorter than the contractual maturity date due to principal prepayments.

The estimated fair value of securities pledged as required security for deposits and for other purposes required by law amounted to $578.5 million and $466.4 million, at September 30, 2018 and December 31, 2017, respectively, including $76.8 million and $58.0 million at September 30, 2018 and December 31, 2017, respectively, pledged as collateral for securities sold under agreements to repurchase.

The estimated fair value and unrealized losses of debt securities available-for-sale and held-to-maturity at September 30, 2018 and December 31, 2017, segregated by the duration of the unrealized losses, are as follows (in thousands):



	At September 30, 2018
	Less than 12 months					12 months or longer					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Debt securities available-for-sale:
Investment securities - U.S. agency obligations	$	57,252	$	(675	)	$	41,621	$	(902	)	$	98,873	$	(1,577	)
Mortgage-backed securities - FNMA	1,142		(11		)	—		—			1,142		(11		)
Total debt securities available-for-sale	58,394		(686		)	41,621		(902		)	100,015		(1,588		)
Debt securities held-to-maturity:
Investment securities:
U.S. agency obligations	9,835		(129		)	4,947		(63		)	14,782		(192		)
State and municipal obligations	52,779		(744		)	67,500		(2,141		)	120,279		(2,885		)
Corporate debt securities	4,903		(68		)	41,583		(2,967		)	46,486		(3,035		)
Total investment securities	67,517		(941		)	114,030		(5,171		)	181,547		(6,112		)
Mortgage-backed securities:
FHLMC	125,973		(2,463		)	112,290		(5,663		)	238,263		(8,126		)
FNMA	120,922		(3,594		)	112,293		(5,788		)	233,215		(9,382		)
GNMA	52,813		(1,042		)	51,237		(1,816		)	104,050		(2,858		)
SBA	4,032		(94		)	—		—			4,032		(94		)
Total mortgage-backed securities	303,740		(7,193		)	275,820		(13,267		)	579,560		(20,460		)
Total debt securities held-to-maturity	371,257		(8,134		)	389,850		(18,438		)	761,107		(26,572		)
Total debt securities	$	429,651	$	(8,820	)	$	431,471	$	(19,340	)	$	861,122	$	(28,160	)

	At December 31, 2017
	Less than 12 months					12 months or longer					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Debt securities available-for-sale:
Investment securities - U.S. agency obligations	$	69,375	$	(496	)	$	12,206	$	(301	)	$	81,581	$	(797	)
Debt securities held-to-maturity:
Investment securities:
U.S. agency obligations	14,903		(65		)	—		—			14,903		(65		)
State and municipal obligations	104,883		(1,153		)	14,363		(322		)	119,246		(1,475		)
Corporate debt securities	4,035		(30		)	56,106		(3,932		)	60,141		(3,962		)
Total investment securities	123,821		(1,248		)	70,469		(4,254		)	194,290		(5,502		)
Mortgage-backed securities:
FHLMC	98,138		(781		)	68,238		(2,156		)	166,376		(2,937		)
FNMA	132,982		(1,058		)	65,060		(1,942		)	198,042		(3,000		)
GNMA	26,105		(223		)	45,281		(705		)	71,386		(928		)
Total mortgage-backed securities	257,225		(2,062		)	178,579		(4,803		)	435,804		(6,865		)
Total debt securities held-to-maturity	381,046		(3,310		)	249,048		(9,057		)	630,094		(12,367		)
Total debt securities	$	450,421	$	(3,806	)	$	261,254	$	(9,358	)	$	711,675	$	(13,164	)

At September 30, 2018, the amortized cost, estimated fair value and credit rating of the individual corporate debt securities in an unrealized loss position for greater than one year are as follows (in thousands):



Security Description	Amortized Cost		Estimated Fair Value		Credit Rating Moody’s/ S&P
Chase Capital	$	10,000	$	9,350	Baa2/BBB-
Wells Fargo Capital	5,000		4,650		A1/BBB
Huntington Capital	5,000		4,525		Baa2/BB+
Keycorp Capital	5,000		4,600		Baa2/BB+
PNC Capital	5,000		4,678		Baa1/BBB-
State Street Capital	5,000		4,700		A3/BBB
SunTrust Capital	5,000		4,625		Not Rated/BB+
Southern Company	1,516		1,485		Baa2/BBB+
AT&T Inc.	1,510		1,480		Baa2/BBB
Celgene	1,524		1,490		Baa2/BBB+
	$	44,550	$	41,583

At September 30, 2018, the estimated fair value of each of the above corporate debt securities was below cost. The Company concluded that these corporate debt securities were only temporarily impaired at September 30, 2018. In concluding that the impairments were only temporary, the Company considered several factors in its analysis. The Company noted that each issuer made all the contractually due payments when required. There were no defaults on principal or interest payments and no interest payments were deferred. Based on management’s analysis of each individual security, the issuers appear to have the ability to meet debt service requirements over the life of the security. Furthermore, the Company does not intend to sell these corporate debt securities and it is more likely than not that the Company will not be required to sell the securities. Historically, the Company has not utilized securities sales as a source of liquidity. The Company’s long range liquidity plans indicate adequate sources of liquidity outside the securities portfolio.

The mortgage-backed securities are issued and guaranteed by either the Federal Home Loan Mortgage Corporation (“FHLMC”), the Federal National Mortgage Association (“FNMA”), the Government National Mortgage Association (“GNMA”), or the Small Business Administration (“SBA”), corporations which are chartered by the United States Government and whose debt obligations are typically rated AA+ by one of the internationally-recognized credit rating services. The Company considers the unrealized losses to be the result of changes in interest rates which over time can have both a positive and negative impact on the estimated fair value of the mortgage-backed securities. 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 the securities before recovery of their amortized cost. As a result, the Company concluded that these securities were only temporarily impaired at September 30, 2018.