Securities

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



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
At December 31, 2018
Debt securities available-for-sale:
Investment securities - U.S. government and agency obligations	$	100,524	$	163	$	(963	)	$	99,724
Mortgage-backed securities - FNMA	998		—		(5		)	993
Total debt securities available-for-sale	$	101,522	$	163	$	(968	)	$	100,717
Debt securities held-to-maturity:
Investment securities:
U.S. government and agency obligations	$	14,975	$	—	$	(130	)	$	14,845
State and municipal obligations	123,987		67		(1,697		)	122,357
Corporate debt securities	66,834		126		(4,984		)	61,976
Total investment securities	205,796		193		(6,811		)	199,178
Mortgage-backed securities:
FHLMC	237,703		159		(5,110		)	232,752
FNMA	277,266		753		(6,030		)	271,989
GNMA	127,611		198		(2,360		)	125,449
SBA	3,527		—		(80		)	3,447
Total mortgage-backed securities	646,107		1,110		(13,580		)	633,637
Total debt securities held-to-maturity	$	851,903	$	1,303	$	(20,391	)	$	832,815
Total debt securities	$	953,425	$	1,466	$	(21,359	)	$	933,532
At December 31, 2017
Debt securities available-for-sale:
Investment securities - U.S. government and agency obligations	$	82,378	$	—	$	(797	)	$	81,581
Debt securities held-to-maturity:
Investment securities:
U.S. government and 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 securities at December 31, 2018 and 2017 are as follows (in thousands):



	December 31,
	2018			2017
Amortized cost	$	851,903		$	772,060
Net loss on date of transfer from available-for-sale	(13,347		)	(13,347		)
Accretion of unrealized loss on securities reclassified to held-to-maturity	8,254			5,349
Carrying value	$	846,810		$	764,062

Realized gains were $248,000 for the year ended December 31, 2018. There were no realized gains or losses on the sale of securities for the year ended December 31, 2017.

The amortized cost and estimated fair value of investment securities at December 31, 2018 by contractual maturity, are shown below (in thousands). Actual maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. At December 31, 2018, corporate debt securities with an amortized cost and estimated fair value of $55.8 million and $51.1 million, respectively, were callable prior to the maturity date.



December 31, 2018	Amortized Cost		Estimated Fair Value
Less than one year	$	50,564	$	50,346
Due after one year through five years	159,365		157,606
Due after five years through ten years	85,574		80,049
Due after ten years	10,817		10,901
	$	306,320	$	298,902

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 $563.1 million and $466.4 million, at December 31, 2018 and 2017, respectively, including $74.1 million and $58.0 million at December 31, 2018 and 2017, respectively, pledged as collateral for securities sold under agreements to repurchase.

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



	As of December 31, 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. government and agency obligations	$	985	$	(3	)	$	66,438	$	(960	)	$	67,423	$	(963	)
Mortgage-backed securities - FNMA	993		(5		)	—		—			993		(5		)
Total debt securities available-for-sale	1,978		(8		)	66,438		(960		)	68,416		(968		)
Debt securities held-to-maturity:
Investment securities:
U.S. government and agency obligations	—		—			14,845		(130		)	14,845		(130		)
State and municipal obligations	2,856		(4		)	106,073		(1,693		)	108,929		(1,697		)
Corporate debt securities	2,470		(21		)	43,059		(4,963		)	45,529		(4,984		)
Total investment securities	5,326		(25		)	163,977		(6,786		)	169,303		(6,811		)
Mortgage-backed securities:
FHLMC	46,615		(159		)	147,763		(4,951		)	194,378		(5,110		)
FNMA	27,594		(125		)	185,328		(5,905		)	212,922		(6,030		)
GNMA	35,221		(535		)	59,468		(1,825		)	94,689		(2,360		)
SBA	3,447		(80		)	—		—			3,447		(80		)
Total mortgage-backed securities	112,877		(899		)	392,559		(12,681		)	505,436		(13,580		)
Total debt securities held-to-maturity	118,203		(924		)	556,536		(19,467		)	674,739		(20,391		)
Total debt securities	$	120,181	$	(932	)	$	622,974	$	(20,427	)	$	743,155	$	(21,359	)

	As of 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. government and agency obligations	$	69,375	$	(496	)	$	12,206	$	(301	)	$	81,581	$	(797	)
Debt securities held-to-maturity:
Investment securities:
U.S. government and 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 December 31, 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):



	As of December 31, 2018
Security Description	Amortized Cost		Estimated Fair Value		Credit Rating Moody’s/S&P
Chase Capital	$	10,000	$	8,800	Baa1/BBB-
Wells Fargo Capital	5,000		4,300		A1/BBB
Huntington Capital	5,000		4,350		Baa2/BB+
Keycorp Capital	5,000		4,400		Baa2/BB+
PNC Capital	5,000		4,570		Baa1/BBB-
State Street Capital	5,000		4,475		A3/BBB
SunTrust Capital	5,000		4,300		Not Rated/BB+
Southern Company	1,514		1,483		Baa2/BBB+
AT&T Inc.	1,509		1,480		Baa2/BBB
BB&T	1,512		1,487		A2/A-
Celgene	1,521		1,490		Baa2/BBB+
Haliburton	461		436		Baa1/A-
Ryder	1,504		1,488		Baa1/BBB+
	$	48,021	$	43,059

At December 31, 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 December 31, 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.

U.S. government and agency obligations consist of U.S. Treasury securities backed by the “full faith and credit” of the U.S. federal government, and agency securities issued by or guaranteed by government corporations, such as the Government National Mortgage Association (“GNMA”) and the Tennessee Valley Authority, and by government sponsored enterprises, such as the Federal Farm Credit Bank, the Federal Home Loan Banks, the Federal Home Loan Mortgage Corporation (“FHLMC”) and the Federal National Mortgage Association (“FNMA”). Mortgage-backed securities are issued and guaranteed by either FHLMC, FNMA, GNMA, or the Small Business Administration (“SBA”), corporations which are chartered by the United States Government. The debt obligations of all these agencies 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 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 December 31, 2018.

State and municipal obligations are securities issued by state and local governments for various purposes. The Company is not aware of any information subsequent to the purchase of any state and municipal obligation that indicates an inability on the part of an issuer to meet all of its financial commitments. The weighted average credit rating of these securities is Aa/AA with no credit rating below A3/A-. The Company has the ability and stated intention to hold these securities to maturity at which time the Company expects to receive full repayment. Current unrealized losses are considered 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 securities. As a result, the Company concluded that these securities were only temporarily impaired as of December 31, 2018.