Note 4. Securities

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



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2018:
Securities available-for-sale:
U.S. Treasury securities	$	31,002	$	—	$	56	$	30,946
U.S. government agency securities	176,305		43		2,905		173,443
Mortgage-backed securities	1,302,274		4,393		29,394		1,277,273
State and municipal securities	1,206,777		3,890		18,202		1,192,465
Asset-backed securities	204,800		377		505		204,672
Corporate notes and other	81,860		868		903		81,825
	$	3,003,018	$	9,571	$	51,965	$	2,960,624
Securities held-to-maturity:
State and municipal securities	$	20,677	$	46	$	120	$	20,603
	$	20,677	$	46	$	120	$	20,603



December 31, 2017:
Securities available-for-sale:
U.S. Treasury securities	$	30,505	$	—	$	60	$	30,445
U.S. government agency securities	182,500		67		1,766		180,801
Mortgage-backed securities	1,270,625		5,318		12,124		1,263,819
State and municipal securities	774,949		12,251		2,588		784,612
Asset-backed securities	173,346		262		316		173,292
Corporate notes and other	81,615		1,346		647		82,314
	$	2,513,540	$	19,244	17,501		$	2,515,283
Securities held-to-maturity:
State and municipal securities	$	20,762	$	114	$	46	$	20,830
	$	20,762	$	114	$	46	$	20,830

At March 31, 2018, approximately $1.4 billion of securities within Pinnacle Financial's investment portfolio were pledged to secure either public funds and other deposits or securities sold under agreements to repurchase. At March 31, 2018, repurchase agreements comprised of secured borrowings totaled $131.9 million and were secured by $131.9 million of pledged U.S. government agency securities, municipal securities, asset backed securities, and corporate debentures. As the fair value of securities pledged to secure repurchase agreements may decline, Pinnacle Financial regularly evaluates its need to pledge additional securities to remain adequately secured.

The amortized cost and fair value of debt securities as of March 31, 2018 by contractual maturity are shown below. Actual maturities may differ from contractual maturities of mortgage- and asset-backed securities since the mortgages and assets underlying the securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories in the following summary (in thousands):



	Available-for-sale				Held-to-maturity
March 31, 2018:	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	—	$	—	$	—	$	—
Due in one year to five years	96,941		97,087		7,496		7,489
Due in five years to ten years	177,898		177,231		10,385		10,316
Due after ten years	1,221,105		1,204,361		2,796		2,798
Mortgage-backed securities	1,302,274		1,277,273		—		—
Asset-backed securities	204,800		204,672		—		—
	$	3,003,018	$	2,960,624	$	20,677	$	20,603

At March 31, 2018 and December 31, 2017, the following investments had unrealized losses. The table below classifies these investments according to the term of the unrealized losses of less than twelve months or twelve months or longer (in thousands):



	Investments with an Unrealized Loss of less than 12 months				Investments with an Unrealized Loss of 12 months or longer				Total Investments with an Unrealized Loss
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At March 31, 2018

U.S. Treasury securities	$	30,697	$	56	$	—	$	—	$	30,697	$	56
U.S. government agency securities	145,967		2,904		248		1		146,215		2,905
Mortgage-backed securities	779,194		17,392		297,735		12,002		1,076,929		29,394
State and municipal securities	863,010		15,987		47,894		2,335		910,904		18,322
Asset-backed securities	79,428		449		9,482		56		88,910		505
Corporate notes	31,880		754		11,697		149		43,577		903
Total temporarily-impaired securities	$	1,930,176	$	37,542	$	367,056	$	14,543	$	2,297,232	$	52,085

At December 31, 2017

U.S. Treasury securities	$	29,948	$	60	$	—	$	—	$	29,948	$	60
U.S. government agency securities	173,677		1,766		—		—		173,677		1,766
Mortgage-backed securities	607,408		5,042		285,561		7,082		892,969		12,124
State and municipal securities	115,403		1,408		50,083		1,226		165,486		2,634
Asset-backed securities	68,742		198		14,136		118		82,878		316
Corporate notes	22,168		547		11,944		100		34,112		647
Total temporarily-impaired securities	$	1,017,346	$	9,021	$	361,724	$	8,526	$	1,379,070	$	17,547

The applicable dates for determining when securities were in an unrealized loss position were March 31, 2018 and December 31, 2017. As such, it is possible that a security had a market value that exceeded its amortized cost on other days during the past twelve-month periods ended March 31, 2018 and December 31, 2017, but is not in the "Investments with an Unrealized Loss of less than 12 months" category above.

As shown in the tables above, including both available-for-sale and held-to-maturity investment securities, at March 31, 2018, Pinnacle Financial had approximately $52.1 million in unrealized losses on $2.30 billion of securities. The unrealized losses associated with these investment securities are driven by changes in interest rates and are not due to the credit quality of the securities. These securities will continue to be monitored as a part of Pinnacle Financial's ongoing impairment analysis. Management evaluates the financial performance of the issuers on a quarterly basis to determine if it is probable that the issuers can make all contractual principal and interest payments. Because Pinnacle Financial currently does not intend to sell those securities that have an unrealized loss at March 31, 2018, and it is not more-likely-than-not that Pinnacle Financial will be required to sell the securities before recovery of their amortized cost bases, which may be maturity, Pinnacle Financial does not consider these securities to be other-than-temporarily impaired at March 31, 2018.

Periodically, available-for-sale securities may be sold or the composition of the portfolio realigned to improve yields, quality or marketability, or to implement changes in investment or asset/liability strategy, including maintaining collateral requirements and raising funds for liquidity purposes. Additionally, if an available-for-sale security loses its investment grade or tax-exempt status, the underlying credit support is terminated or collection otherwise becomes uncertain based on factors known to management, Pinnacle Financial will consider selling the security, but will review each security on a case-by-case basis as these factors become known. Consistent with the investment policy, during the first quarter of 2018 available-for-sale securities of approximately $14.5 million were sold and net unrealized gains, net of tax, of $22,000 were reclassified from accumulated other comprehensive income into net income.

The carrying values of Pinnacle Financial's investment securities could decline in the future if the financial condition of issuers deteriorates and management determines it is probable that Pinnacle Financial will not recover the entire amortized cost bases of the securities. As a result, there is a risk that other-than-temporary impairment charges may occur in the future. Additionally, there is a risk that other-than-temporary impairment charges may occur in the future if management's intention to hold these securities to maturity and/or recovery changes.