Securities

The amortized cost and estimated fair value of debt securities available-for-sale and held-to-maturity at March 31, 2019, and December 31, 2018, are as follows (in thousands):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
At March 31, 2019
Debt securities available-for-sale:
Investment securities - U.S. government and agency obligations	$	118,632	$	642	$	(630	)	$	118,644
State and municipal obligations	2,055		1		—			2,056
Corporate debt securities	999		—		—			999
Mortgage-backed securities - FNMA	859		2		(2		)	859
Total debt securities available-for-sale	$	122,545	$	645	$	(632	)	$	122,558
Debt securities held-to-maturity:
Investment securities:
U.S. agency obligations	$	14,977	$	—	$	(78	)	$	14,899
State and municipal obligations	147,499		517		(641		)	147,375
Corporate debt securities	82,787		552		(3,489		)	79,850
Total investment securities	245,263		1,069		(4,208		)	242,124
Mortgage-backed securities:
FHLMC	245,662		688		(2,738		)	243,612
FNMA	288,289		1,086		(2,963		)	286,412
GNMA	122,837		254		(1,794		)	121,297
SBA	3,445		—		(78		)	3,367
Total mortgage-backed securities	660,233		2,028		(7,573		)	654,688
Total debt securities held-to-maturity	$	905,496	$	3,097	$	(11,781	)	$	896,812
Total debt securities	$	1,028,041	$	3,742	$	(12,413	)	$	1,019,370
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

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 March 31, 2019, and December 31, 2018, is as follows (in thousands):



	March 31, 2019			December 31, 2018
Amortized cost	$	905,496		$	851,903
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	8,465			8,254
Carrying value	$	900,614		$	846,810

There were no realized gains or losses for the quarter ended March 31, 2019 and there were realized gains of 2,000 on the sale of securities for the quarter ended March 31, 2018.

The amortized cost and estimated fair value of investment securities at March 31, 2019 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 March 31, 2019, corporate debt securities with an amortized cost of $59.1 million and estimated fair value of $56.1 million were callable prior to the maturity date.



March 31, 2019	Amortized Cost		Estimated Fair Value
Less than one year	$	57,483	$	57,339
Due after one year through five years	202,279		202,039
Due after five years through ten years	92,349		89,312
Due after ten years	14,838		15,133
	$	366,949	$	363,823

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 $560.2 million and $563.1 million, at March 31, 2019 and December 31, 2018, respectively, including $71.7 million and $74.1 million at March 31, 2019 and December 31, 2018, 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 March 31, 2019 and December 31, 2018, segregated by the duration of the unrealized losses, are as follows (in thousands):



	At March 31, 2019
	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	$	—	$	—		$	62,766	$	(630	)	$	62,766	$	(630	)
Mortgage-backed securities - FNMA	—		—			634		(2		)	634		(2		)
Total debt securities available-for-sale	—		—			63,400		(632		)	63,400		(632		)
Debt securities held-to-maturity:
Investment securities:
U.S. government and agency obligations	—		—			14,900		(78		)	14,900		(78		)
State and municipal obligations	3,987		(7		)	79,317		(634		)	83,304		(641		)
Corporate debt securities	1,526		(19		)	44,541		(3,470		)	46,067		(3,489		)
Total investment securities	5,513		(26		)	138,758		(4,182		)	144,271		(4,208		)
Mortgage-backed securities:
FHLMC	1,902		(16		)	156,294		(2,722		)	158,196		(2,738		)
FNMA	15,571		(36		)	187,853		(2,927		)	203,424		(2,963		)
GNMA	17,423		(25		)	76,925		(1,769		)	94,348		(1,794		)
SBA	—		—			3,367		(78		)	3,367		(78		)
Total mortgage-backed securities	34,896		(77		)	424,439		(7,496		)	459,335		(7,573		)
Total debt securities held-to-maturity	40,409		(103		)	563,197		(11,678		)	603,606		(11,781		)
Total debt securities	$	40,409	$	(103	)	$	626,597	$	(12,310	)	$	667,006	$	(12,413	)

	At 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	)

At March 31, 2019, 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	$	9,150	Baa1/BBB-
Wells Fargo Capital	5,000		4,606		A1/BBB
Huntington Capital	5,000		4,450		Baa2/BB+
Keycorp Capital	5,000		4,525		Baa2/BB+
PNC Capital	5,000		4,605		Baa1/BBB-
State Street Capital	5,000		4,625		A3/BBB
SunTrust Capital	5,000		4,625		Not Rated/BB+
Celgene	1,518		1,501		Baa2/BBB+
Southern Company	1,512		1,500		Baa2/BBB+
BB&T	1,510		1,499		A2/A-
AT&T Inc.	1,507		1,494		Baa2/BBB
Ryder	1,504		1,501		Baa1/BBB+
HAL	460		460		Baa1/A-
	$	48,011	$	44,541

At March 31, 2019, 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 March 31, 2019. 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 March 31, 2019.