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Securities
 9 Months Ended
Sep. 30, 2022
Investments, Debt and Equity Securities [Abstract]  
Securities
Note 3.  Securities

The amortized cost and fair value of securities available-for-sale and held-to-maturity at September 30, 2022 and December 31, 2021 are summarized as follows (in thousands):
 Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
September 30, 2022:    
Securities available-for-sale:    
U.S. Treasury securities$210,655 $— $4,655 $206,000 
U.S. Government agency securities443,579 — 36,641 406,938 
Mortgage-backed securities1,518,231 231 188,934 1,329,528 
State and municipal securities1,478,698 4,270 133,384 1,349,584 
Asset-backed securities164,901 — 16,260 148,641 
Corporate notes and other109,331 65 7,486 101,910 
 $3,925,395 $4,566 $387,360 $3,542,601 
Securities held-to-maturity:    
U.S. Treasury securities$92,837 $— $6,897 $85,940 
U.S. Government agency securities354,118 — 28,181 325,937 
Mortgage-backed securities451,854 — 49,642 402,212 
State and municipal securities1,854,612 26 316,607 1,538,031 
Asset-backed securities172,752 — 16,563 156,189 
Corporate notes and other13,851 — 1,190 12,661 
 $2,940,024 $26 $419,080 $2,520,970 
Allowance for credit losses - securities held-to-maturity(1,607)
Securities held-to-maturity, net of allowance for credit losses$2,938,417 
December 31, 2021:    
Securities available-for-sale:    
U.S. Treasury securities$194,490 $— $881 $193,609 
U.S. Government agency securities634,611 2,359 4,961 632,009 
Mortgage-backed securities1,908,675 29,874 18,310 1,920,239 
State and municipal securities1,774,119 52,961 3,243 1,823,837 
Asset-backed securities232,294 60 2,785 229,569 
Corporate notes and other114,355 3,082 2,506 114,931 
 $4,858,544 $88,336 32,686 $4,914,194 
Securities held-to-maturity:    
U.S. Government agency securities11,920 — 37 11,883 
Mortgage-backed securities 106,555 86 196 106,445 
State and municipal securities 1,037,644 32,966 889 1,069,721 
$1,156,119 $33,052 $1,122 $1,188,049 
Allowance for credit losses - securities held-to-maturity(161)
Securities held-to-maturity, net of allowance for credit losses$1,155,958 
 
During the quarters ended March 31, 2022, March 31, 2020 and September 30, 2018, Pinnacle Financial transferred, at fair value, $1.1 billion, $873.6 million and $179.8 million, respectively, of securities from the available-for-sale portfolio to the held-to-maturity portfolio. The related net unrealized after tax losses of $1.5 million, net unrealized after tax gains of $69.0 million and net unrealized after tax losses of $2.2 million, respectively, remained in accumulated other comprehensive income (loss) and are being amortized over the remaining life of the transferred securities, offsetting the related amortization of discount or premium on the transferred securities. No gains or losses were recognized at the time of the transfer. At September 30, 2022, approximately $666.4 million 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 September 30, 2022, repurchase agreements comprised of secured borrowings totaled $190.6 million and were secured by $190.6 million of pledged U.S. government agency securities, mortgage-backed 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 September 30, 2022 by contractual maturity is 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-saleHeld-to-maturity
September 30, 2022:Amortized
Cost		Fair
Value		Amortized
 Cost		Fair
Value
Due in one year or less$15,616 $15,574 $1,986 $1,965 
Due in one year to five years187,720 189,083 377,940 348,130 
Due in five years to ten years349,217 321,759 84,549 78,621 
Due after ten years1,689,710 1,538,016 1,850,943 1,533,853 
Mortgage-backed securities1,518,231 1,329,528 451,854 402,212 
Asset-backed securities164,901 148,641 172,752 156,189 
 $3,925,395 $3,542,601 $2,940,024 $2,520,970 
At September 30, 2022 and December 31, 2021, the following available-for-sale securities 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 ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized
Losses
At September 30, 2022      
U.S. Treasury securities$196,001 $4,653 $9,998 $2 $205,999 $4,655 
U.S. Government agency securities267,400 17,991 139,538 18,650 406,938 36,641 
Mortgage-backed securities659,467 57,377 661,931 131,557 1,321,398 188,934 
State and municipal securities1,096,601 117,016 35,582 16,368 1,132,183 133,384 
Asset-backed securities59,323 4,955 89,319 11,305 148,642 16,260 
Corporate notes68,901 6,040 21,009 1,446 89,910 7,486 
Total temporarily-impaired securities$2,347,693 $208,032 $957,377 $179,328 $3,305,070 $387,360 
At December 31, 2021      
U.S. Treasury securities$178,610 $881 $— $— $178,610 $881 
U.S. Government agency securities353,951 2,987 54,266 1,974 408,217 4,961 
Mortgage-backed securities744,996 11,663 178,956 6,647 923,952 18,310 
State and municipal securities309,605 2,198 57,270 1,045 366,875 3,243 
Asset-backed securities198,349 2,595 6,513 190 204,862 2,785 
Corporate notes14,991 554 20,270 1,952 35,261 2,506 
Total temporarily-impaired securities$1,800,502 $20,878 $317,275 $11,808 $2,117,777 $32,686 

The applicable dates for determining when available-for-sale securities were in an unrealized loss position were September 30, 2022 and December 31, 2021. As such, it is possible that an available-for-sale security had a market value less than its amortized cost on other days during the twelve-month periods ended September 30, 2022 and December 31, 2021, but is not in the "Investments with an Unrealized Loss of less than 12 months" category above.

As shown in the tables above, at September 30, 2022, Pinnacle Financial had approximately $387.4 million in unrealized losses on approximately $3.3 billion of available-for-sale securities. For any securities classified as available-for-sale that are in an unrealized loss position at the balance sheet date, Pinnacle Financial assesses whether or not it intends to sell the security, or more likely than not will be required to sell the security, before recovery of its amortized cost basis which would require a write-down to fair value through net income. Because Pinnacle Financial currently does not intend to sell those available-for-sale securities that have an unrealized loss at September 30, 2022, 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 has determined that no write-down is necessary. In addition, Pinnacle Financial evaluates whether any portion of the decline in fair value of available-for-sale securities is the result of credit deterioration, which would require the recognition of an allowance for credit losses. Such evaluations consider the extent to which the amortized cost of the security exceeds its fair value, changes in credit ratings and any other known adverse conditions related to the specific security. The unrealized losses associated with available-for-sale securities at September 30, 2022 are driven by changes in interest rates and are not due to the credit quality of the securities, and accordingly, no allowance for credit losses is considered necessary related to available-for-sale securities at September 30, 2022. These securities will continue to be monitored as a part of Pinnacle Financial's ongoing evaluation of credit quality. 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.

The allowance for credit losses on held-to-maturity securities is measured on a collective basis by major security type. Pinnacle Financial has a zero loss expectation for U.S. treasury securities in addition to U.S. Government agency securities and mortgage-backed securities issued by Ginnie Mae, Fannie Mae and Freddie Mac, and accordingly, no allowance for credit losses is estimated for these securities. Credit losses on held-to-maturity state and municipal securities and corporate notes and other securities are estimated using third-party probability of default and loss given default models driven primarily by macroeconomic factors over a reasonable and supportable period of eighteen months with a twelve month reversion to average loss factors. At September 30, 2022 and December 31, 2021, the estimated allowance for credit losses on these held-to-maturity securities was $1.6 million and $161,000, respectively, with the change driven largely by the increase in the balance of held-to-maturity securities and by changes in macroeconomic forecasts.
Pinnacle Financial utilizes bond credit ratings assigned by third party ratings agencies to monitor the credit quality of debt securities held-to-maturity. At September 30, 2022, all debt securities classified as held-to-maturity were rated A or higher by the ratings agencies. Updated credit ratings are obtained as they become available from the ratings agencies.

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 or preparing for anticipated changes in market interest rates. 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. During the nine months ended September 30, 2022, $29.5 million of available-for-sale securities were sold resulting in gross realized gains of $292,000 and gross realized losses of $136,000. During the nine months ended September 30, 2021, $2.2 million of available-for-sale securities were sold resulting in gross realized gains of $366,000.

Pinnacle Financial has entered into various fair value hedging transactions to mitigate the impact of changing interest rates on the fair values of available for sale securities. See Note 8. Derivative Instruments for disclosure of the gains and losses recognized on derivative instruments and the cumulative fair value hedging adjustments to the carrying amount of the hedged securities.