Investment Securities

The following table presents the amortized cost and estimated fair values of investment securities, which were all classified as available for sale:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
September 30, 2015
Equity securities	$	16,087	$	7,453	$	(8	)	$	23,532
U.S. Government sponsored agency securities	48,320		231		—			48,551
State and municipal securities	234,868		5,430		(62		)	240,236
Corporate debt securities	102,297		2,935		(5,291		)	99,941
Collateralized mortgage obligations	879,738		5,638		(11,077		)	874,299
Mortgage-backed securities	1,036,193		16,845		(1,133		)	1,051,905
Auction rate securities	106,661		—		(8,788		)	97,873
	$	2,424,164	$	38,532	$	(26,359	)	$	2,436,337



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
December 31, 2014
Equity securities	$	33,469	$	14,167	$	(13	)	$	47,623
U.S. Government securities	200		—		—			200
U.S. Government sponsored agency securities	209		5		—			214
State and municipal securities	238,250		7,231		(266		)	245,215
Corporate debt securities	99,016		5,126		(6,108		)	98,034
Collateralized mortgage obligations	917,395		5,705		(20,787		)	902,313
Mortgage-backed securities	914,797		16,978		(2,944		)	928,831
Auction rate securities	108,751		—		(7,810		)	100,941
	$	2,312,087	$	49,212	$	(37,928	)	$	2,323,371

Securities carried at $1.8 billion as of September 30, 2015 and $1.7 billion as of December 31, 2014 were pledged as collateral to secure public and trust deposits and customer repurchase agreements.

Equity securities include common stocks of financial institutions (estimated fair value of $22.4 million at September 30, 2015 and $41.8 million at December 31, 2014) and other equity investments (estimated fair value of $1.1 million at September 30, 2015 and $5.8 million at December 31, 2014).

As of September 30, 2015, the financial institutions stock portfolio had a cost basis of $15.1 million and an estimated fair value of $22.4 million, including an investment in a single financial institution with a cost basis of $8.5 million and an estimated fair value of $12.8 million. The estimated fair value of this investment accounted for 57.1% of the estimated fair value of the Corporation's investments in the common stocks of publicly traded financial institutions. No other investment within the financial institutions stock portfolio exceeded 5% of the portfolio's estimated fair value.

The amortized cost and estimated fair values of debt securities as of September 30, 2015, by contractual maturity, are shown in the following table. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



		Amortized Cost		Estimated Fair Value
	(in thousands)
Due in one year or less		$	62,247	$	63,023
Due from one year to five years		104,989		107,283
Due from five years to ten years		132,930		136,571
Due after ten years		191,980		179,724
		492,146		486,601
Collateralized mortgage obligations		879,738		874,299
Mortgage-backed securities		1,036,193		1,051,905
		$	2,408,077	$	2,412,805

The following table presents information related to the gross realized gains and losses on the sales of equity and debt securities:



	Gross Realized Gains		Gross Realized Losses			Other-than- temporary Impairment Losses			Net Gains (Losses)
Three months ended September 30, 2015	(in thousands)
Equity securities	$	1,730	$	—		$	—		$	1,730
Debt securities	—		—			—			—
Total	$	1,730	$	—		$	—		$	1,730
Three months ended September 30, 2014
Equity securities	$	99	$	—		$	—		$	99
Debt securities	—		—			(18		)	(18		)
Total	$	99	$	—		$	(18	)	$	81

Nine months ended September 30, 2015
Equity securities	$	5,990	$	—		$	—		$	5,990
Debt securities	2,300		—			—			2,300
Total	$	8,290	$	—		$	—		$	8,290
Nine months ended September 30, 2014
Equity securities	$	100	$	—		$	(12	)	$	88
Debt securities	1,446		(323		)	(18		)	1,105
Total	$	1,546	$	(323	)	$	(30	)	$	1,193

The following table presents a summary of the cumulative credit related other-than-temporary impairment charges, recognized as components of earnings, for debt securities held by the Corporation at September 30, 2015 and 2014:



	Three months ended September 30						Nine months ended September 30
	2015			2014			2015			2014
	(in thousands)
Balance of cumulative credit losses on debt securities, beginning of period	$	(11,510	)	$	(17,214	)	$	(16,242	)	$	(20,691	)
Additions for credit losses recorded which were not previously recognized as components of earnings	—			(18		)	—			(18		)
Reductions for securities sold during the period	—			—			4,730			3,472
Reductions for increases in cash flows expected to be collected that are recognized over the remaining life of the security	—			—			2			5
Balance of cumulative credit losses on debt securities, end of period	$	(11,510	)	$	(17,232	)	$	(11,510	)	$	(17,232	)

The following table presents the gross unrealized losses and estimated fair values of investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2015:



	Less than 12 months					12 months or longer					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(in thousands)
U.S. Government sponsored agency securities	$	—	$	—		$	—	$	—		$	—	$	—
State and municipal securities	11,892		(62		)	—		—			11,892		(62		)
Corporate debt securities	7,968		(15		)	33,718		(5,276		)	41,686		(5,291		)
Collateralized mortgage obligations	30,723		(62		)	493,703		(11,015		)	524,426		(11,077		)
Mortgage-backed securities	161,097		(443		)	67,071		(690		)	228,168		(1,133		)
Auction rate securities	—		—			97,873		(8,788		)	97,873		(8,788		)
Total debt securities	211,680		(582		)	692,365		(25,769		)	904,045		(26,351		)
Equity securities	—		—			13		(8		)	13		(8		)
	$	211,680	$	(582	)	$	692,378	$	(25,777	)	$	904,058	$	(26,359	)

The Corporation’s collateralized mortgage obligations and mortgage-backed securities have contractual terms that generally do not permit the issuer to settle the securities at a price less than the amortized cost of the investment. Because the decline in market value of these securities is attributable to changes in interest rates and not credit quality, and because the Corporation does not have the intent to sell and does not believe it will more likely than not be required to sell any of these securities prior to a recovery of their fair value to amortized cost, the Corporation does not consider these investments to be other-than-temporarily impaired as of September 30, 2015.

The unrealized holding losses on auction rate securities (auction rate certificates, or "ARCs"), are attributable to liquidity issues resulting from the failure of periodic auctions. The Corporation had previously purchased ARCs for investment management and trust customers as short-term investments with fair values that could be derived based on periodic auctions under normal market conditions. During 2008 and 2009, the Corporation purchased ARCs from these customers due to the failure of these periodic auctions, which made these previously short-term investments illiquid.

As of September 30, 2015, all of the ARCs were rated above investment grade, with approximately $5.4 million, or 6%, "AAA" rated and $92.4 million, or 94%, "AA" rated. All of the loans underlying the ARCs have principal payments which are guaranteed by the federal government.

As of September 30, 2015, all ARCs were current and making scheduled interest payments. Based on management’s evaluations, ARCs with an estimated fair value of $97.9 million were not subject to any other-than-temporary impairment charges as of September 30, 2015. The Corporation does not have the intent to sell and does not believe it will more likely than not be required to sell any of these securities prior to a recovery of their fair value to amortized cost, which may be at maturity.

For its investments in equity securities, particularly its investments in stocks of financial institutions, management evaluates the near-term prospects of the issuers in relation to the severity and duration of the impairment. Based on that evaluation and the Corporation’s ability and intent to hold those investments for a reasonable period of time sufficient for a recovery of fair value, the Corporation does not consider those investments with unrealized holding losses as of September 30, 2015 to be other-than-temporarily impaired.

The majority of the Corporation's available for sale corporate debt securities are issued by financial institutions. The following table presents the amortized cost and estimated fair value of corporate debt securities:



	September 30, 2015				December 31, 2014
	Amortized cost		Estimated fair value		Amortized cost		Estimated fair value
	(in thousands)
Single-issuer trust preferred securities	$	46,624	$	41,787	$	47,569	$	42,016
Subordinated debt	51,625		53,576		47,530		50,023
Pooled trust preferred securities	—		530		2,010		4,088
Corporate debt securities issued by financial institutions	98,249		95,893		97,109		96,127
Other corporate debt securities	4,048		4,048		1,907		1,907
Available for sale corporate debt securities	$	102,297	$	99,941	$	99,016	$	98,034

The Corporation’s investments in single-issuer trust preferred securities had an unrealized loss of $4.8 million at September 30, 2015. The Corporation did not record any other-than-temporary impairment charges for single-issuer trust preferred securities during the three or nine months ended September 30, 2015 or 2014. Seven of the Corporation's 19 single-issuer trust preferred securities were rated below investment grade by at least one ratings agency, with an amortized cost of $14.5 million and an estimated fair value of $13.2 million at September 30, 2015. All of the single-issuer trust preferred securities rated below investment grade were rated "BB" or "Ba". Two single-issuer trust preferred securities with an amortized cost of $3.7 million and an estimated fair value of $2.7 million at September 30, 2015 were not rated by any ratings agency.

During the nine months ended September 30, 2015, the Corporation sold three pooled trust preferred securities with a total amortized cost of $1.9 million, for a gain of $2.3 million. As of September 30, 2015, both of the Corporation's remaining pooled trust preferred securities, with an amortized cost of $0 and an estimated fair value of $530,000, were rated below investment grade by at least one ratings agency, with ratings ranging from "C" to "Ca". The class of securities held by the Corporation was below the most senior tranche, with the Corporation’s interests being subordinate to other investors in the pool. The Corporation determines the fair value of pooled trust preferred securities based on quotes provided by third-party brokers.

The amortized cost of pooled trust preferred securities is the purchase price of the securities, net of cumulative credit related other-than-temporary impairment charges, determined using an expected cash flows model. The most significant input to the expected cash flows model is the expected payment deferral rate for each pooled trust preferred security. The Corporation evaluates the financial metrics, such as capital ratios and non-performing assets ratios, of the individual financial institution issuers that comprise each pooled trust preferred security to estimate its expected deferral rate.

Based on management’s evaluations, corporate debt securities with a fair value of $99.9 million were not subject to any other-than-temporary impairment charges as of September 30, 2015. The Corporation does not have the intent to sell and does not believe it will more likely than not be required to sell any of these securities prior to a recovery of their fair value to amortized cost, which may be at maturity.