NOTE

INVESTMENT SECURITIES

The amortized cost and fair value of investment securities that are classified as held-to-maturity (“HTM”) and available-for-sale (“AFS”) are as follows:

	Years Ended December 31
	2017									2016
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value

Held-to-Maturity

U.S. Government agencies	$	46,945	$	7	$	(228	)	$	46,724	$	76,875	$	107	$	(182	)	$	76,800
Mortgage-backed securities		16,132		8		(287	)		15,853		19,773		63		(249	)		19,587
State and political subdivisions		301,491		5,962		(222	)		307,231		362,532		4,967		(842	)		366,657
Other securities		3,490		--		--			3,490		2,916		--		--			2,916

Total HTM	$	368,058	$	5,977	$	(737	)	$	373,298	$	462,096	$	5,137	$	(1,273	)	$	465,960

Available-for-Sale

U.S. Treasury	$	--	$	--	$	--		$	--	$	300	$	--	$	--		$	300
U.S. Government agencies		141,559		116		(1,951	)		139,724		140,005		67		(2,301	)		137,771
Mortgage-backed securities		1,208,017		246		(20,946	)		1,187,317		885,783		178		(17,637	)		868,324
State and political subdivisions		144,642		532		(2,009	)		143,165		108,374		38		(5,469	)		102,943
Other securities		118,106		1,206		(1	)		119,311		47,022		996		(2	)		48,016

Total AFS	$	1,612,324	$	2,100	$	(24,907	)	$	1,589,517	$	1,181,484	$	1,279	$	(25,409	)	$	1,157,354

Securities with limited marketability, such as stock in the Federal Reserve Bank and the Federal Home Loan Bank, are carried at cost and are reported as other AFS securities in the table above.

Certain investment securities are valued at less than their historical cost. Total fair value of these investments at

December

31,

2017

and

2016,

was

$1.4

billion and

$1.2

billion, which is approximately

73.5%

and

75.7%,

respectively, of the Company’s combined AFS and HTM investment portfolios.

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at:

	Less Than 12 Months				12 Months or More				Total
(In thousands)	Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses		Estimated Fair Value		Gross Unrealized Losses
December 31, 2017

Held-to-Maturity

U.S. Government agencies	$	11,961	$	6	$	32,778	$	222	$	44,739	$	228
Mortgage-backed securities		5,471		47		8,946		240		14,417		287
State and political subdivisions		40,299		198		1,887		24		42,186		222

Total HTM	$	57,731	$	251	$	43,611	$	486	$	101,342	$	737

Available-for-Sale

U.S. Government agencies	$	91,988	$	921	$	25,742	$	1,030	$	117,730	$	1,951
Mortgage-backed securities		510,770		4,516		609,329		16,430		1,120,099		20,946
State and political subdivisions		25,049		202		75,404		1,807		100,453		2,009
Other securities		--		--		99		1		99		1

Total AFS	$	627,807	$	5,639	$	710,574	$	19,268	$	1,338,381	$	24,907

December 31, 2016

Held-to-Maturity

U.S. Government agencies	$	32,859	$	141	$	19,959	$	41	$	52,818	$	182
Mortgage-backed securities		11,833		205		1,465		44		13,298		249
State and political subdivisions		104,974		841		330		1		105,304		842

Total HTM	$	149,666	$	1,187	$	21,754	$	86	$	171,420	$	1,273

Available-for-Sale

U.S. Government agencies	$	126,325	$	2,301	$	--	$	--	$	126,325	$	2,301
Mortgage-backed securities		833,393		17,637		--		--		833,393		17,637
State and political subdivisions		94,922		5,469		--		--		94,922		5,469
Other securities		99		2		--		--		99		2

Total AFS	$	1,054,739	$	25,409	$	--	$	--	$	1,054,739	$	25,409

These declines primarily resulted from the rate for these investments yielding less than current market rates. Based on evaluation of available evidence, management believes the declines in fair value for these securities are temporary. Management does

not

have the intent to sell these securities and management believes it is more likely than

not

the Company will

not

have to sell these securities before recovery of their amortized cost basis less any current period credit losses.

Declines in the fair value of HTM and AFS securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Management has the ability and intent to hold the securities classified as HTM until they mature, at which time the Company expects to receive full value for the securities. Furthermore, as of

December 31, 2017,

management also had the ability and intent to hold the securities classified as AFS for a period of time sufficient for a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Management does

not

believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of

December 31, 2017,

management believes the impairments detailed in the table above are temporary. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

Income earned on securities for the years ended

December 31, 2017,

2016

and

2015,

is as follows:

(In thousands)	2017		2016		2015

Taxable
Held-to-maturity	$	2,521	$	3,778	$	5,162
Available-for-sale		25,996		17,928		12,129

Non-taxable
Held-to-maturity		8,693		10,641		11,635
Available-for-sale		2,905		1,132		1,687

Total	$	40,115	$	33,479	$	30,613

The amortized cost and estimated fair value by maturity of securities are shown in the following table. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. Accordingly, actual maturities

may

differ from contractual maturities.

	Held-to-Maturity				Available-for-Sale
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value

One year or less	$	46,377	$	46,255	$	590	$	591
After one through five years		85,451		85,581		35,616		35,246
After five through ten years		92,361		93,400		24,203		23,953
After ten years		127,737		132,209		225,892		223,198
Securities not due on a single maturity date		16,132		15,853		1,208,017		1,187,317
Other securities (no maturity)		--		--		118,006		119,212

Total	$	368,058	$	373,298	$	1,612,324	$	1,589,517

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to

$1.2

billion at

December 31, 2017

and

$915.2

million at

December 31, 2016.

There were

$2.4

million of gross realized gains and

$1.3

million of realized losses from the sale of securities during the year ended

December 31, 2017.

There were

$5.8

million of gross realized gains and

realized losses from the sale of securities during the year ended

December 31, 2016.

There were

$350,000

of gross realized gains and

$43,000

of realized losses from the sale of securities during the year ended

December 31, 2015.

The income tax expense/benefit related to security gains/losses was

39.225%

of the gross amounts.

The state and political subdivision debt obligations are predominately non-rated bonds representing small issuances, primarily in Arkansas, Missouri, Oklahoma, Tennessee and Texas issues, which are evaluated on an ongoing basis.