INVESTMENT SECURITIES

A summary of available for sale and held to maturity investment securities are as follows:



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
September 30, 2015
Held to Maturity:
Mortgage-backed securities:
Residential - U.S. Government sponsored entities	$	158,622	$	195	$	(1,446	)	$	157,371
Commercial - U.S. Government sponsored entities	96,097		1,074		(2		)	97,169
Total	$	254,719	$	1,269	$	(1,448	)	$	254,540

Available for Sale:
Debt securities:
States and political subdivisions	$	188,229	$	3,679	$	(1,475	)	$	190,433
Corporate securities	103,117		1,612		(31		)	104,698
Mortgage-backed securities:
Residential - U.S. Government sponsored entities	760,884		10,043		(2,341		)	768,586
Residential - Non-government agencies	66,560		2,452		—			69,012
Commercial - Non-government agencies	135,487		3,629		(355		)	138,761
Other	823		69		—			892
Total	$	1,255,100	$	21,484	$	(4,202	)	$	1,272,382

December 31, 2014
Held to Maturity:
Mortgage-backed securities:
Residential - U.S. Government sponsored entities	$	140,741	$	196	$	(2,150	)	$	138,787
Commercial - U.S. Government sponsored entities	97,546		—		(736		)	96,810
Total	$	238,287	$	196	$	(2,886	)	$	235,597

Available for Sale:
Debt securities:
States and political subdivisions	$	191,280	$	2,054	$	(1,689	)	$	191,645
Corporate securities	99,237		1,492		(125		)	100,604
Mortgage-backed securities:
Residential - U.S. Government sponsored entities	744,527		11,064		(4,033		)	751,558
Residential - Non-government agencies	45,275		1,510		(92		)	46,693
Commercial - Non-government agencies	135,630		2,946		(935		)	137,641
Other	757		120		—			877
Total	$	1,216,706	$	19,186	$	(6,874	)	$	1,229,018

The amortized cost and estimated fair value of investment securities at September 30, 2015 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.



	September 30, 2015
(dollars in thousands)	Amortized Cost		Estimated Fair Value
Held to Maturity
Mortage-backed securities:
Residential - U.S. Government sponsored entities	$	158,622	$	157,371
Commercial - U.S. Government sponsored entities	96,097		97,169
Total	$	254,719	$	254,540

Available for Sale
Due in one year or less	$	7,559	$	7,690
Due after one year through five years	98,871		100,540
Due after five years through ten years	82,352		83,760
Due after ten years	102,564		103,141
Mortage-backed securities:
Residential - U.S. Government sponsored entities	760,884		768,586
Residential - Non-government agencies	66,560		69,012
Commercial - Non-government agencies	135,487		138,761
Other	823		892
Total	$	1,255,100	$	1,272,382

During the second quarter of 2015, we completed an investment securities portfolio repositioning to reduce net interest income volatility and enhance the potential for prospective earnings and an improved net interest margin. In connection with the repositioning, we sold certain available for sale mortgage-backed securities with an average yield of 1.35% and a weighted average life of 4.4 years and reinvested the gross proceeds of $117.5 million in $137.4 million in investment securities with an average yield of 2.68% and a weighted average life of 7.5 years. The new securities were classified in the available for sale portfolio. Gross realized losses on the sale of the available for sale investment securities were $1.9 million. We did not sell any available for sale securities during the first and third quarters of 2015. The specific identification method was used as the basis for determining the cost of all securities sold.

During the second quarter of 2014, we sold certain available for sale investment securities for gross proceeds of $162.5 million. Gross realized gains and losses on the sales of the available for sale investment securities were $0.9 million and $0.7 million, respectively. We did not sell any available for sale securities during the first and third quarters of 2014. The specific identification method was used as the basis for determining the cost of all securities sold.

Investment securities of $1.01 billion and $900.5 million at September 30, 2015 and December 31, 2014, respectively, were pledged to secure public funds on deposit and other long-term and short-term borrowings.

Provided below is a summary of the 138 and 195 investment securities which were in an unrealized loss position at September 30, 2015 and December 31, 2014, respectively.



	Less than 12 months					12 months or longer					Total
			Unrealized					Unrealized					Unrealized
(dollars in thousands)	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
September 30, 2015
Debt securities:
States and political subdivisions	$	36,426	$	(706	)	$	19,410	$	(769	)	$	55,836	$	(1,475	)
Corporate securities	10,753		(31		)	—		—			10,753		(31		)
Mortgage-backed securities:
Residential - U.S. Government sponsored entities	344,484		(2,500		)	85,081		(1,287		)	429,565		(3,787		)
Commercial - U.S. Government sponsored entities	9,723		(2		)	—		—			9,723		(2		)
Commercial - Non-government agencies	33,484		(256		)	4,706		(99		)	38,190		(355		)
Total temporarily impaired securities	$	434,870	$	(3,495	)	$	109,197	$	(2,155	)	$	544,067	$	(5,650	)

December 31, 2014
Debt securities:
States and political subdivisions	$	23,591	$	(145	)	$	68,622	$	(1,544	)	$	92,213	$	(1,689	)
Corporate securities	23,938		(125		)	—		—			23,938		(125		)
Mortgage-backed securities:
Residential - U.S. Government sponsored entities	107,755		(487		)	318,571		(5,696		)	426,326		(6,183		)
Residential - Non-government agencies	15,895		(92		)	—		—			15,895		(92		)
Commercial - U.S. Government sponsored entities	11,455		(34		)	85,355		(702		)	96,810		(736		)
Commercial - Non-government agencies	4,962		(8		)	47,539		(927		)	52,501		(935		)
Total temporarily impaired securities	$	187,596	$	(891	)	$	520,087	$	(8,869	)	$	707,683	$	(9,760	)

Other-Than-Temporary Impairment (“OTTI”)

Unrealized losses for all investment securities are reviewed to determine whether the losses are deemed “other-than-temporary.” Investment securities are evaluated for OTTI on at least a quarterly basis and more frequently when economic or market conditions warrant such an evaluation to determine whether a decline in their value below amortized cost is other-than-temporary. In conducting this assessment, we evaluate a number of factors including, but not limited to:


•	The length of time and the extent to which fair value has been less than the amortized cost basis;


•	Adverse conditions specifically related to the security, an industry, or a geographic area;


•	The historical and implied volatility of the fair value of the security;


•	The payment structure of the debt security and the likelihood of the issuer being able to make payments;


•	Failure of the issuer to make scheduled interest or principal payments;


•	Any rating changes by a rating agency; and


•	Recoveries or additional declines in fair value subsequent to the balance sheet date.

The term “other-than-temporary” is not intended to indicate that the decline is permanent, but indicates that the prospects for a near-term recovery of value are not necessarily favorable, or that there is a general lack of evidence to support a realizable value equal to or greater than the carrying value of the investment. Once a decline in value is determined to be other-than-temporary, the value of the security is reduced and a corresponding charge to earnings is recognized for anticipated credit losses.

Because we have no intent to sell securities in an unrealized loss position and it is not more likely than not that we will be required to sell such securities before recovery of its amortized cost basis, we do not consider our investments to be other-than-temporarily impaired.