3. INVESTMENT SECURITIES

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



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
June 30, 2017
Held-to-Maturity:
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	$	112,053	$	110	$	(1,839	)	$	110,324
Commercial - U.S. Government-sponsored entities	92,535		475		—			93,010
Total	$	204,588	$	585	$	(1,839	)	$	203,334

Available-for-Sale:
Debt securities:
States and political subdivisions	$	182,853	$	3,350	$	(521	)	$	185,682
Corporate securities	92,827		1,325		(80		)	94,072
U.S. Treasury obligations and direct obligations of U.S Government agencies	26,395		114		(3		)	26,506
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	791,720		3,526		(6,908		)	788,338
Commercial - U.S. Government agencies and sponsored entities	32,659		73		(184		)	32,548
Residential - Non-government agencies	48,420		773		(239		)	48,954
Commercial - Non-government agencies	135,153		3,945		(112		)	138,986
Other	694		115		—			809
Total	$	1,310,721	$	13,221	$	(8,047	)	$	1,315,895



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2016
Held-to-Maturity:
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	$	124,082	$	92	$	(2,474	)	$	121,700
Commercial - U.S. Government-sponsored entities	93,586		—		(920		)	92,666
Total	$	217,668	$	92	$	(3,394	)	$	214,366

Available-for-Sale:
Debt securities:
States and political subdivisions	$	184,836	$	2,002	$	(1,797	)	$	185,041
Corporate securities	98,596		974		(181		)	99,389
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	775,803		3,698		(9,515		)	769,986
Residential - Non-government agencies	51,681		627		(761		)	51,547
Commercial - Non-government agencies	135,248		2,387		(411		)	137,224
Other	564		96		—			660
Total	$	1,246,728	$	9,784	$	(12,665	)	$	1,243,847

The amortized cost and estimated fair value of investment securities at June 30, 2017 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.



	June 30, 2017
(dollars in thousands)	Amortized Cost		Fair Value
Held-to-Maturity:
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	$	112,053	$	110,324
Commercial - U.S. Government-sponsored entities	92,535		93,010
Total	$	204,588	$	203,334

Available-for-Sale:
Due in one year or less	$	8,807	$	8,866
Due after one year through five years	144,860		146,731
Due after five years through ten years	53,401		54,410
Due after ten years	95,007		96,253

Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	791,720		788,338
Commercial - U.S. Government agencies and sponsored entities	32,659		32,548
Residential - Non-government agencies	48,420		48,954
Commercial - Non-government agencies	135,153		138,986
Other	694		809
Total	$	1,310,721	$	1,315,895

In the second quarter of 2017, we completed an investment portfolio repositioning strategy designed to enhance potential prospective earnings and improve net interest margin. In connection with the repositioning, we sold $97.7 million in lower-yielding available-for-sale securities, and purchased $97.4 million in higher yielding, longer duration investment securities. The investment securities sold had a duration of 3.3 and an average yield of 1.91%. Gross proceeds of the sale of $96.0 million were immediately reinvested back into investment securities with a duration of 4.6 and an average yield of 2.57%. The new securities were classified in the available-for-sale portfolio. There were no gross realized gains on the sale of the investment securities. Gross realized losses on the sale of the investment securities were $1.6 million. The specific identification method was used as the basis for determining the cost of all securities sold. We did not sell any available-for-sale securities during the three months ended March 31, 2017. We also did not sell any available-for-sale securities during the six months ended June 30, 2016.

Investment securities of $1.02 billion and $1.05 billion at June 30, 2017 and December 31, 2016, respectively, were pledged to secure public funds on deposit and other long-term debt and short-term borrowings.

Provided below is a summary of the 138 and 242 investment securities which were in an unrealized loss position at June 30, 2017 and December 31, 2016, respectively, segregated by continuous length of impairment.



	Less Than 12 Months					12 Months or Longer					Total
(dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
June 30, 2017
Debt securities:
States and political subdivisions	$	38,303	$	(497	)	$	1,126	$	(24	)	$	39,429	$	(521	)
Corporate securities	—		—			5,353		(80		)	5,353		(80		)
U.S. Treasury obligations and direct obligations of U.S Government agencies	3,380		(3		)	—		—			3,380		(3		)
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	547,203		(8,383		)	10,747		(364		)	557,950		(8,747		)
Residential - Non-government agencies	10,506		(239		)	—		—			10,506		(239		)
Commercial - U.S. Government agencies and sponsored entities	11,548		(184		)	—		—			11,548		(184		)
Commercial - Non-government agencies	9,498		(112		)	—		—			9,498		(112		)
Total temporarily impaired securities	$	620,438	$	(9,418	)	$	17,226	$	(468	)	$	637,664	$	(9,886	)



	Less Than 12 Months					12 Months or Longer					Total
(dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
December 31, 2016
Debt securities:
States and political subdivisions	$	85,288	$	(1,797	)	$	—	$	—		$	85,288	$	(1,797	)
Corporate securities	20,357		(181		)	—		—			20,357		(181		)
Mortgage-backed securities:
Residential - U.S. Government-sponsored entities	648,923		(11,766		)	3,978		(223		)	652,901		(11,989		)
Residential - Non-government agencies	30,596		(761		)	—		—			30,596		(761		)
Commercial - U.S. Government-sponsored entities	92,666		(920		)	—		—			92,666		(920		)
Commercial - Non-government agencies	52,880		(411		)	—		—			52,880		(411		)
Total temporarily impaired securities	$	930,710	$	(15,836	)	$	3,978	$	(223	)	$	934,688	$	(16,059	)

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.