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INVESTMENT SECURITIES | 9 Months Ended
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Sep. 30, 2017
Investments, Debt and Equity Securities [Abstract] |
INVESTMENT SECURITIES | 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
September 30, 2017 |  |  |  |  |  |  |  |  |  |  |
Held-to-Maturity: |  |  |  |  |  |  |  |  |  |  |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | $ | 105,659 |  |  | $ | 127 |  |  | $ | (1,832 | ) |  | $ | 103,954 |
Commercial - U.S. Government-sponsored entities | 92,013 |  |  | 178 |  |  | (431 | ) |  | 91,760 |
Total | $ | 197,672 |  |  | $ | 305 |  |  | $ | (2,263 | ) |  | $ | 195,714 |
Available-for-Sale: |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 181,665 |  |  | $ | 3,244 |  |  | $ | (555 | ) |  | $ | 184,354 |
Corporate securities | 92,440 |  |  | 1,444 |  |  | (54 | ) |  | 93,830 |
U.S. Treasury obligations and direct obligations of U.S Government agencies | 25,991 |  |  | 116 |  |  | (129 | ) |  | 25,978 |
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 822,342 |  |  | 3,720 |  |  | (6,976 | ) |  | 819,086 |
Commercial - U.S. Government agencies and sponsored entities | 40,385 |  |  | 29 |  |  | (186 | ) |  | 40,228 |
Residential - Non-government agencies | 46,881 |  |  | 794 |  |  | (211 | ) |  | 47,464 |
Commercial - Non-government agencies | 135,105 |  |  | 3,273 |  |  | (7 | ) |  | 138,371 |
Other | 665 |  |  | 129 |  |  | — |  |  | 794 |
Total | $ | 1,345,474 |  |  | $ | 12,749 |  |  | $ | (8,118 | ) |  | $ | 1,350,105 |
(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 |
U.S. Treasury obligations and direct obligations of U.S Government agencies | — |  |  | — |  |  | — |  |  | — |
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 September 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.
| September 30, 2017
(dollars in thousands) | Amortized Cost |  | Fair Value
Held-to-Maturity: |  |  |  |  |
Mortgage-backed securities: |  |  |  |  |
Residential - U.S. Government-sponsored entities | $ | 105,659 |  |  | $ | 103,954 |
Commercial - U.S. Government-sponsored entities | 92,013 |  |  | 91,760 |
Total | $ | 197,672 |  |  | $ | 195,714 |
Available-for-Sale: |  |  |  |  |
Due in one year or less | $ | 10,193 |  |  | $ | 10,228 |
Due after one year through five years | 152,586 |  |  | 154,716 |
Due after five years through ten years | 52,282 |  |  | 53,293 |
Due after ten years | 85,035 |  |  | 85,925 |
Mortgage-backed securities: |  |  |
Residential - U.S. Government-sponsored entities | 822,342 |  |  | 819,086 |
Commercial - U.S. Government agencies and sponsored entities | 40,385 |  |  | 40,228 |
Residential - Non-government agencies | 46,881 |  |  | 47,464 |
Commercial - Non-government agencies | 135,105 |  |  | 138,371 |
Other | 665 |  |  | 794 |
Total | $ | 1,345,474 |  |  | $ | 1,350,105 |
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 first and third quarters of 2017. We also did not sell any available-for-sale securities during the nine months ended September 30, 2016. Investment securities of $1.11 billion and $1.05 billion at September 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 144 and 242 investment securities which were in an unrealized loss position at September 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
September 30, 2017 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Debt securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
States and political subdivisions | $ | 30,233 |  |  | $ | (414 | ) |  | $ | 5,591 |  |  | $ | (141 | ) |  | $ | 35,824 |  |  | $ | (555 | )
Corporate securities | — |  |  | — |  |  | 5,354 |  |  | (54 | ) |  | 5,354 |  |  | (54 | )
U.S. Treasury obligations and direct obligations of U.S Government agencies | 12,090 |  |  | (129 | ) |  | — |  |  | — |  |  | 12,090 |  |  | (129 | )
Mortgage-backed securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Residential - U.S. Government-sponsored entities | 415,136 |  |  | (5,012 | ) |  | 152,528 |  |  | (3,796 | ) |  | 567,664 |  |  | (8,808 | )
Residential - Non-government agencies | 10,129 |  |  | (211 | ) |  | — |  |  | — |  |  | 10,129 |  |  | (211 | )
Commercial - U.S. Government agencies and sponsored entities | 40,690 |  |  | (617 | ) |  | — |  |  | — |  |  | 40,690 |  |  | (617 | )
Commercial - Non-government agencies | 14,616 |  |  | (7 | ) |  | — |  |  | — |  |  | 14,616 |  |  | (7 | )
Total temporarily impaired securities | $ | 522,894 |  |  | $ | (6,390 | ) |  | $ | 163,473 |  |  | $ | (3,991 | ) |  | $ | 686,367 |  |  | $ | (10,381 | )
| 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 | )
U.S. Treasury obligations and direct obligations of U.S Government agencies | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
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.

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