Investment Securities

The following table presents the amortized costs, unrealized gains, unrealized losses and approximate fair values of investment securities at September 30, 2013 and December 31, 2012:

September 30, 2013

(in thousands)



	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	256	$	22	$	—		$	278
Obligations of states and political subdivisions	233,499		9,146		(2,114		)	240,531
Residential mortgage-backed securities and
collateralized mortgage obligations	1,668,904		18,140		(19,900		)	1,667,144
Other debt securities	60		74		—			134
Investments in mutual funds and
other equity securities	1,959		36		—			1,995
	$	1,904,678	$	27,418	$	(22,014	)	$	1,910,082
HELD TO MATURITY:
Residential mortgage-backed securities and
collateralized mortgage obligations	$	5,766	$	265	$	(1	)	$	6,030
	$	5,766	$	265	$	(1	)	$	6,030

December 31, 2012

(in thousands)



	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	45,503	$	318	$	(1	)	$	45,820
Obligations of states and political subdivisions	245,606		18,119		—			263,725
Residential mortgage-backed securities and
collateralized mortgage obligations	2,291,253		28,747		(6,624		)	2,313,376
Other debt securities	143		79		—			222
Investments in mutual funds and
other equity securities	1,959		127		—			2,086
	$	2,584,464	$	47,390	$	(6,625	)	$	2,625,229
HELD TO MATURITY:
Obligations of states and political subdivisions	$	595	$	1	$	—		$	596
Residential mortgage-backed securities and
collateralized mortgage obligations	3,946		197		(7		)	4,136
	$	4,541	$	198	$	(7	)	$	4,732

Investment securities that were in an unrealized loss position as of September 30, 2013 and December 31, 2012 are presented in the following tables, based on the length of time individual securities have been in an unrealized loss position. In the opinion of management, these securities are considered only temporarily impaired due to changes in market interest rates or the widening of market spreads subsequent to the initial purchase of the securities, and not due to concerns regarding the underlying credit of the issuers or the underlying collateral.

September 30, 2013

(in thousands)



	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	—	$	—	$	—	$	—	$	—	$	—
Obligations of states and political subdivisions	47,814		2,114		—		—		47,814		2,114
Residential mortgage-backed securities and
collateralized mortgage obligations	440,921		13,680		264,968		6,220		705,889		19,900
Total temporarily impaired securities	$	488,735	$	15,794	$	264,968	$	6,220	$	753,703	$	22,014
HELD TO MATURITY:
Residential mortgage-backed securities and
collateralized mortgage obligations	$	—	$	—	$	46	$	1	$	46	$	1
Total temporarily impaired securities	$	—	$	—	$	46	$	1	$	46	$	1

Unrealized losses on the impaired held to maturity collateralized mortgage obligations include the unrealized losses related to factors other than credit that are included in other comprehensive income.

December 31, 2012

(in thousands)



	Less than 12 Months				12 Months or Longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
AVAILABLE FOR SALE:
U.S. Treasury and agencies	$	—	$	—	$	59	$	1	$	59	$	1
Residential mortgage-backed securities and
collateralized mortgage obligations	780,234		5,548		106,096		1,076		886,330		6,624
Total temporarily impaired securities	$	780,234	$	5,548	$	106,155	$	1,077	$	886,389	$	6,625
HELD TO MATURITY:
Residential mortgage-backed securities and
collateralized mortgage obligations	$	—	$	—	$	48	$	7	$	48	$	7
Total temporarily impaired securities	$	—	$	—	$	48	$	7	$	48	$	7

The unrealized losses on investments in U.S. Treasury and agency securities were caused by interest rate increases subsequent to the purchase of these securities. The contractual terms of these investments do not permit the issuer to settle the securities at a price less than par. Because the Bank does not intend to sell the securities in this class and it is not likely that the Bank will be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until contractual maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired.

The unrealized losses on obligations of political subdivisions were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities. Management monitors published credit ratings of these securities and no adverse ratings changes have occurred since the date of purchase of obligations of political subdivisions which are in an unrealized loss position as of September 30, 2013. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because the Bank does not intend to sell the securities in this class and it is not likely that the Bank will be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired.

All of the available for sale residential mortgage-backed securities and collateralized mortgage obligations portfolio in an unrealized loss position at September 30, 2013 are issued or guaranteed by governmental agencies. The unrealized losses on residential mortgage-backed securities and collateralized mortgage obligations were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities, and not concerns regarding the underlying credit of the issuers or the underlying collateral. It is expected that these securities will not be settled at a price less than the amortized cost of each investment. Because the decline in fair value is attributable to changes in interest rates or widening market spreads and not credit quality, and because the Bank does not intend to sell the securities in this class and it is not likely that the Bank will be required to sell these securities before recovery of their amortized cost basis, which may include holding each security until contractual maturity, the unrealized losses on these investments are not considered other-than-temporarily impaired.

We review investment securities on an ongoing basis for the presence of other-than-temporary impairment (“OTTI”) or permanent impairment, taking into consideration current market conditions, fair value in relationship to cost, extent and nature of the change in fair value, issuer rating changes and trends, whether we intend to sell a security or if it is likely that we will be required to sell the security before recovery of our amortized cost basis of the investment, which may be maturity, and other factors. For debt securities, if we intend to sell the security or it is likely that we will be required to sell the security before recovering its cost basis, the entire impairment loss would be recognized in earnings as an OTTI. If we do not intend to sell the security and it is not likely that we will be required to sell the security but we do not expect to recover the entire amortized cost basis of the security, only the portion of the impairment loss representing credit losses would be recognized in earnings. The credit loss on a security is measured as the difference between the amortized cost basis and the present value of the cash flows expected to be collected. Projected cash flows are discounted by the original or current effective interest rate depending on the nature of the security being measured for potential OTTI. The remaining impairment related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to other comprehensive income (“OCI”). Impairment losses related to all other factors are presented as separate categories within OCI. For investment securities held to maturity, this amount is accreted over the remaining life of the debt security prospectively based on the amount and timing of future estimated cash flows. The accretion of the OTTI amount recorded in OCI will increase the carrying value of the investment, and would not affect earnings. If there is an indication of additional credit losses the security is re-evaluated according to the procedures described above.

The following table presents the maturities of investment securities at September 30, 2013:

(in thousands)



	Available For Sale				Held To Maturity
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
AMOUNTS MATURING IN:
Three months or less	$	18,573	$	18,569	$	—	$	—
Over three months through twelve months	191,763		194,660		338		378
After one year through five years	1,294,846		1,303,726		863		1,085
After five years through ten years	361,759		354,446		89		89
After ten years	35,778		36,687		4,476		4,478
Other investment securities	1,959		1,994		—		—
	$	1,904,678	$	1,910,082	$	5,766	$	6,030

The amortized cost and fair value of collateralized mortgage obligations and mortgage-backed securities are presented by expected average life, rather than contractual maturity, in the preceding table. Expected maturities may differ from contractual maturities because borrowers have the right to prepay underlying loans without prepayment penalties.

The following table presents the gross realized gains and gross realized losses on the sale of securities available for sale for the three and nine months ended September 30, 2013 and 2012:

(in thousands)



	Three months ended				Three months ended
	September 30, 2013				September 30, 2012
	Gains		Losses		Gains		Losses
U.S. Treasury and agencies	$	—	$	—	$	—	$	—
Obligations of states and political subdivisions	3		—		8		—
Residential mortgage-backed securities and
collateralized mortgage obligations	—		—		—		—
Other debt securities	—		—		13		—
	$	3	$	—	$	21	$	—

(in thousands)
	Nine months ended				Nine months ended
	September 30, 2013				September 30, 2012
	Gains		Losses		Gains		Losses
U.S. Treasury and agencies	$	—	$	—	$	371	$	—
Obligations of states and political subdivisions	10		1		10		1
Residential mortgage-backed securities and
collateralized mortgage obligations	—		—		1,484		683
Other debt securities	9		—		18		—
	$	19	$	1	$	1,883	$	684

The following table presents, as of September 30, 2013, investment securities which were pledged to secure borrowings, public deposits, and repurchase agreements as permitted or required by law:

(in thousands)



	Amortized		Fair
	Cost		Value
To Federal Home Loan Bank to secure borrowings	$	16,831	$	17,287
To state and local governments to secure public deposits	810,529		808,734
Other securities pledged principally to secure repurchase agreements	307,164		304,093
Total pledged securities	$	1,134,524	$	1,130,114