Investment Securities

The following is a summary of the amortized cost and fair value of investment securities carried at fair value and investment securities held-to-maturity at June 30, 2018 and December 31, 2017:



	Investment Securities Carried at Fair Value
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
June 30, 2018
Debt securities
Government and government-sponsored agencies	$	238,370	$	64	$	3,351	$	235,083
State and political subdivisions	455,677		267		10,864		445,080
Residential mortgage-backed securities	184,303		133		4,642		179,794
Collateralized mortgage obligations	1,414,120		104		29,992		1,384,232
Corporate bonds	255,186		265		5,915		249,536
Trust preferred securities	35,021		1,216		52		36,185
Total	$	2,582,677	$	2,049	$	54,816	$	2,529,910
December 31, 2017
Debt securities
Government and government-sponsored agencies	$	203,099	$	765	$	948	$	202,916
State and political subdivisions	350,088		310		4,428		345,970
Residential mortgage-backed securities	151,752		5		1,626		150,131
Collateralized mortgage obligations	1,042,240		89		8,484		1,033,845
Corporate bonds	193,230		1,156		1,592		192,794
Trust preferred securities	34,848		1,280		62		36,066
Total debt securities available-for-sale	1,975,257		3,605		17,140		1,961,722
Equity securities
Preferred stock	1,389		435		—		1,824
Total equity securities	1,389		435		—		1,824
Total	$	1,976,646	$	4,040	$	17,140	$	1,963,546



	Investment Securities Held-to-Maturity
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
June 30, 2018
State and political subdivisions	$	602,187	$	2,112	$	12,426	$	591,873
Trust preferred securities	500		—		75		425
Total	$	602,687	$	2,112	$	12,501	$	592,298
December 31, 2017
State and political subdivisions	$	676,593	$	3,856	$	17,933	$	662,516
Trust preferred securities	500		—		110		390
Total	$	677,093	$	3,856	$	18,043	$	662,906

Investment securities are classified at the time they are acquired as either available-for-sale, held-to-maturity or carried at fair value based upon various factors, including asset/liability management strategies, liquidity and profitability objectives and regulatory requirements. Debt securities classified as available-for-sale and equity securities are recorded at fair value. Investment securities carried at fair value may be sold prior to maturity based upon asset/liability management decisions. Unrealized gains or losses on available-for-sale debt securities are recorded as part of accumulated other comprehensive income in stockholders’ equity. Unrealized gains or losses on equity securities were recorded as part of accumulated other comprehensive income in stockholders' equity through December 31, 2017. Effective January 1, 2018, the amendments within ASU 2016-01, require that equity investments be measured at fair value with changes in fair value recognized in net income. At January 1, 2018, the Corporation's equity securities consisted of $1.8 million in preferred stocks. The Corporation recognized a cumulative effect adjustment in the amount of $344 thousand as of January 1, 2018 to reclassify the fair value position into retained earnings. Beginning January 1, 2018, the fair value changes on equity securities are recognized in net income, rather than in accumulated other comprehensive income. The Corporation sold its remaining position in equity securities during the second quarter of 2018. Held-to-maturity securities are carried at amortized cost, adjusted for amortization of premiums or accretion of discounts.

The majority of the Corporation’s residential mortgage-backed securities and collateralized mortgage obligations are backed by a U.S. government agency (Government National Mortgage Association) or a government sponsored enterprise (Federal Home Loan Mortgage Corporation or Federal National Mortgage Association).

Proceeds from sales of securities and the associated gains and losses recorded in earnings are listed below:



	Three Months Ended June 30,					Six Months Ended June 30,
(Dollars in thousands)	2018			2017		2018			2017
Proceeds	$	4,215		$	10,050	$	4,215		$	10,050
Gross gains	42			77		42			167
Gross losses	(39		)	—		(39		)	—

The following is a summary of the amortized cost and fair value of investment securities at June 30, 2018, by maturity, for both carried at fair value and held-to-maturity. The maturities of residential mortgage-backed securities and collateralized mortgage obligations are based on scheduled principal payments. The maturities of all other debt securities are based on final contractual maturity.



	June 30, 2018
(Dollars in thousands)	Amortized Cost		Fair Value
Investment Securities Carried at Fair Value:
Due in one year or less	$	37,082	$	36,851
Due after one year through five years	116,724		114,934
Due after five years through ten years	402,343		391,936
Due after ten years	2,026,509		1,986,189
Total	$	2,582,658	$	2,529,910
Investment Securities Held-to-Maturity:
Due in one year or less	$	57,341	$	57,143
Due after one year through five years	222,454		219,379
Due after five years through ten years	140,431		136,972
Due after ten years	182,461		178,804
Total	$	602,687	$	592,298

Securities with a carrying value of $967.9 million and $937.2 million were pledged at June 30, 2018 and December 31, 2017, respectively, to secure borrowings and deposits.

At June 30, 2018 and December 31, 2017, there were no holdings of securities of any one issuer, other than the U.S. government and its agencies, in an amount greater than 10% of shareholders' equity.

The following schedule summarizes information for debt securities both available-for-sale and held-to-maturity with gross unrealized losses at June 30, 2018 and December 31, 2017, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position. As of June 30, 2018, the Corporation’s securities portfolio consisted of 2,047 securities, 1,474 of which were in an unrealized loss position.



	Less Than 12 Months				12 Months or More				Total
(Dollars in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
June 30, 2018
Government sponsored agencies	$	173,618	$	2,307	$	31,046	$	1,044	$	204,664	$	3,351
State and political subdivisions	532,178		13,619		338,016		9,671		870,194		23,290
Residential mortgage-backed securities	97,148		2,203		51,138		2,439		148,286		4,642
Collateralized mortgage obligations	1,081,106		23,794		180,809		6,198		1,261,915		29,992
Corporate bonds	163,889		4,786		48,160		1,129		212,049		5,915
Trust preferred securities	1,500		—		2,758		127		4,258		127
Total	$	2,049,439	$	46,709	$	651,927	$	20,608	$	2,701,366	$	67,317
December 31, 2017
Government sponsored agencies	$	63,818	$	510	$	24,621	$	438	$	88,439	$	948
State and political subdivisions	437,407		12,268		349,242		10,093		786,649		22,361
Residential mortgage-backed securities	93,508		383		56,576		1,243		150,084		1,626
Collateralized mortgage obligations	713,525		7,235		73,707		1,249		787,232		8,484
Corporate bonds	71,447		1,138		47,878		454		119,325		1,592
Trust preferred securities	—		—		11,164		172		11,164		172
Total	$	1,379,705	$	21,534	$	563,188	$	13,649	$	1,942,893	$	35,183

An assessment is performed quarterly by the Corporation to determine whether unrealized losses in its debt securities portfolio are temporary or other-than-temporary by carefully considering all reasonably available information. The Corporation reviews factors such as financial statements, credit ratings, news releases and other pertinent information of the underlying issuer or company to make its determination. Management did not believe any individual unrealized loss on any debt security, as of June 30, 2018, represented other-than-temporary impairment ("OTTI") as the unrealized losses for these securities resulted primarily from changes in benchmark U.S. Treasury interest rates and not credit issues. Management believed that the unrealized losses on debt securities at June 30, 2018 were temporary in nature and due primarily to changes in interest rates and reduced market liquidity and not as a result of credit-related issues.

At June 30, 2018, the Corporation did not have the intent to sell any of its impaired debt securities and believed that it was more-likely-than-not that the Corporation will not have to sell any such debt securities before a full recovery of amortized cost. Accordingly, at June 30, 2018, the Corporation believed the impairments in its debt securities portfolio were temporary in nature. However, there is no assurance that OTTI may not occur in the future.