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 September 30, 2018 and December 31, 2017:



	Investment Securities Carried at Fair Value
(Dollars in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
September 30, 2018
Debt securities
Government and government-sponsored agencies	$	258,643	$	14	$	4,204	$	254,453
State and political subdivisions	506,277		187		14,555		491,909
Residential mortgage-backed securities	182,983		6		5,968		177,021
Collateralized mortgage obligations	1,517,172		—		39,354		1,477,818
Corporate bonds	293,828		485		6,908		287,405
Trust preferred securities	47,378		1,004		108		48,274
Total	$	2,806,281	$	1,696	$	71,097	$	2,736,880
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
September 30, 2018
State and political subdivisions	$	607,867	$	1,917	$	12,037	$	597,747
Trust preferred securities	500		—		50		450
Total	$	608,367	$	1,917	$	12,087	$	598,197
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 investment securities carried at fair value and the associated gains and losses recorded in earnings are listed below:



	Three Months Ended September 30,				Nine Months Ended September 30,
(Dollars in thousands)	2018		2017		2018			2017
Proceeds	$	—	$	7,035	$	4,215		$	17,085
Gross gains	—		1		42			168
Gross losses	—		—		(39		)	—

The following is a summary of the amortized cost and fair value of investment securities at September 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.



	September 30, 2018
(Dollars in thousands)	Amortized Cost		Fair Value
Investment Securities Carried at Fair Value:
Due in one year or less	$	32,586	$	32,424
Due after one year through five years	121,421		119,478
Due after five years through ten years	455,582		443,027
Due after ten years	2,196,692		2,141,951
Total	$	2,806,281	$	2,736,880
Investment Securities Held-to-Maturity:
Due in one year or less	$	57,403	$	57,248
Due after one year through five years	221,335		218,555
Due after five years through ten years	157,517		153,997
Due after ten years	172,112		168,397
Total	$	608,367	$	598,197

Securities with a carrying value of $1.02 billion and $937.2 million were pledged at September 30, 2018 and December 31, 2017, respectively, to secure borrowings and deposits.

At September 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 September 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 September 30, 2018, the Corporation’s securities portfolio consisted of 2,074 securities, 1,525 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
September 30, 2018
Government sponsored agencies	$	204,095	$	2,564	$	39,573	$	1,640	$	243,668	$	4,204
State and political subdivisions	563,202		14,773		414,480		11,819		977,682		26,592
Residential mortgage-backed securities	119,911		2,907		55,068		3,061		174,979		5,968
Collateralized mortgage obligations	990,167		19,414		456,347		19,940		1,446,514		39,354
Corporate bonds	141,365		3,773		76,955		3,135		218,320		6,908
Trust preferred securities	13,716		60		2,789		98		16,505		158
Total	$	2,032,456	$	43,491	$	1,045,212	$	39,693	$	3,077,668	$	83,184
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 September 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 September 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 September 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 September 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.