Note 3—Investment Securities

The amortized cost and estimated fair values of investments in debt securities are summarized in the following tables:


	March 31, 2018
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Debt Securities Available for Sale
Obligations of U.S. government corporations and agencies	$	633,310	$	317	$	(16,970	)	$	616,657
Obligations of states and political subdivisions		121,560		466		(2,788	)		119,238

Total debt securities available for sale	$	754,870	$	783	$	(19,758	)	$	735,895

Debt Securities Held to Maturity
Obligations of U.S. government corporations and agencies	$	481,457	$	533	$	(7,737	)	$	474,253
Obligations of states and political subdivisions		14,578		39		(231	)		14,386

Total debt securities held to maturity	$	496,035	$	572	$	(7,968	)	$	488,639


	December 31, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(in thousands)
Debt Securities Available for Sale
Obligations of U.S. government corporations and agencies	$	609,695	$	695	$	(5,601	)	$	604,789
Obligations of states and political subdivisions		121,597		1,888		(329	)		123,156

Total debt securities available for sale	$	731,292	$	2,583	$	(5,930	)	$	727,945

Debt Securities Held to Maturity
Obligations of U.S. government corporations and agencies	$	500,271	$	5,101	$	(1,889	)	$	503,483
Obligations of states and political subdivisions		14,573		146		(37	)		14,682

Total debt securities held to maturity	$	514,844	$	5,247	$	(1,926	)	$	518,165

No investment securities were sold during the three months ended March 31, 2018 or the three months ended March 31, 2017. Investment securities with an aggregate carrying value of $415,542,000 and $285,596,000 at March 31, 2018 and December 31, 2017, respectively, were pledged as collateral for specific borrowings, lines of credit and local agency deposits.

The amortized cost and estimated fair value of debt securities at March 31, 2018 by contractual maturity are shown below. Actual maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. At March 31, 2018, obligations of U.S. government corporations and agencies with a cost basis totaling $1,114,767,000 consist almost entirely of residential real estate mortgage-backed securities whose contractual maturity, or principal repayment, will follow the repayment of the underlying mortgages. For purposes of the following table, the entire outstanding balance of these mortgage-backed securities issued by U.S. government corporations and agencies is categorized based on final maturity date. At March 31, 2018, the Company estimates the average remaining life of these mortgage-backed securities issued by U.S. government corporations and agencies to be approximately 6.1 years. Average remaining life is defined as the time span after which the principal balance has been reduced by half.


Debt Securities	Available for Sale				Held to Maturity
(In thousands)	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year	$	2	$	2	$	—	$	—
Due after one year through five years		235		236		1,215		1,228
Due after five years through ten years		3,324		3,452		20,631		20,291
Due after ten years		751,309		732,205		474,189		467,120

Totals	$	754,870	$	735,895	$	496,035	$	488,639

Gross unrealized losses on debt securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position were as follows:


	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
						(in thousands)
March 31, 2018
Debt Securities Available for Sale
Obligations of U.S. government corporations and agencies	$	434,302	$	(10,345	)	$	158,324	$	(6,625	)	$	592,626	$	(16,970	)
Obligations of states and political subdivisions		65,047		(1,456	)		16,042		(1,332	)		81,089		(2,788	)

Total debt securities available for sale	$	499,349	$	(11,801	)	$	174,366	$	(7,957	)	$	673,715	$	(19,758	)

Debt Securities Held to Maturity
Obligations of U.S. government corporations and agencies	$	299,575	$	(4,551	)	$	89,809	$	(3,186	)	$	389,384	$	(7,737	)
Obligations of states and political subdivisions		8,901		(144	)		2,579		(87	)		11,480		(231	)

Total debt securities held to maturity	$	308,476	$	(4,695	)	$	92,388	$	(3,273	)	$	400,864	$	(7,968	)


	Less than 12 months					12 months or more					Total
	Fair Value		Unrealized Loss			Fair Value		Unrealized Loss			Fair Value		Unrealized Loss
						(in thousands)
December 31, 2017
Debt Securities Available for Sale
Obligations of U.S. government corporations and agencies	$	284,367	$	(2,176	)	$	166,338	$	(3,425	)	$	450,705	$	(5,601	)
Obligations of states and political subdivisions		4,904		(35	)		17,085		(294	)		21,989		(329	)

Total securities available for sale	$	289,271	$	(2,211	)	$	183,423	$	(3,719	)	$	472,694	$	(5,930	)

Debt Securities Held to Maturity
Obligations of U.S. government corporations and agencies	$	93,017	$	(567	)	$	95,367	$	(1,322	)	$	188,384	$	(1,889	)
Obligations of states and political subdivisions		1,488		(7	)		2,637		(30	)		4,125		(37	)

Total debt securities held to maturity	$	94,505	$	(574	)	$	98,004	$	(1,352	)	$	192,509	$	(1,926	)

Obligations of U.S. government corporations and agencies: Unrealized losses on investments in obligations of U.S. government corporations and agencies are caused by interest rate increases. The contractual cash flows of these securities are guaranteed by U.S. Government Sponsored Entities (principally Fannie Mae and Freddie Mac). It is expected that the securities would not be settled at a price less than the amortized cost of the investment. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell and more likely than not will not be required to sell, these investments are not considered other-than-temporarily impaired. At March 31, 2018, 128 debt securities representing obligations of U.S. government corporations and agencies had unrealized losses with aggregate depreciation of (2.45%) from the Company’s amortized cost basis.

Obligations of states and political subdivisions: The unrealized losses on investments in obligations of states and political subdivisions were caused by increases in required yields by investors in these types of securities. It is expected that the securities would not be settled at a price less than the amortized cost of the investment. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company does not intend to sell and more likely than not will not be required to sell, these investments are not considered other-than-temporarily impaired. At March 31, 2018, 94 debt securities representing obligations of states and political subdivisions had unrealized losses with aggregate depreciation of (3.16%) from the Company’s amortized cost basis.

Marketable equity securities: All unrealized losses recognized during the reporting period were for equity securities still held at March 31, 2018.