Investment Securities

9 Months Ended

Sep. 30, 2019

Note 3 - Investment Securities

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


	September 30, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
			(in thousands)
Debt Securities Available for Sale
Obligations of U.S. government agencies	$	488,080	$	8,004	$	(447)	$	495,637
Obligations of states and political subdivisions	108,360		3,550		—		111,910
Corporate bonds	4,420		108		—		4,528
Asset backed securities	376,683		192		(4,870)		372,005
Total debt securities available for sale	$	977,543	$	11,854	$	(5,317)	$	984,080
Debt Securities Held to Maturity
Obligations of U.S. government agencies	$	379,634	$	6,382	$	(482)	$	385,534
Obligations of states and political subdivisions	13,815		350		—		14,165
Total debt securities held to maturity	$	393,449	$	6,732	$	(482)	$	399,699


	December 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 agencies	$	647,288	$	771	$	(18,078)	$	629,981
Obligations of states and political subdivisions	128,890		294		(3,112)		126,072
Corporate bonds	4,381		97		—		4,478
Asset backed securities	355,451		73		(1,019)		354,505
Total debt securities available for sale	$	1,136,010	$	1,235	$	(22,209)	$	1,115,036
Debt Securities Held to Maturity
Obligations of U.S. government agencies	430,343		327		(7,745)		422,925
Obligations of states and political subdivisions	14,593		82		(230)		14,445
Total debt securities held to maturity	$	444,936	$	409	$	(7,975)	$	437,370

Proceeds from the sales of investment securities totaled $125,247,000 and $293,279,000 during the nine months ended September 30, 2019 and 2018, respectively. Gross realized gains from the sale of investment securities totaled $335,000 and $207,000 during the three and nine months ended September 30, 2019 and 2018, respectively. Gross realized losses from the sale of investment securities totaled $228,000 during the three and nine months ended September 30, 2019. There were no realized losses from the sale of investment securities during the three and nine months ended September 30, 2018. Investment securities with an aggregate carrying value of $504,475,000 and $597,591,000 at September 30, 2019 and December 31, 2018, respectively, were pledged as collateral for specific borrowings, lines of credit or local agency deposits.

The amortized cost and estimated fair value of debt securities at September 30, 2019 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 September 30, 2019, obligations of U.S. government corporations and agencies with a cost basis totaling $867,714,000 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 September 30, 2019, the Company estimates the average remaining life of these mortgage-backed securities issued by U.S. government corporations and agencies to be approximately 4.7 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	$	2,607	$	2,613	$	1,263	$	1,274
Due after one year through five years	14,986		15,401		—		—
Due after five years through ten years	46,263		47,273		20,747		21,035
Due after ten years	913,687		918,793		371,439		377,390
Totals	$	977,543	$	984,080	$	393,449	$	399,699

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
September 30, 2019:	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
					(in thousands)
Debt Securities Available for Sale
Obligations of U.S. government agencies	$	38,295	$	(374)	$	25,171	$	(73)	$	63,466	$	(447)


Asset backed securities	293,500		(4,432)		45,981		(438)		339,481		(4,870)
Total debt securities available for sale	$	331,795	$	(4,806)	$	71,152	$	(511)	$	402,947	$	(5,317)
Debt Securities Held to Maturity
Obligations of U.S. government agencies	$	19,749	$	(94)	$	78,604	$	(388)	$	98,353	$	(482)


	Less than 12 months						12 months or more						Total
December 31, 2018:	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
					(in thousands)
Debt Securities Available for Sale
Obligations of U.S. government agencies	$	171,309	$	(3,588)	$	394,630	$	(14,490)	$	565,939	$	(18,078)
Obligations of states and political subdivisions	63,738		(1,541)		20,719		(1,571)		84,457		(3,112)
Asset backed securities	101,386		(1,019)		—		—		101,386		(1,019)
Total debt securities available for sale	$	336,433	$	(6,148)	$	415,349	$	(16,061)	$	751,782	$	(22,209)
Debt Securities Held to Maturity
Obligations of U.S. government agencies	223,810		(2,619)		158,648		(5,126)		382,458		(7,745)
Obligations of states and political subdivisions	5,786		(114)		4,042		(116)		9,828		(230)
Total debt securities held to maturity	$	229,596	$	(2,733)	$	162,690	$	(5,242)	$	392,286	$	(7,975)

Obligations of U.S. government agencies: Unrealized losses on investments in obligations of U.S. government 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 September 30, 2019, 19 debt securities representing obligations of U.S. government agencies had unrealized losses with aggregate depreciation of 0.59% from the Company’s amortized cost basis.

Asset backed securities: The unrealized losses on investments in asset backed securities were caused by increases in required yields by investors in these types of securities. At the time of purchase, each of these securities was rated AA or AAA and through September 30, 2019 has not experienced any deterioration in credit rating. The Company continues to monitor these securities for changes in credit rating or other indications of credit deterioration. Because management believes 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 September 30, 2019, 25 asset backed securities had unrealized losses with aggregate depreciation of 1.49% from the Company’s amortized cost basis.