

June 30, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value


	($ in Thousands)
Investment securities available for sale
U. S. Treasury securities	$	1,001	$	—	$	(6	)	$	996
Residential mortgage-related securities
FNMA / FHLMC	396,368		5,573		(5,232		)	396,709
GNMA	2,275,481		23		(65,315		)	2,210,189
Private-label	1,037		—		(5		)	1,031
GNMA commercial mortgage-related securities	1,400,680		—		(52,399		)	1,348,282
FFELP asset backed securities	298,263		1,679		(111		)	299,831
Other debt securities	3,000		—		—			3,000
Other equity securities	1,613		—		—			1,613
Total investment securities available for sale	$	4,377,443	$	7,275	$	(123,068	)	$	4,261,651
Investment securities held to maturity
Obligations of state and political subdivisions (municipal securities)	$	1,593,147	$	4,851	$	(17,698	)	$	1,580,300
Residential mortgage-related securities
FNMA / FHLMC	97,822		191		(2,306		)	95,707
GNMA	388,174		1,969		(13,020		)	377,123
GNMA commercial mortgage-related securities	523,103		8,542		(23,832		)	507,813
Total investment securities held to maturity	$	2,602,247	$	15,553	$	(56,856	)	$	2,560,943



December 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value


	($ in Thousands)
Investment securities available for sale
U. S. Treasury securities	$	1,003	$	—	$	(7	)	$	996
Residential mortgage-related securities
FNMA / FHLMC	457,680		9,722		(2,634		)	464,768
GNMA	1,944,453		275		(31,378		)	1,913,350
Private-label	1,067		—		(8		)	1,059
GNMA commercial mortgage-related securities	1,547,173		5		(33,901		)	1,513,277
FFELP asset backed securities	144,322		867		(13		)	145,176
Other debt securities	3,200		—		(12		)	3,188
Other equity securities	1,519		127		(14		)	1,632
Total investment securities available for sale	$	4,100,417	$	10,996	$	(67,967	)	$	4,043,446
Investment securities held to maturity
Obligations of state and political subdivisions (municipal securities)	$	1,281,320	$	13,899	$	(3,177	)	$	1,292,042
Residential mortgage-related securities
FNMA / FHLMC	40,995		398		(489		)	40,904
GNMA	414,440		2,700		(6,400		)	410,740
GNMA commercial mortgage-related securities	546,098		9,546		(15,756		)	539,888
Total investment securities held to maturity	$	2,282,853	$	26,543	$	(25,822	)	$	2,283,574

The expected maturities of investment securities available for sale and held to maturity at June 30, 2018 are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	Available for Sale					Held to Maturity
	Amortized Cost		Fair Value			Amortized Cost		Fair Value
	($ in Thousands)
Due in one year or less	$	3,001	$	2,996		$	46,938	$	47,269
Due after one year through five years	1,000		1,000			200,725		199,266
Due after five years through ten years	—		—			366,997		361,260
Due after ten years	—		—			978,487		972,504
Total debt securities	4,001		3,996			1,593,147		1,580,300
Residential mortgage-related securities
FNMA / FHLMC	396,368		396,709			97,822		95,707
GNMA	2,275,481		2,210,189			388,174		377,123
Private-label	1,037		1,031			—		—
GNMA commercial mortgage-related securities	1,400,680		1,348,282			523,103		507,813
FFELP asset backed securities	298,263		299,831			—		—
Equity securities	1,613		1,613			—		—
Total investment securities	$	4,377,443	$	4,261,651		$	2,602,247	$	2,560,943
Ratio of Fair Value to Amortized Cost			97.4		%			98.4		%

The proceeds from the sale of investment securities for the six months ended June 30, 2018 and 2017 are shown below.



	Six Months Ended June 30,
	2018			2017
	($ in Thousands)
Gross gains on available for sale securities	$	—		$	—
Gross gains on held to maturity securities	—			361
Total gains	—			361
Gross losses on available for sale securities	(2,015		)	—
Gross losses on held to maturity securities	$	—		$	(5	)
Total losses	$	(2,015	)	$	(5	)
Investment securities gains (losses), net	$	(2,015	)	$	356
Proceeds from sales of investment securities	$	493,060		$	16,059

During the first six months of 2018, the Corporation sold approximately $40 million of lower yielding GNMA commercial mortgage-related securities. In addition, on the acquisition date, the Corporation sold Bank Mutual's entire $453 million securities portfolio.

During the first six months of 2017, the Corporation sold approximately $16 million of municipal securities classified as held to maturity due to credit concerns stemming from budgetary pressure and continued credit rating deterioration concerns in the State of Illinois.

Investment securities with a carrying value of approximately $3.1 billion at both June 30, 2018 and December 31, 2017 were pledged to secure certain deposits or for other purposes as required or permitted by law.

The following represents gross unrealized losses and the related fair value of investment securities available for sale and held to maturity, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position, at June 30, 2018.



	Less than 12 months						12 months or more						Total
June 30, 2018	Number of Securities	Unrealized Losses			Fair Value		Number of Securities	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value
	($ in Thousands)
Investment securities available for sale
U.S. Treasury securities	—	$	—		$	—	1	$	(6	)	$	996	$	(6	)	$	996
Residential mortgage-related securities
FNMA / FHLMC	19	(1,613		)	100,946		9	(3,620		)	128,509		(5,233		)	229,455
GNMA	62	(31,430		)	1,453,394		29	(33,885		)	756,061		(65,315		)	2,209,455
Private-label	—	—			—		1	(5		)	1,031		(5		)	1,031
GNMA commercial mortgage-related securities	22	(8,821		)	284,733		80	(43,577		)	1,063,701		(52,398		)	1,348,434
FFELP asset backed securities	7	(111		)	100,757		—	—			—		(111		)	100,757
Total	110	$	(41,975	)	$	1,939,830	120	$	(81,093	)	$	1,950,298	$	(123,068	)	$	3,890,128
Investment securities held to maturity
Obligations of state and political subdivisions (municipal securities)	890	$	(10,814	)	$	609,381	142	$	(6,884	)	$	128,244	$	(17,698	)	$	737,625
Residential mortgage-related securities
FNMA / FHLMC	25	(1,518		)	76,046		10	(788		)	14,728		(2,306		)	90,774
GNMA	61	(7,062		)	236,008		20	(5,957		)	137,093		(13,019		)	373,101
GNMA commercial mortgage-related securities	1	(813		)	29,243		24	(23,019		)	478,570		(23,832		)	507,813
Total	977	$	(20,207	)	$	950,678	196	$	(36,648	)	$	758,635	$	(56,856	)	$	1,709,313

For comparative purposes, the following represents gross unrealized losses and the related fair value of investment securities available for sale and held to maturity, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2017.



	Less than 12 months						12 months or more						Total
December 31, 2017	Number of Securities	Unrealized Losses			Fair Value		Number of Securities	Unrealized Losses			Fair Value		Unrealized Losses			Fair Value
	($ in Thousands)
Investment securities available for sale
U.S. Treasury securities	1	$	(7	)	$	996	—	$	—		$	—	$	(7	)	$	996
Residential mortgage-related securities
FNMA / FHLMC	9	(572		)	69,939		9	(2,062		)	142,093		(2,634		)	212,032
GNMA	44	(8,927		)	1,028,221		25	(22,451		)	737,198		(31,378		)	1,765,419
Private-label	—	—			—		1	(8		)	1,059		(8		)	1,059
GNMA commercial mortgage-related securities	33	(5,554		)	480,514		70	(28,347		)	1,026,642		(33,901		)	1,507,156
FFELP asset backed securities	1	(13		)	12,158		—	—			—		(13		)	12,158
Other debt securities	1	(12		)	188		—	—			—		(12		)	188
Other equity securities	3	(14		)	1,487		—	—			—		(14		)	1,487
Total	92	$	(15,099	)	$	1,593,503	105	$	(52,868	)	$	1,906,992	$	(67,967	)	$	3,500,495
Investment securities held to maturity
Obligations of state and political subdivisions (municipal securities)	157	$	(746	)	$	122,761	132	$	(2,431	)	$	127,043	$	(3,177	)	$	249,804
Residential mortgage-related securities
FNMA / FHLMC	8	(73		)	13,143		10	(417		)	16,262		(490		)	29,405
GNMA	35	(3,373		)	268,388		18	(3,026		)	120,892		(6,399		)	389,280
GNMA commercial mortgage-related securities	2	(299		)	52,997		23	(15,457		)	486,891		(15,756		)	539,888
Total	202	$	(4,491	)	$	457,289	183	$	(21,331	)	$	751,088	$	(25,822	)	$	1,208,377

The Corporation reviews the investment securities portfolio on a quarterly basis to monitor its exposure to other-than-temporary impairment. A determination as to whether a security’s decline in fair value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Corporation may consider in the other-than-temporary impairment analysis include the length of time and extent to which the security has been in an unrealized loss position, changes in security ratings, financial condition and near-term prospects of the issuer, as well as security and industry specific economic conditions.

Based on the Corporation’s evaluation, management does not believe any unrealized loss at June 30, 2018 represents an other-than-temporary impairment as these unrealized losses are primarily attributable to changes in interest rates and the current market conditions, and not credit deterioration. The unrealized losses reported for municipal securities relate to various state and local political subdivisions and school districts. The unrealized losses at June 30, 2018 for mortgage-related securities is due to the increase in overall interest rates. The U.S. Treasury 3 year and 5 year rates increased by 65 bp and 53 bp, respectively, from December 31, 2017. The Corporation does not intend to sell nor does it believe that it will be required to sell the securities in an unrealized loss position before recovery of their amortized cost basis.

Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank stocks: The Corporation is required to maintain Federal Reserve stock and FHLB stock as a member of both the Federal Reserve System and the FHLB, and in amounts as required by these institutions. These equity securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other marketable equity securities and their fair value is equal to amortized cost. At June 30, 2018, and December 31, 2017, the Corporation had FHLB stock of $173 million and $89 million, respectively. The Corporation had Federal Reserve Bank stock of $76 million at both June 30, 2018 and December 31, 2017.