4. INVESTMENT SECURITIES

The following tables detail the amortized cost and the estimated fair value of our available-for-sale and held-to-maturity investment securities. None of our investment securities are classified as trading.


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gain		Loss		Value
Available-for-Sale Securities:
September 30, 2016
GSE	$	35,070	$	66	$	—	$	35,136
CMO		259,379		5,396		34		264,741
FNMA MBS		370,292		10,149		150		380,291
FHLMC MBS		66,326		1,846		—		68,172
GNMA MBS		28,264		646		42		28,868
Other investments		627		—		—		627

	$	759,958	$	18,103	$	226	$	777,835

December 31, 2015
GSE	$	31,041	$	—	$	127	$	30,914
CMO		253,189		713		2,414		251,488
FNMA MBS		320,105		1,081		2,715		318,471
FHLMC MBS		99,350		405		313		99,442
GNMA MBS		20,387		420		93		20,714

	$	724,072	$	2,619	$	5,662	$	721,029


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
(Dollars in thousands)	Cost		Gain		Loss		Value
Held-to-Maturity Securities⁽¹⁾
September 30, 2016
State and political subdivisions	$	164,880	$	4,713	$	31	$	169,562

December 31, 2015
State and political subdivisions	$	165,862	$	1,943	$	62	$	167,743

⁽¹⁾

Held-to–maturity securities transferred from available-for-sale are included in held-to-maturity at fair value at the time of transfer. The amortized cost of held-to-maturity securities included net unrealized gains of $2.4 million and $2.9 million at September 30, 2016 and December 31, 2015, respectively, related to securities transferred, which are offset in Accumulated Other Comprehensive Income, net of tax.

The scheduled maturities of investment securities available-for-sale and held-to-maturity at September 30, 2016 and December 31, 2015 are presented in the table below:


	Available-for-Sale ⁽¹⁾
	Amortized		Fair
(Dollars in thousands)	Cost		Value
September 30, 2016
Within one year	$	8,995	$	9,010
After one year but within five years		26,075		26,125
After five years but within ten years		281,237		289,917
After ten years		443,024		452,156

	$	759,331	$	777,208

December 31, 2015
Within one year	$	3,997	$	3,995
After one year but within five years		30,009		29,840
After five years but within ten years		218,023		215,018
After ten years		472,043		472,176

	$	724,072	$	721,029


	Held-to-Maturity
	Amortized		Fair
(Dollars in thousands)	Cost		Value
September 30, 2016
Within one year	$	—	$	—
After one year but within five years		5,097		5,180
After five years but within ten years		9,030		9,219
After ten years		150,753		155,163

	$	164,880	$	169,562

December 31, 2015
Within one year	$	1,486	$	1,488
After one year but within five years		3,465		3,456
After five years but within ten years		7,939		8,045
After ten years		152,972		154,754

	$	165,862	$	167,743

⁽¹⁾	Included in the investment portfolio, but not in the table above, is a mutual fund with an amortized cost and fair value, as of September 30, 2016 of $0.6 million, which has no stated maturity.

MBS have expected maturities that differ from their contractual maturities. These differences arise because borrowers have the right to call or prepay obligations with or without a prepayment penalty.

Investment securities with fair market values aggregating $598.9 million and $457.0 million were pledged as collateral for retail customer repurchase agreements, municipal deposits, and other obligations as of September 30, 2016 and December 31, 2015, respectively.

During the first nine months of 2016 and 2015, we sold $155.8 million and $117.3 million, respectively of investment securities categorized as available-for-sale, for a gain of $1.9 million and $1.0 million, respectively. No losses were incurred from sales during the first nine months of 2016 and 2015.

As of September 30, 2016 and December 31, 2015, our investment securities portfolio had remaining unamortized premiums of $18.5 million and $18.3 million, respectively, and unaccreted discounts of $0.3 million at both September 30, 2016 and December 31, 2015.

For those investment securities with unrealized losses, the table below shows our gross unrealized losses and fair value by investment category and length of time that individual securities were in a continuous unrealized loss position at September 30, 2016.

Duration of Unrealized Loss Position

Less than 12 months

12 months or longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(Dollars in thousands)

Value

Loss

Value

Loss

Value

Loss

Available-for-sale securities:

CMO

7,690

5,144

12,834

FNMA MBS

37,371

150

—

37,371

150

GNMA MBS

9,311

—

9,311

Total temporarily impaired investments

54,372

193

5,144

59,516

226

Less than 12 months

12 months or longer

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

(Dollars in thousands)

Value

Loss

Value

Loss

Value

Loss

Held-to-maturity securities:

State and political subdivisions

3,372

708

4,080

Total temporarily impaired investments

3,372

708

4,080

For investment securities with unrealized losses, the table below shows our gross unrealized losses and fair value by investment category and length of time that individual securities were in a continuous unrealized loss position at December 31, 2015.


	Duration of Unrealized Loss Position
	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Available-for-sale securities:
GSE	$	30,914	$	127	$	—	$	—	$	30,914	$	127
CMO		139,486		1,703		26,536		711		166,022		2,414
FNMA MBS		214,465		2,715		—		—		214,465		2,715
FHLMC MBS		41,791		136		4,025		177		45,816		313
GNMA MBS		4,073		29		2,377		64		6,450		93

Total temporarily impaired investments	$	430,729	$	4,710	$	32,938	$	952	$	463,667	$	5,662


	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(Dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Held-to-maturity securities:
State and political subdivisions	$	9,845	$	62	$	—	$	—	$	9,845	$	62

Total temporarily impaired investments	$	9,845	$	62	$	—	$	—	$	9,845	$	62

At September 30, 2016, we owned investment securities totaling $63.6 million for which the amortized cost basis exceeded fair value. Total unrealized losses on these securities were $0.3 million at September 30, 2016. The temporary impairment is the result of changes in market interest rates subsequent to the purchase of the securities. Our investment portfolio is reviewed each quarter for indications of OTTI. This review includes analyzing the length of time and the extent to which the fair value has been lower than the amortized cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and our intent and ability to hold the investment for a period of time sufficient to allow for full recovery of the unrealized loss. We evaluate our intent and ability to hold securities based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. We do not have the intent to sell, nor is it more likely-than-not we will be required to sell these securities before we are able to recover the amortized cost basis.

All securities, with the exception of one, were AA-rated or better at the time of purchase and remained investment grade at September 30, 2016. All securities were evaluated for OTTI at September 30, 2016 and December 31, 2015. The result of this evaluation showed no OTTI as of September 30, 2016 or December 31, 2015. The estimated weighted average duration of MBS was 4.3 years at September 30, 2016.