(2) Securities

Trading Securities

The fair value and net unrealized gain (loss) included in trading securities is as follows (in thousands):



	June 30, 2016					December 31, 2015					June 30, 2015
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. government agency debentures	$	18,909	$	(8	)	$	61,295	$	(71	)	$	40,212	$	(28	)
U.S. government agency residential mortgage-backed securities	122,306		363			10,989		17			23,090		181
Municipal and other tax-exempt securities	52,721		262			31,901		210			62,801		(41		)
Other trading securities	17,686		169			18,219		(16		)	32,106		47
Total trading securities	$	211,622	$	786		$	122,404	$	140		$	158,209	$	159

Investment Securities

The amortized cost and fair values of investment securities are as follows (in thousands):



	June 30, 2016
	Amortized		Carrying		Fair		Gross Unrealized¹
	Cost		Value		Value		Gain		Loss
Municipal and other tax-exempt	$	334,551	$	334,551	$	340,700	$	6,234	$	(85	)
U.S. government agency residential mortgage-backed securities – Other	23,750		23,750		25,233		1,483		—
Other debt securities	202,410		202,410		233,129		30,723		(4		)
Total investment securities	$	560,711	$	560,711	$	599,062	$	38,440	$	(89	)


¹	Gross unrealized gains and losses are not recognized in Accumulated Other Comprehensive Income "AOCI" in the Consolidated Balance Sheets.



	December 31, 2015
	Amortized		Carrying		Fair		Gross Unrealized¹
	Cost		Value		Value		Gain		Loss
Municipal and other tax-exempt	$	365,258	$	365,258	$	368,910	$	3,935	$	(283	)
U.S. government agency residential mortgage-backed securities – Other	26,721		26,833		27,874		1,063		(22		)
Other debt securities	205,745		205,745		232,375		26,689		(59		)
Total investment securities	$	597,724	$	597,836	$	629,159	$	31,687	$	(364	)


¹	Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.



	June 30, 2015
	Amortized		Carrying		Fair		Gross Unrealized¹
	Cost		Value		Value		Gain		Loss
Municipal and other tax-exempt	$	389,824	$	389,824	$	392,367	$	3,158	$	(615	)
U.S. government agency residential mortgage-backed securities – Other	30,565		30,867		32,133		1,276		(10		)
Other debt securities	204,973		204,973		217,542		14,017		(1,448		)
Total investment securities	$	625,362	$	625,664	$	642,042	$	18,451	$	(2,073	)


¹	Gross unrealized gains and losses are not recognized in AOCI in the Consolidated Balance Sheets.

The amortized cost and fair values of investment securities at June 30, 2016, by contractual maturity, are as shown in the following table (dollars in thousands):



	Less than One Year			One to Five Years			Six to Ten Years			Over Ten Years			Total			Weighted Average Maturity²
Municipal and other tax-exempt:
Carrying value	$	74,024		$	216,810		$	9,178		$	34,539		$	334,551		3.02
Fair value	74,119			218,972			9,469			38,140			340,700
Nominal yield¹	1.47		%	1.95		%	3.18		%	5.70		%	2.27		%
Other debt securities:
Carrying value	13,055			43,730			125,949			19,676			202,410			6.95
Fair value	13,264			47,596			150,198			22,071			233,129
Nominal yield	3.99		%	4.80		%	5.88		%	4.82		%	5.36		%
Total fixed maturity securities:
Carrying value	$	87,079		$	260,540		$	135,127		$	54,215		$	536,961		4.48
Fair value	87,383			266,568			159,667			60,211			573,829
Nominal yield	1.84		%	2.43		%	5.70		%	5.38		%	3.44		%
Residential mortgage-backed securities:
Carrying value													$	23,750		³
Fair value													25,233
Nominal yield⁴													2.75		%
Total investment securities:
Carrying value													$	560,711
Fair value													599,062
Nominal yield													3.41		%


¹	Calculated on a taxable equivalent basis using a 39 percent effective tax rate.


²	Expected maturities may differ from contractual maturities, because borrowers may have the right to call or prepay obligations with or without penalty.


³	The average expected lives of residential mortgage-backed securities were 3.9 years based upon current prepayment assumptions.


⁴	The nominal yield on residential mortgage-backed securities is based upon prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments. See Quarterly Financial Summary - Unaudited for current yields on the investment securities portfolio.

Available for Sale Securities

The amortized cost and fair value of available for sale securities are as follows (in thousands):



	June 30, 2016
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	1,004	$	4	$	—		$	—
Municipal and other tax-exempt	50,170		50,262		805		(713		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	2,908,698		2,988,974		80,549		(273		)	—
FHLMC	1,746,661		1,785,332		38,869		(198		)	—
GNMA	921,928		925,962		4,646		(612		)	—
Other	—		—		—		—			—
Total U.S. government agencies	5,577,287		5,700,268		124,064		(1,083		)	—
Private issue:
Alt-A loans	49,522		54,536		5,461		—			(447		)
Jumbo-A loans	65,787		71,777		6,355		(36		)	(329		)
Total private issue	115,309		126,313		11,816		(36		)	(776		)
Total residential mortgage-backed securities	5,692,596		5,826,581		135,880		(1,119		)	(776		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,854,306		2,911,946		57,762		(122		)	—
Other debt securities	4,400		4,151		—		(249		)	—
Perpetual preferred stock	15,562		17,931		2,369		—			—
Equity securities and mutual funds	17,270		18,814		1,558		(14		)	—
Total available for sale securities	$	8,635,304	$	8,830,689	$	198,378	$	(2,217	)	$	(776	)

¹ Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet.

² Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.



	December 31, 2015
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	995	$	—	$	(5	)	$	—
Municipal and other tax-exempt	56,681		56,817		873		(737		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	3,156,214		3,187,215		41,502		(10,501		)	—
FHLMC	1,940,915		1,949,335		14,727		(6,307		)	—
GNMA	763,967		761,801		2,385		(4,551		)	—
Other	—		—		—		—			—
Total U.S. government agencies	5,861,096		5,898,351		58,614		(21,359		)	—
Private issue:
Alt-A loans	56,387		62,574		6,574		—			(387		)
Jumbo-A loans	71,724		76,544		5,260		—			(440		)
Total private issue	128,111		139,118		11,834		—			(827		)
Total residential mortgage-backed securities	5,989,207		6,037,469		70,448		(21,359		)	(827		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,919,044		2,905,796		5,396		(18,644		)	—
Other debt securities	4,400		4,151		—		(249		)	—
Perpetual preferred stock	17,171		19,672		2,501		—			—
Equity securities and mutual funds	17,121		17,833		752		(40		)	—
Total available for sale securities	$	9,004,624	$	9,042,733	$	79,970	$	(41,034	)	$	(827	)

¹ Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet.

² Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.



	June 30, 2015
	Amortized		Fair		Gross Unrealized¹
	Cost		Value		Gain		Loss			OTTI²
U.S. Treasury	$	1,000	$	1,000	$	—	$	—		$	—
Municipal and other tax-exempt	61,341		61,624		1,028		(745		)	—
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	3,558,224		3,609,273		57,269		(6,220		)	—
FHLMC	1,929,685		1,954,917		27,594		(2,362		)	—
GNMA	768,342		770,739		4,928		(2,531		)	—
Other	4,224		4,520		296		—			—
Total U.S. government agencies	6,260,475		6,339,449		90,087		(11,113		)	—
Private issue:
Alt-A loans	61,486		67,711		6,692		—			(467		)
Jumbo-A loans	80,968		86,439		5,843		—			(372		)
Total private issue	142,454		154,150		12,535		—			(839		)
Total residential mortgage-backed securities	6,402,929		6,493,599		102,622		(11,113		)	(839		)
Commercial mortgage-backed securities guaranteed by U.S. government agencies	2,405,480		2,401,364		7,988		(12,104		)	—
Other debt securities	4,400		4,150		—		(250		)	—
Perpetual preferred stock	17,171		19,648		2,477		—			—
Equity securities and mutual funds	18,638		18,732		840		(746		)	—
Total available for sale securities	$	8,910,959	$	9,000,117	$	114,955	$	(24,958	)	$	(839	)


¹	Gross unrealized gain/loss recognized in AOCI in the consolidated balance sheet.


²	Amounts represent unrealized loss that remains in AOCI after an other-than-temporary credit loss has been recognized in income.

The amortized cost and fair values of available for sale securities at June 30, 2016, by contractual maturity, are as shown in the following table (dollars in thousands):



	Less than One Year			One to Five Years			Six to Ten Years			Over Ten Years				Total			Weighted Average Maturity⁵
U.S. Treasuries:
Amortized cost	$	—		$	1,000		$	—		$	—			$	1,000		1.55
Fair value	—			1,004			—			—				1,004
Nominal yield	—		%	0.87		%	—		%	—		%		0.87		%
Municipal and other tax-exempt:
Amortized cost	$	9,693		$	16,270		$	2,806		$	21,401			$	50,170		8.43
Fair value	9,781			16,636			2,867			20,978				50,262
Nominal yield¹	4.51		%	4.11		%	3.70		%	2.01		%	⁶	3.27		%
Commercial mortgage-backed securities:
Amortized cost	$	—		$	904,982		$	1,760,882		$	188,442			$	2,854,306		6.91
Fair value	—			919,153			1,802,497			190,296				2,911,946
Nominal yield	—		%	1.66		%	1.87		%	1.50		%		1.78		%
Other debt securities:
Amortized cost	$	—		$	—		$	—		$	4,400			$	4,400		31.16
Fair value	—			—			—			4,151				4,151
Nominal yield	—		%	—		%	—		%	1.71		%	⁶	—		%
Total fixed maturity securities:
Amortized cost	$	9,693		$	922,252		$	1,763,688		$	214,243			$	2,909,876		6.97
Fair value	9,781			936,793			1,805,364			215,425				2,967,363
Nominal yield	4.51		%	1.71		%	1.87		%	1.55		%		1.80		%
Residential mortgage-backed securities:
Amortized cost														$	5,692,596		²
Fair value														5,826,581
Nominal yield⁴														1.90		%
Equity securities and mutual funds:
Amortized cost														$	32,832		³
Fair value														36,745
Nominal yield														—		%
Total available-for-sale securities:
Amortized cost														$	8,635,304
Fair value														8,830,689
Nominal yield														1.86		%


¹	Calculated on a taxable equivalent basis using a 39 percent effective tax rate.


²	The average expected lives of mortgage-backed securities were 3.3 years years based upon current prepayment assumptions.


³	Primarily common stock and preferred stock of corporate issuers with no stated maturity.


⁴	The nominal yield on mortgage-backed securities is based upon prepayment assumptions at the purchase date. Actual yields earned may differ significantly based upon actual prepayments. See Quarterly Financial Summary –– Unaudited following for current yields on available for sale securities portfolio.


⁵	Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without penalty.


⁶	Nominal yield on municipal and other tax-exempt securities and other debt securities with contractual maturity dates over ten years are based on variable rates which generally are reset within 35 days.

Sales of available for sale securities resulted in gains and losses as follows (in thousands):



	Three Months Ended June 30,					Six Months Ended June 30,
	2016		2015			2016		2015
Proceeds	$	325,758	$	378,835		$	795,140	$	713,660
Gross realized gains	5,326		4,840			9,290		9,740
Gross realized losses	—		(1,407		)	—		(1,980		)
Related federal and state income tax expense	2,072		1,335			3,614		3,018

A summary of investment and available for sale securities that have been pledged as collateral for repurchase agreements, public trust funds on deposit and for other purposes, as required by law was as follows (in thousands):



	June 30, 2016		Dec. 31, 2015		June 30, 2015
Investment:
Carrying value	$	287,166	$	231,033	$	58,875
Fair value	293,625		234,382		60,645

Available for sale:
Amortized cost	7,502,361		6,831,743		6,035,423
Fair value	7,657,916		6,849,524		6,089,438

The secured parties do not have the right to sell or re-pledge these securities.

Temporarily Impaired Securities as of June 30, 2016

(in thousands):



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax-exempt	19	$	11,915	$	20	$	4,378	$	65	$	16,293	$	85
U.S. government agency residential mortgage-backed securities – Other	—	—		—		—		—		—		—
Other debt securities	1	—		—		858		4		858		4
Total investment securities	20	$	11,915	$	20	$	5,236	$	69	$	17,151	$	89



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale:
Municipal and other tax-exempt	17	$	375	$	—	$	10,289	$	713	$	10,664	$	713
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	4	97,910		267		15,401		6		113,311		273
FHLMC	1	—		—		22,338		198		22,338		198
GNMA	11	349,631		612		—		—		349,631		612
Total U.S. government agencies	16	447,541		879		37,739		204		485,280		1,083
Private issue¹:
Alt-A loans	5	8,513		241		8,291		206		16,804		447
Jumbo-A loans	9	7,076		36		7,877		329		14,953		365
Total private issue	14	15,589		277		16,168		535		31,757		812
Total residential mortgage-backed securities	30	463,130		1,156		53,907		739		517,037		1,895
Commercial mortgage-backed securities guaranteed by U.S. government agencies	11	103,955		37		65,857		85		169,812		122
Other debt securities	2	—		—		4,151		249		4,151		249
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	30	—		—		889		14		889		14
Total available for sale securities	90	$	567,460	$	1,193	$	135,093	$	1,800	$	702,553	$	2,993


¹	Includes securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income.

Temporarily Impaired Securities as of December 31, 2015

(In thousands)



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax-exempt	73	$	127,319	$	207	$	13,380	$	77	$	140,699	$	284
U.S. government agency residential mortgage-backed securities – Other	1	5,533		22		—		—		5,533		22
Other debt securities	11	1,082		41		1,715		18		2,797		59
Total investment securities	85	$	133,934	$	270	$	15,095	$	95	$	149,029	$	365



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale:
U.S. Treasury	1	$	995	$	5	$	—	$	—	$	995	$	5
Municipal and other tax-exempt	20	$	9,909	$	27	$	11,664	$	710	$	21,573	$	737
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	55	1,188,022		10,262		18,236		239		1,206,258		10,501
FHLMC	40	726,713		4,827		77,545		1,480		804,258		6,307
GNMA	15	364,919		1,951		102,109		2,600		467,028		4,551
Total U.S. government agencies	110	2,279,654		17,040		197,890		4,319		2,477,544		21,359
Private issue¹:
Alt-A loans	4	—		—		9,264		387		9,264		387
Jumbo-A loans	8	—		—		8,482		440		8,482		440
Total private issue	12	—		—		17,746		827		17,746		827
Total residential mortgage-backed securities	122	2,279,654		17,040		215,636		5,146		2,495,290		22,186
Commercial mortgage-backed securities guaranteed by U.S. government agencies	213	1,582,469		11,419		484,258		7,225		2,066,727		18,644
Other debt securities	2	—		—		4,151		249		4,151		249
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	61	782		5		991		35		1,773		40
Total available for sale securities	419	$	3,873,809	$	28,496	$	716,700	$	13,365	$	4,590,509	$	41,861


¹	Includes securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income.

Temporarily Impaired Securities as of June 30, 2015

(In thousands)



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Investment:
Municipal and other tax-exempt	79	$	102,223	$	351	$	50,991	$	264	$	153,214	$	615
U.S. government agency residential mortgage-backed securities – Other	1	6,491		10		—		—		6,491		10
Other debt securities	110	31,875		1,407		2,458		41		34,333		1,448
Total investment securities	190	$	140,589	$	1,768	$	53,449	$	305	$	194,038	$	2,073



	Number of Securities	Less Than 12 Months				12 Months or Longer				Total
	Number of Securities	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Available for sale:
Municipal and other tax-exempt¹	20	$	9,855	$	41	$	11,688	$	704	$	21,543	$	745
Residential mortgage-backed securities:
U. S. government agencies:
FNMA	29	601,863		4,327		118,269		1,893		720,132		6,220
FHLMC	13	121,217		795		117,408		1,567		238,625		2,362
GNMA	6	66,131		50		115,103		2,481		181,234		2,531
Total U.S. government agencies	48	789,211		5,172		350,780		5,941		1,139,991		11,113
Private issue¹:
Alt-A loans	4	10,244		467		—		—		10,244		467
Jumbo-A loans	11	7,542		18		9,310		354		16,852		372
Total private issue	15	17,786		485		9,310		354		27,096		839
Total residential mortgage-backed securities	63	806,997		5,657		360,090		6,295		1,167,087		11,952
Commercial mortgage-backed securities guaranteed by U.S. government agencies	128	712,973		3,848		791,108		8,256		1,504,081		12,104
Other debt securities	2	—		—		4,149		250		4,149		250
Perpetual preferred stocks	—	—		—		—		—		—		—
Equity securities and mutual funds	51	4,706		714		994		32		5,700		746
Total available for sale securities	264	$	1,534,531	$	10,260	$	1,168,029	$	15,537	$	2,702,560	$	25,797


¹	Includes securities for which an unrealized loss remains in AOCI after an other-than-temporary credit loss has been recognized in income.

On a quarterly basis, the Company performs separate evaluations of impaired debt and equity investments and available for sale securities to determine if the unrealized losses are temporary.

For debt securities, management determines whether it intends to sell or if it is more-likely-than-not that it will be required to sell impaired securities. This determination considers current and forecasted liquidity requirements, regulatory and capital requirements and securities portfolio management. Based on this evaluation as of June 30, 2016, the Company does not intend to sell any impaired available for sale securities before fair value recovers to the current amortized cost and it is more-likely-than-not that the Company will not be required to sell impaired securities before fair value recovers, which may be maturity.

Impairment of debt securities rated investment grade by all nationally-recognized rating agencies is considered temporary unless specific contrary information is identified. None of the debt securities rated investment grade were considered to be other-than-temporarily impaired at June 30, 2016.

At June 30, 2016, the composition of the Company’s investment and available for sale securities portfolios by the lowest current credit rating assigned by any of the three nationally-recognized rating agencies is as follows (in thousands):



	AAA - AA				A - BBB				Below Investment Grade				Not Rated				Total
	Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value		Carrying Value		Fair Value
Investment:
Municipal and other tax-exempt	$	211,530	$	213,727	$	6,696	$	6,789	$	—	$	—	$	116,325	$	120,184	$	334,551	$	340,700
U.S. government agency residential mortgage-backed securities ₁	—		—		—		—		—		—		23,750		25,233		23,750		25,233
Other debt securities	140,184		166,203		—		—		—		—		62,226		66,926		202,410		233,129
Total investment securities	$	351,714	$	379,930	$	6,696	$	6,789	$	—	$	—	$	202,301	$	212,343	$	560,711	$	599,062



	AAA - AA				A - BBB				Below Investment Grade				Not Rated				Total
	Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value		Amortized Cost		Fair Value
Available for Sale:
U.S. Treasury	$	—	$	—	$	—	$	—	$	—	$	—	$	1,000	$	1,004	$	1,000	$	1,004
Municipal and other tax-exempt	27,841		28,404		9,621		9,025		—		—		12,708		12,833		50,170		50,262
U.S. government agency residential mortgage-backed securities ₁	—		—		—		—		—		—		5,577,287		5,700,268		5,577,287		5,700,268
Privately issued residential mortgage-backed securities	—		—		—		—		115,309		126,313		—		—		115,309		126,313
Commercial mortgage-backed securities guaranteed by U.S. government agencies	—		—		—		—		—		—		2,854,306		2,911,946		2,854,306		2,911,946
Other debt securities	4,400		4,151		—		—		—		—		—		—		4,400		4,151
Perpetual preferred stock	—		—		4,796		5,543		10,766		12,388		—		—		15,562		17,931
Equity securities and mutual funds	4		492		—		—		—		—		17,266		18,322		17,270		18,814
Total available for sale securities	$	32,245	$	33,047	$	14,417	$	14,568	$	126,075	$	138,701	$	8,462,567	$	8,644,373	$	8,635,304	$	8,830,689


¹	U.S. government and government sponsored enterprises are not rated by the nationally-recognized rating agencies as these securities are guaranteed by agencies of the U.S. government or government-sponsored enterprises.

At June 30, 2016, the entire portfolio of privately issued residential mortgage-backed securities was rated below investment grade by the nationally-recognized rating agencies. The gross unrealized loss on these securities totaled $812 thousand. Impairment of securities rated below investment grade was evaluated based on projections of estimated cash flows from individual loans underlying each security using current and anticipated unemployment and default rates, changes in housing prices and estimated liquidation costs at foreclosure. Each factor is considered in the evaluation.

The primary assumptions used in this evaluation were:



	June 30, 2016	Dec. 31, 2015	June 30, 2015

Unemployment rate	Moving down to 4.7 percent over the next 12 months and remain at 4.7 percent thereafter.	Decreasing to 4.8 percent over the next 12 months and remain at 4.8 percent thereafter.	Held constant at 5.6 percent over the next 12 months and remain at 5.6 percent thereafter.
Housing price appreciation/depreciation	Starting with current depreciated housing prices based on information derived from the FHFA¹, appreciating 3.5 percent over the next 12 months, then flat for the following 12 months and then appreciating at 2 percent per year thereafter.	Starting with current depreciated housing prices based on information derived from the FHFA¹, appreciating 3.5 percent over the next 12 months, then flat for the following 12 months and then appreciating at 2 percent per year thereafter.	Starting with current depreciated housing prices based on information derived from the FHFA¹, appreciating 3.2 percent over the next 12 months, then flat for the following 12 months and then appreciating at 2 percent per year thereafter.
Estimated liquidation costs	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.	Reflect actual historical liquidations costs observed on Jumbo and Alt-A residential mortgage loans in securities owned by the Company.
Discount rates	Estimated cash flows were discounted at rates that range from 2.00 percent to 6.25 percent based on our current expected yields.	Estimated cash flows were discounted at rates that range from 2.00 percent to 6.25 percent based on our current expected yields.	Estimated cash flows were discounted at rates that range from 2.00 percent to 6.25 percent based on our current expected yields.


¹	Federal Housing Finance Agency

Credit loss impairment is recorded as a charge to earnings. Additional impairment based on the difference between the total unrealized loss and the estimated credit loss on these securities is charged against other comprehensive income, net of deferred taxes. No credit loss impairments were recognized in earnings on privately issued residential mortgage-backed securities during the three months ended June 30, 2016.

A distribution of the amortized cost (after recognition of the other-than-temporary impairment), fair value and credit loss impairments recognized on our privately issued residential mortgage-backed securities is as follows (in thousands, except for number of securities):



						Credit Losses Recognized
						Three months ended
						June 30, 2016			Life-to-date
	Number of Securities	Amortized Cost		Fair Value		Number of Securities	Amount		Number of Securities	Amount
Alt-A	14	$	49,522	$	54,536	—	$	—	14	$	36,284
Jumbo-A	30	65,787		71,777		—	—		29	18,220
Total	44	$	115,309	$	126,313	—	$	—	43	$	54,504

Impaired equity securities, including perpetual preferred stocks, are evaluated based on management's ability and intent to hold the securities until fair value recovers over periods not to exceed three years. The assessment of the ability and intent to hold these securities focuses on the liquidity needs, asset/liability management objectives and securities portfolio objectives. Factors considered when assessing recovery include forecasts of general economic conditions and specific performance of the issuer, analyst ratings and credit spreads for preferred stocks which have debt-like characteristics. The Company has evaluated the near-term prospects of the investments in relation to the severity and duration of the impairment and based on that evaluation has the ability and intent to hold these investments until a recovery in fair value. Accordingly, all impairment of equity securities was considered temporary at June 30, 2016.

The following is a tabular roll forward of the amount of credit-related OTTI recognized on available for sale debt securities in earnings (in thousands):



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2016		2015		2016		2015
Balance of credit-related OTTI recognized on available for sale debt securities, beginning of period	$	54,504	$	54,439	$	54,504	$	54,347
Additions for credit-related OTTI not previously recognized	—		—		—		—
Additions for increases in credit-related OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost	—		—		—		92
Reductions for change in intent to hold before recovery	—		—		—		—
Sales	—		—		—		—
Balance of credit-related OTTI recognized on available for sale debt securities, end of period	$	54,504	$	54,439	$	54,504	$	54,439

Additions above exclude other-than-temporary impairment recorded due to change in intent to hold before recovery.

Fair Value Option Securities

Fair value option securities represent securities which the Company has elected to carry at fair value and are separately identified on the Consolidated Balance Sheets. Changes in the fair value are recognized in earnings as they occur. Certain U.S. Treasury securities, residential mortgage-backed securities issued by U.S. government agencies and derivative contracts are held as an economic hedge of the mortgage servicing rights.

The fair value and net unrealized gain (loss) included in fair value option securities is as follows (in thousands):



	June 30, 2016					Dec. 31, 2015					June 30, 2015
	Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)			Fair Value		Net Unrealized Gain (Loss)
U.S. government agency residential mortgage-backed securities	$	237,959	$	4,476		$	444,217	$	(2,060	)	$	436,324	$	(3,859	)
U.S. Treasury	25,306		(43		)	—		—			—		—
Total	$	263,265	$	4,433		$	444,217	$	(2,060	)	$	436,324	$	(3,859	)

Restricted Equity Securities

Restricted equity securities primarily include stock we are required to hold as members of the Federal Reserve system and the Federal Home Loan Banks. Restricted equity securities are carried at cost as these securities do not have a readily determined fair value because ownership of these shares are restricted and lacks a market. A summary of restricted equity securities follows (in thousands):



	June 30, 2016		Dec. 31, 2015		June 30, 2015
Federal Reserve stock	$	36,283	$	36,148	$	35,148
Federal Home Loan Bank stock	283,155		237,365		196,201
Other	201		171		171
Total	$	319,639	$	273,684	$	231,520