NOTE

INVESTMENT SECURITIES

The amortized cost and fair value of investment securities that are classified as held-to-maturity (“HTM”) and available-for-sale (“AFS”) are as follows:

	September 30, 2017									December 31, 2016
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value
Held-to-Maturity
U.S. Government agencies	$	66,928	$	40	$	(140	)	$	66,828	$	76,875	$	107	$	(182	)	$	76,800
Mortgage-backed securities		16,972		56		(191	)		16,837		19,773		63		(249	)		19,587
State and political subdivisions		320,116		6,397		(55	)		326,458		362,532		4,967		(842	)		366,657
Other securities		2,017		--		--			2,017		2,916		--		--			2,916
Total HTM	$	406,033	$	6,493	$	(386	)	$	412,140	$	462,096	$	5,137	$	(1,273	)	$	465,960

Available-for-Sale
U.S. Treasury	$	--	$	--	$	--		$	--	$	300	$	--	$	--		$	300
U.S. Government agencies		210,004		273		(2,057	)		208,220		140,005		67		(2,301	)		137,771
Mortgage-backed securities		973,111		120		(13,533	)		959,698		885,783		178		(17,637	)		868,324
State and political subdivisions		87,405		161		(2,744	)		84,822		108,374		38		(5,469	)		102,943
Other securities		63,295		1,385		--			64,680		47,022		996		(2	)		48,016
Total AFS	$	1,333,815	$	1,939	$	(18,334	)	$	1,317,420	$	1,181,484	$	1,279	$	(25,409	)	$	1,157,354

Securities with limited marketability, such as stock in the Federal Reserve Bank and the Federal Home Loan Bank, are carried at cost and are reported as other AFS securities in the table above.

Certain investment securities are valued at less than their historical cost. Total fair value of these investments at

September 30, 2017,

was

$1.2

billion, which is approximately

69.7%

of the Company’s combined AFS and HTM investment portfolios.

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at

September 30, 2017:

	Less Than 12 Months					12 Months or More					Total
(In thousands)	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses
Held-to-Maturity
U.S. Government agencies	$	12,947	$	(53	)	$	39,913	$	(87	)	$	52,860	$	(140	)
Mortgage-backed securities		4,094		(42	)		6,687		(149	)		10,781		(191	)
State and political subdivisions		11,300		(41	)		2,634		(14	)		13,934		(55	)
Total HTM	$	28,341	$	(136	)	$	49,234	$	(250	)	$	77,575	$	(386	)

Available-for-Sale
U.S. Government agencies	$	66,254	$	(750	)	$	82,211	$	(1,307	)	$	148,465	$	(2,057	)
Mortgage-backed securities		626,560		(7,458	)		273,883		(6,075	)		900,443		(13,533	)
State and political subdivisions		1,813		(32	)		76,781		(2,712	)		78,594		(2,744	)
Other securities		--		--			100		--			100		--
Total AFS	$	694,627	$	(8,240	)	$	432,975	$	(10,094	)	$	1,127,602	$	(18,334	)

These declines primarily resulted from the rate for these investments yielding less than current market rates. Based on evaluation of available evidence, management believes the declines in fair value for these securities are temporary. Management does

not

have the intent to sell these securities and management believes it is more likely than

not

the Company will

not

have to sell these securities before recovery of their amortized cost basis less any current period credit losses.

Declines in the fair value of HTM and AFS securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Management has the ability and intent to hold the securities classified as held to maturity until they mature, at which time the Company expects to receive full value for the securities. Furthermore, as of

September 30, 2017,

management also had the ability and intent to hold the securities classified as AFS for a period of time sufficient for a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Management does

not

believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of

September 30, 2017,

management believes the impairments detailed in the table above are temporary. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

Income earned on securities for the

three

and

nine

months ended

September 30, 2017

and

2016,

is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2017		2016		2017		2016
Taxable:
Held-to-maturity	$	625	$	771	$	1,922	$	3,094
Available-for-sale		5,949		4,005		18,003		12,931
Non-taxable:
Held-to-maturity		2,135		2,617		6,635		8,162
Available-for-sale		509		381		2,099		592
Total	$	9,218	$	7,774	$	28,659	$	24,779

The amortized cost and estimated fair value by maturity of securities are shown in the following table. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. Accordingly, actual maturities

may

differ from contractual maturities.

	Held-to-Maturity				Available-for-Sale
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value

One year or less	$	50,829	$	50,838	$	21,211	$	21,145
After one through five years		105,323		105,823		81,147		80,388
After five through ten years		99,399		100,902		14,532		14,427
After ten years		133,510		137,740		181,619		178,182
Securities not due on a single maturity date		16,972		16,837		973,111		959,698
Other securities (no maturity)		--		--		62,195		63,580
Total	$	406,033	$	412,140	$	1,333,815	$	1,317,420

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to

$985.8

million at

September 30, 2017

and

$915.2

million at

December 31, 2016.

There were

$3,000

of gross realized gains and

realized losses from the sale of securities during the

three

months ended

September 30, 2017

and

$2.3

million of realized gains and

$5,000

of realized losses from the sale of securities during the

nine

months ended

September 30, 2017.

There were

$315,000

of gross realized gains and

realized losses from the sale of securities during the

three

months ended

September 30, 2016

and

$4.4

million of realized gains and

realized losses from the sale of securities during the

nine

months ended

September 30, 2016.

The state and political subdivision debt obligations are predominately non-rated bonds representing small issuances, primarily in Arkansas, Missouri, Tennessee and Texas issues, which are evaluated on an ongoing basis.