Note 3 - Investment Securities

9 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 3:  Investment Securities

An analysis of the amortized cost, unrealized gains and losses accumulated in other comprehensive income, and fair value of investment securities available for sale follows:

	Investment Securities Available for Sale At September 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
U.S. Treasury securities	$	3,499	$	10	$	-		$	3,509
Securities of U.S. Government sponsored entities		442,482		214		(1,160	)		441,536
Residential mortgage-backed securities		26,574		1,799		(20	)		28,353
Commercial mortgage-backed securities		3,021		7		(7	)		3,021
Obligations of states and political subdivisions		176,614		10,203		(197	)		186,620
Residential collateralized mortgage obligations		240,091		594		(11,400	)		229,285
Asset-backed securities		8,674		-		(35	)		8,639
FHLMC(1) and FNMA(2) stock		804		13,798		-			14,602
Corporate securities		470,570		3,674		(1,106	)		473,138
Other securities		2,039		756		(136	)		2,659
Total	$	1,374,368	$	31,055	$	(14,061	)	$	1,391,362

(1) Federal Home Loan Mortgage Corporation

(2) Federal National Mortgage Association

An analysis of the amortized cost, unrealized gains and losses, and fair value of investment securities held to maturity follows:

	Investment Securities Held to Maturity At September 30, 2014
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Securities of U.S. Government sponsored entities	$	1,164	$	-	$	-		$	1,164
Residential mortgage-backed securities		59,182		926		(86	)		60,022
Obligations of states and political subdivisions		703,554		11,483		(2,909	)		712,128
Residential collateralized mortgage obligations		271,141		1,673		(4,743	)		268,071
Total	$	1,035,041	$	14,082	$	(7,738	)	$	1,041,385

An analysis of the amortized cost, unrealized gains and losses accumulated in other comprehensive income, and fair value of investment securities available for sale follows:

	Investment Securities Available for Sale At December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
U.S. Treasury securities	$	3,500	$	9	$	(3	)	$	3,506
Securities of U.S. Government sponsored entities		131,080		75		(663	)		130,492
Residential mortgage-backed securities		32,428		1,763		(15	)		34,176
Commercial mortgage-backed securities		3,411		19		(5	)		3,425
Obligations of states and political subdivisions		186,082		5,627		(323	)		191,386
Residential collateralized mortgage obligations		266,890		730		(14,724	)		252,896
Asset-backed securities		14,653		3		(101	)		14,555
FHLMC and FNMA stock		804		12,568		-			13,372
Corporate securities		430,794		2,901		(1,264	)		432,431
Other securities		2,049		1,251		(158	)		3,142
Total	$	1,071,691	$	24,946	$	(17,256	)	$	1,079,381

An analysis of the amortized cost, unrealized gains and losses, and fair value of investment securities held to maturity follows:

	Investment Securities Held to Maturity At December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(In thousands)
Securities of U.S. Government sponsored entities	$	1,601	$	-	$	(4	)	$	1,597
Residential mortgage-backed securities		65,076		854		(624	)		65,306
Obligations of states and political subdivisions		756,707		6,211		(21,667	)		741,251
Residential collateralized mortgage obligations		308,915		1,209		(5,602	)		304,522
Total	$	1,132,299	$	8,274	$	(27,897	)	$	1,112,676

The amortized cost and fair value of investment securities by contractual maturity are shown in the following tables at the dates indicated:

	At September 30, 2014
	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Maturity in years:
1 year or less	$	45,444	$	45,671	$	13,767	$	14,233
Over 1 to 5 years		625,789		629,181		216,979		220,062
Over 5 to 10 years		362,884		366,119		270,071		273,124
Over 10 years		67,722		72,471		203,901		205,873
Subtotal		1,101,839		1,113,442		704,718		713,292
Mortgage-backed securities and residential collateralized mortgage obligations		269,686		260,659		330,323		328,093
Other securities		2,843		17,261		-		-
Total	$	1,374,368	$	1,391,362	$	1,035,041	$	1,041,385

Securities available for sale at September 30, 2014 with maturity dates over five years but less than ten years include $255,634 (fair value) of securities of U.S. Government sponsored entities with call options on dates within one year or less, of which $89,821 have interest coupons which will increase if the issuer does not exercise the call option.

	At December 31, 2013
	Securities Available for Sale				Securities Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Maturity in years:
1 year or less	$	75,385	$	75,609	$	9,639	$	9,900
Over 1 to 5 years		536,333		538,111		187,051		189,827
Over 5 to 10 years		66,669		68,166		314,630		310,104
Over 10 years		87,722		90,484		246,988		233,017
Subtotal		766,109		772,370		758,308		742,848
Mortgage-backed securities and residential collateralized mortgage obligations		302,729		290,497		373,991		369,828
Other securities		2,853		16,514		-		-
Total	$	1,071,691	$	1,079,381	$	1,132,299	$	1,112,676

Expected maturities of mortgage-backed securities can differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties. In addition, such factors as prepayments and interest rates may affect the yield on the carrying value of mortgage-backed securities. At September 30, 2014 and December 31, 2013, the Company had no high-risk collateralized mortgage obligations as defined by regulatory guidelines.

An analysis of gross unrealized losses of investment securities available for sale follows:

	Investment Securities Available for Sale At September 30, 2014
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment				Unrealized			Investment				Unrealized			Investment				Unrealized
	Positions		Fair Value		Losses			Positions		Fair Value		Losses			Positions		Fair Value		Losses
	($ in thousands)
Securities of U.S. Government sponsored entities		24	$	358,842	$	(1,103	)		1	$	9,943	$	(57	)		25	$	368,785	$	(1,160	)
Residential mortgage-backed securities		-		-		-			2		828		(20	)		2		828		(20	)
Commercial mortgage-backed securities		-		-		-			2		1,822		(7	)		2		1,822		(7	)
Obligations of states and political subdivisions		8		2,783		(46	)		21		6,460		(151	)		29		9,243		(197	)
Residential collateralized mortgage obligations		-		-		-			38		209,504		(11,400	)		38		209,504		(11,400	)
Asset-backed securities		1		5,030		(1	)		1		3,609		(34	)		2		8,639		(35	)
Corporate securities		31		93,716		(772	)		5		34,218		(334	)		36		127,934		(1,106	)
Other securities		-		-		-			1		1,864		(136	)		1		1,864		(136	)
Total		64	$	460,371	$	(1,922	)		71	$	268,248	$	(12,139	)		135	$	728,619	$	(14,061	)

An analysis of gross unrealized losses of investment securities held to maturity follows:

	Investment Securities Held to Maturity At September 30, 2014
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment				Unrealized			Investment				Unrealized			Investment				Unrealized
	Positions		Fair Value		Losses			Positions		Fair Value		Losses			Positions		Fair Value		Losses
	($ in thousands)
Securities of U.S. Government sponsored entities		1	$	1,164	$	-			-	$	-	$	-			1	$	1,164	$	-
Residential  mortgage-backed securities		2		9,658		(48	)		2		3,320		(38	)		4		12,978		(86	)
Obligations of states and political subdivisions		14		10,434		(45	)		180		162,095		(2,864	)		194		172,529		(2,909	)
Residential collateralized mortgage obligations		15		63,098		(787	)		23		132,175		(3,956	)		38		195,273		(4,743	)
Total		32	$	84,354	$	(880	)		205	$	297,590	$	(6,858	)		237	$	381,944	$	(7,738	)

The unrealized losses on the Company’s investment securities were caused by market conditions for these types of investments, particularly changes in risk-free interest rates. The Company evaluates securities on a quarterly basis including changes in security ratings issued by ratings agencies, changes in the financial condition of the issuer, and, for mortgage-related and asset-backed securities, delinquency and loss information with respect to the underlying collateral, changes in the levels of subordination for the Company’s particular position within the repayment structure and remaining credit enhancement as compared to expected credit losses of the security. Substantially all of these securities continue to be investment grade rated by a major rating agency. In addition to monitoring credit rating agency evaluations, Management performs its own evaluations regarding the credit worthiness of the issuer or the securitized assets underlying asset backed securities.

The Company does not intend to sell any investments and has concluded that it is more likely than not that it will not be required to sell the investments prior to recovery of the amortized cost basis. Therefore, the Company does not consider these investments to be other-than-temporarily impaired as of September 30, 2014.

The fair values of the investment securities could decline in the future if the general economy deteriorates, inflation increases, credit ratings decline, the issuer’s financial condition deteriorates, or the liquidity for securities declines. As a result, other than temporary impairments may occur in the future.

As of September 30, 2014, $773,297 thousand of investment securities were pledged to secure public deposits, short-term borrowed funds and FHLB advances. As of December 31, 2013, $778,588 thousand of investment securities were pledged to secure public deposits, short-term borrowed funds, FHLB advances and term repurchase agreements.

An analysis of gross unrealized losses of investment securities available for sale follows:

	Investment Securities Available for Sale At December 31, 2013
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment				Unrealized			Investment				Unrealized			Investment				Unrealized
	Positions		Fair Value		Losses			Positions		Fair Value		Losses			Positions		Fair Value		Losses
	($ in thousands)
U.S. Treasury securities		1	$	2,994	$	(3	)		-	$	-	$	-			1	$	2,994	$	(3	)
Securities of U.S. Government sponsored entities		15		91,669		(663	)		-		-		-			15		91,669		(663	)
Residential mortgage-backed securities		3		864		(15	)		-		-		-			3		864		(15	)
Commercial mortgage-backed securities		1		1,072		(5	)		-		-		-			1		1,072		(5	)
Obligations of states and political subdivisions		35		17,516		(222	)		11		3,214		(101	)		46		20,730		(323	)
Residential collateralized mortgage obligations		34		187,848		(12,326	)		6		40,575		(2,398	)		40		228,423		(14,724	)
Asset-backed securities		1		5,002		(1	)		1		4,475		(100	)		2		9,477		(101	)
Corporate securities		25		117,751		(1,087	)		2		9,824		(177	)		27		127,575		(1,264	)
Other securities		-		-		-			1		1,842		(158	)		1		1,842		(158	)
Total		115	$	424,716	$	(14,322	)		21	$	59,930	$	(2,934	)		136	$	484,646	$	(17,256	)

An analysis of gross unrealized losses of investment securities held to maturity follows:

	Investment Securities Held to Maturity At December 31, 2013
	No. of		Less than 12 months					No. of		12 months or longer					No. of		Total
	Investment				Unrealized			Investment				Unrealized			Investment				Unrealized
	Positions		Fair Value		Losses			Positions		Fair Value		Losses			Positions		Fair Value		Losses
	($ in thousands)
Securities of U.S. Government sponsored entities		1	$	1,597	$	(4	)		-	$	-	$	-			1	$	1,597	$	(4	)
Residential  mortgage-backed securities		13		38,396		(616	)		1		392		(8	)		14		38,788		(624	)
Obligations of states and political subdivisions		530		355,797		(14,893	)		64		64,427		(6,774	)		594		420,224		(21,667	)
Residential collateralized mortgage obligations		42		214,981		(5,175	)		5		14,120		(427	)		47		229,101		(5,602	)
Total		586	$	610,771	$	(20,688	)		70	$	78,939	$	(7,209	)		656	$	689,710	$	(27,897	)

The unrealized losses on the Company’s investment securities were caused by market conditions for these types of investments, particularly rising risk-free interest rates causing bond prices to decline.

The following table provides information about the amount of interest income earned on investment securities that is fully taxable and that is exempt from regular federal income tax:

	For the Three Months				For the Nine Months
	Ended September 30,
	2014		2013		2014		2013
	(In thousands)
Taxable	$	6,348	$	5,502	$	17,907	$	16,626
Tax-exempt		6,423		7,338		20,143		22,368
Total interest income from investment securities	$	12,771	$	12,840	$	38,050	$	38,994