Investment Securities

The following tables provide the amortized cost and fair value for the major categories of held-to-maturity and available-for-sale securities. Held-to-maturity securities are carried at amortized cost, which reflects historical cost, adjusted for amortization of premiums and accretion of discounts. Available-for-sale securities are carried at fair value with net unrealized gains or losses reported on an after-tax basis as a component of other comprehensive income in the statements of comprehensive income and shareholders’ equity.



	September 30, 2012
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available for sale
Debt Securities
U.S. government agency debentures	$	35,109	$	28	$	—		$	35,137
U.S. States and political subdivisions	241,436		17,003		(21		)	258,418
Residential mortgage-backed securities:
U.S. government agencies	1,216,671		61,160		—			1,277,831
Commercial mortgage-backed securities:
U.S. government agencies	15,434		233		—			15,667
Residential collateralized mortgage-backed securities:
U.S. government agencies	1,188,072		17,836		(383		)	1,205,525
Non-agency	12		—		—			12
Commercial collateralized mortgage-backed securities:
U.S. government agencies	66,316		2,349		—			68,665
Corporate debt securities	61,527		—		(14,034		)	47,493
Total debt securities	2,824,577		98,609		(14,438		)	2,908,748
Marketable equity securities	3,245		—		—			3,245
Total securities available for sale	$	2,827,822	$	98,609	$	(14,438	)	$	2,911,993
Securities held to maturity
Debt Securities
U.S. States and political subdivisions	$	262,091	$	6,946	$	(17	)	$	269,020
Commercial mortgage-backed securities:
U.S. government agency obligations	33,149		792		—			33,941
Residential collateralized mortgage-backed securities:
U.S. government agencies	129,265		396		—			129,661
Commercial collateralized mortgage obligations:
U.S. government agency obligations	98,961		1,054		—			100,015
Corporate debt securities	97,165		1,435		—			98,600
Total securities held to maturity	$	620,631	$	10,623	$	(17	)	$	631,237



	December 31, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available for sale
Debt Securities
U.S. government agency debentures	$	122,711	$	358	$	—		$	123,069
U.S. States and political subdivisions	334,916		22,865		(50		)	357,731
Residential mortgage-backed securities:
U.S. government agencies	1,407,345		53,129		(131		)	1,460,343
Residential collateralized mortgage-backed securities:
U.S. government agencies	1,115,832		22,058		(55		)	1,137,835
Non-agency	43,225		82		—			43,307
Commercial collateralized mortgage-backed securities:
U.S. government agencies	127,624		1,648		(145		)	129,127
Corporate debt securities	115,947		276		(17,381		)	98,842
Total debt securities	3,267,600		100,416		(17,762		)	3,350,254
Marketable equity securities	3,299		—		—			3,299
Total securities available for sale	$	3,270,899	$	100,416	$	(17,762	)	$	3,353,553
Securities held to maturity
Debt Securities
U.S. States and political subdivisions	$	82,764	$	2,348	$	—		$	85,112
Total securities held to maturity	$	82,764	$	2,348	$	—		$	85,112



	September 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available for sale
Debt Securities
U.S. government agency debentures	$	203,148	$	590	$	(20	)	$	203,718
U.S. States and political subdivisions	298,140		16,426		(125		)	314,441
Residential mortgage-backed securities:
U.S. government agencies	1,419,808		61,416		(2		)	1,481,222
Residential collateralized mortgage-backed securities:
U.S. government agencies	1,080,627		23,327		(45		)	1,103,909
Non-agency	44,715		139		—			44,854
Corporate debt securities	61,474		—		(15,287		)	46,187
Total debt securities	3,107,912		101,898		(15,479		)	3,194,331
Marketable equity securities	3,715		—		—			3,715
Total securities available for sale	$	3,111,627	$	101,898	$	(15,479	)	$	3,198,046
Securities held to maturity
Debt Securities
U.S. States and political subdivisions	$	92,214	$	2,707	$	—		$	94,921
Total securities held to maturity	$	92,214	$	2,707	$	—		$	94,921

Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stock constitute the majority of other investments on the consolidated balance sheets.



	September 30, 2012		December 31, 2011		September 30, 2011
FRB stock	$	21,045	$	21,003	$	20,804
FHLB stock	119,145		119,145		139,398
Other	540		578		591
Total other investments	$	140,730	$	140,726	$	160,793

FRB and FHLB stock is classified as a restricted investment, carried at cost and valued based on the ultimate recoverability of par value. Cash and stock dividends received on the stock are reported as interest income. There are no identified events or changes in circumstances that may have a significant adverse effect on these investments carried at cost.

Securities with a carrying value of $1.9 billion, $1.9 billion and $2.2 billion as of September 30, 2012, December 31, 2011 and September 30, 2011, respectively, were pledged to secure trust and public deposits and securities sold under agreements to repurchase and for other purposes required or permitted by law.

Gross Unrealized Losses and Fair Value

The following table presents the gross unrealized losses and fair value of securities in the securities available-for-sale portfolio by length of time that individual securities in each category had been in a continuous loss position.



	September 30, 2012
	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses			Number of Impaired Securities	Fair Value		Unrealized Losses			Number of Impaired Securities	Fair Value		Unrealized Losses
Debt Securities
U.S. government agency debentures	$	—	$	—		—	$	—	$	—		—	$	—	$	—
U.S. States and political subdivisions	3,560		(21		)	8	—		—			—	3,560		(21		)
Residential mortgage-backed securities:
U.S. government agencies	—		—			—	14		—			1	14		—
Commercial mortgage-backed securities:
U.S. government agencies	—		—			—	—		—			—	—		—
Residential collateralized mortgage-backed securities:
U.S. government agencies	121,427		(379		)	8	1,581		(4		)	1	123,008		(383		)
U.S. non agencies	—		—			—	2		—			1	2		—
Commercial collateralized mortgage-backed securities:
U.S. government agencies	—		—			—	—		—			—	—		—
Corporate debt securities	—		—			—	47,493		(14,034		)	8	47,493		(14,034		)
Total temporarily impaired securities	$	124,987	$	(400	)	16	$	49,090	$	(14,038	)	11	$	174,077	$	(14,438	)



	December 31, 2011
	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses			Number of Impaired Securities	Fair Value		Unrealized Losses			Number of Impaired Securities	Fair Value		Unrealized Losses
Debt Securities
U.S. States and political subdivisions	$	5,249	$	(50	)	6	$	—	$	—		—	$	5,249	$	(50	)
Residential mortgage-backed securities:
U.S. government agencies	40,020		(129		)	4	149		(2		)	1	40,169		(131		)
Residential collateralized mortgage-backed securities:
U.S. government agencies	48,003		(55		)	6	—		—			—	48,003		(55		)
Non-agency	—		—			—	2		—			1	2		—
Commercial collateralized mortgage-backed securities:
U.S. government agencies	30,227		(145		)	2	—		—			—	30,227		(145		)
Corporate debt securities	24,846		(127		)	8	44,234		(17,254		)	8	69,080		(17,381		)
Total temporarily impaired securities	$	148,345	$	(506	)	26	$	44,385	$	(17,256	)	10	$	192,730	$	(17,762	)



	September 30, 2011
	Less than 12 months						12 months or longer						Total
	Fair Value		Unrealized Losses			Number of Impaired Securities	Fair Value		Unrealized Losses			Number of Impaired Securities	Fair Value		Unrealized Losses
Debt Securities
U.S. government agency debentures	$	15,032	$	(20	)	1	$	—	$	—		—	$	15,032	$	(20	)
U.S. States and political subdivisions	16,180		(102		)	18	648		(23		)	1	16,828		(125		)
Residential mortgage-backed securities:
U.S. government agencies	—		—			—	174		(2		)	2	174		(2		)
Residential collateralized mortgage-backed securities:
U.S. government agencies	21,505		(45		)	3	—		—			—	21,505		(45		)
Corporate debt securities	—		—			—	46,187		(15,287		)	8	46,187		(15,287		)
Total temporarily impaired securities	$	52,717	$	(167	)	22	$	47,009	$	(15,312	)	11	$	99,726	$	(15,479	)

At least quarterly, the Corporation conducts a comprehensive security-level impairment assessment on all securities in an unrealized loss position to determine if other-than-temporary impairment (“OTTI”) exists. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. Under the current OTTI accounting model for debt securities, an OTTI loss must be recognized for a debt security in an unrealized loss position if the Corporation intends to sell the security or it is more likely than not that the Corporation will be required to sell the security before recovery of its amortized cost basis. In this situation, the amount of loss recognized in income is equal to the difference between the fair value and the amortized cost basis of the security. Even if the Corporation does not expect to sell the security, the Corporation must evaluate the expected cash flows to be received to determine if a credit loss has occurred. In the event of a credit loss, only the amount of impairment associated with the credit loss is recognized in income. The portion of the unrealized loss relating to other factors, such as liquidity conditions in the market or changes in market interest rates, is recorded in other comprehensive income. Equity securities are also evaluated to determine whether the unrealized loss is expected to be recoverable based on whether evidence exists to support a realizable value equal to or greater than the amortized cost basis. If it is probable that the Corporation will not recover the amortized cost basis, taking into consideration the estimated recovery period and its ability to hold the equity security until recovery, OTTI is recognized.

The security-level assessment is performed on each security, regardless of the classification of the security as available for sale or held to maturity. The assessments are based on the nature of the securities, the financial condition of the issuer, the extent and duration of the securities, the extent and duration of the loss and whether Management intends to sell or it is more likely than not that it will be required to sell a security before recovery of its amortized cost basis, which may be maturity. For those securities for which the assessment shows the Corporation will recover the entire cost basis, Management does not intend to sell these securities and it is not more likely than not that the Corporation will be required to sell them before the anticipated recovery of the amortized cost basis, the gross unrealized losses are recognized in other comprehensive income, net of tax.

As of September 30, 2012, gross unrealized losses are concentrated within corporate debt securities and is composed of eight, single issuer, trust preferred securities with stated maturities. Such investments are less than 2% of the fair value of the entire investment portfolio. None of the corporate issuers have deferred paying dividends on their issued trust preferred shares in which the Corporation is invested. The fair values of these investments have been impacted by market conditions that have caused risk premiums to increase, resulting in the decline in the fair value of the trust preferred securities. Management believes the Corporation will fully recover the cost of these securities, it does not intend to sell these securities and it is not more likely than not that it will be required to sell them before the anticipated recovery of the remaining amortized cost basis, which may be maturity. As a result, Management concluded that these securities were not OTTI at September 30, 2012 and has recognized the total amount of the impairment in other comprehensive income, net of tax.

Realized Gains and Losses

The following table shows the proceeds from sales of available-for-sale securities and the gross realized gains and losses on those sales that have been included in earnings. Gains or losses on the sales of available-for-sale securities are recognized upon sale and are determined using the specific identification method.



	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
Proceeds	$	29,735	$	179,133		$	190,813	$	182,781
Realized gains	553		4,473			1,361		5,418
Realized losses	—		(71		)	—		(127		)
Net securities gains	$	553	$	4,402		$	1,361	$	5,291

Contractual Maturity of Debt Securities

The following table shows the remaining contractual maturities and contractual yields of debt securities held-to-maturity and available-for-sale as of September 30, 2012. Estimated lives on mortgage-backed securities may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.



	U.S. Government agency debentures			U.S. States and political subdivisions obligations			Residential mortgage-backed securities - U.S govt. agency obligations			Commercial mortgage-backed securities - U.S govt. agency obligations			Residential collateralized mortgage obligations - U.S. govt. agency obligations			Residential collateralized mortgage obligations - non - U.S. govt. agency issued			Commercial collateralized mortgage obligations - U.S. govt. agency obligations			Corporate debt securities			Total			Weighted Average Yield
Securities Available for Sale
Remaining maturity:
One year or less	$	35,137		$	7,322		$	4,032		$	5,073		$	62,769		$	—		$	—		$	—		$	114,333		2.68	%
Over one year through five years	—			27,234			1,265,886			—			1,111,218			12			63,358			—			2,467,708			2.55	%
Over five years through ten years	—			177,836			7,913			10,594			31,538			—			5,307			—			233,188			4.74	%
Over ten years	—			46,026			—			—			—			—			—			47,493			93,519			2.74	%
Fair Value	$	35,137		$	258,418		$	1,277,831		$	15,667		$	1,205,525		$	12		$	68,665		$	47,493		$	2,908,748		2.74	%
Amortized Cost	$	35,109		$	241,436		$	1,216,671		$	15,434		$	1,188,072		$	12		$	66,316		$	61,527		$	2,824,577
Weighted-Average Yield	0.73		%	5.37		%	2.98		%	1.75		%	2.14		%	3.81		%	2.13		%	1.09		%	2.74		%
Weighted-Average Maturity	0.14			7.83			3.02			4.00			2.94			1.92			4.35			15.06			3.66
Securities Held to Maturity
Remaining maturity:
One year or less	$	—		$	45,126		$	—		$	—		$	—		$	—		$	—		$	—		$	45,126		1.61	%
Over one year through five years	—			15,116			—			—			129,661			—			21,160			33,529			199,466			2.17	%
Over five years through ten years	—			30,309			—			33,941			—			—			78,855			65,071			208,176			2.81	%
Over ten years	—			178,469			—			—			—			—			—			—			178,469			5.14	%
Fair Value	$	—		$	269,020		$	—		$	33,941		$	129,661		$	—		$	100,015		$	98,600		$	631,237		3.18	%
Amortized Cost	$	—		$	262,091		$	—		$	33,149		$	129,265		$	—		$	98,961		$	97,165		$	620,631
Weighted-Average Yield	—		%	5.10		%	—		%	1.42		%	1.89		%	—		%	2.91		%	2.23		%	3.18		%
Weighted-Average Maturity	—			13.48			—			6.03			2.70			—			6.86			5.29			7.35