3. 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 OCI in shareholders' equity.



		September 30, 2013
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale
Debt securities
	U.S. states and political subdivisions	$	267,470	$	8,249	$	(3,495	)	$	272,224
	Residential mortgage-backed securities:
	U.S. government agencies	983,255		26,155		(10,035		)	999,375
	Commercial mortgage-backed securities:
	U.S. government agencies	58,129		23		(2,220		)	55,932
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	1,538,991		5,710		(38,995		)	1,505,706
	Non-agency	9		—		—			9
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	98,440		404		(1,690		)	97,154
	Asset-backed securities:
	Collateralized loan obligations	271,856		71		(3,295		)	268,632
	Corporate debt securities	61,582		—		(10,732		)	50,850
	Total debt securities	3,279,732		40,612		(70,462		)	3,249,882
Equity Securities
	Marketable equity securities	3,096		—		—			3,096
	Non-marketable equity securities	3,281		—		—			3,281
	Total equity securities	6,377		—		—			6,377
	Total securities available for sale	$	3,286,109	$	40,612	$	(70,462	)	$	3,256,259
Securities held-to-maturity
Debt securities
	U.S. treasuries	$	5,000	$	5	$	—		$	5,005
	U.S. government agency debentures	25,000		—		(1,136		)	23,864
	U.S. states and political subdivisions	453,230		5,093		(9,257		)	449,066
	Residential mortgage-backed securities:
	U.S. government agencies	377,980		1,068		(8,578		)	370,470
	Commercial mortgage-backed securities:
	U.S. government agencies	50,179		12		(1,025		)	49,166
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	1,523,792		179		(68,719		)	1,455,252
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	220,410		—		(8,936		)	211,474
	Corporate debt securities	94,343		294		(501		)	94,136
	Total securities held to maturity	$	2,749,934	$	6,651	$	(98,152	)	$	2,658,433



		December 31, 2012
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale
Debt securities
	U.S. states and political subdivisions	$	253,198	$	15,235	$	(229	)	$	268,204
	Residential mortgage-backed securities:
	U.S. government agencies	1,058,005		49,058		—			1,107,063
	Commercial mortgage-backed securities:
	U.S. government agencies	52,014		428		(406		)	52,036
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	1,311,501		18,180		(260		)	1,329,421
	Non-agency	11		—		—			11
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	109,260		2,221		(138		)	111,343
	Corporate debt securities	61,541		—		(11,889		)	49,652
	Total debt securities	2,845,530		85,122		(12,922		)	2,917,730
	Marketable equity securities	3,241		—		—			3,241
	Total securities available for sale	$	2,848,771	$	85,122	$	(12,922	)	$	2,920,971
Securities held-to-maturity
Debt securities
	U.S. states and political subdivisions	$	270,005	$	5,126	$	(70	)	$	275,061
	Commercial mortgage-backed securities:
	U.S. government agencies	33,165		812		—			33,977
	Residential collateralized mortgage-backed securities:								—
	U.S. government agencies	123,563		533		(16		)	124,080
	Commercial collateralized mortgage-backed securities:								—
	U.S. government agencies	98,924		772		—			99,696
	Corporate debt securities	96,464		1,521		—			97,985
	Total securities held to maturity	$	622,121	$	8,764	$	(86	)	$	630,799



		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 agencies	33,149		792		—			33,941
	Residential Collateralized mortgage-backed securities:
	U.S. Government Agencies	129,265		396		—			129,661
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	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

The Corporation's U.S. states and political subdivisions portfolio is composed of general obligation bonds issued by a highly diversified number of states, cities, counties, and school districts. As of September 30, 2013, the aggregate fair value of the Corporation's general obligation bonds was $0.6 million more than amortized cost. Additionally, the aggregate fair value of the Corporation's general obligation bonds was greater than $10.0 million in twelve of the thirty-eight U.S. states in which it holds investments. The amortized cost and fair value of the Corporation's portfolio of general obligation bonds are summarized by U.S. state in the tables below.



	September 30, 2013
U.S. State	# of Issuers	Average Issue Size, Fair Value		Amortized Cost		Fair Value
Michigan	178	$	823	$	140,651	$	146,448
Ohio	155	940		146,841		145,656
Illinois	68	1,017		69,302		69,149
Texas	69	774		54,428		53,427
Wisconsin	83	637		51,981		52,856
Pennsylvania	56	889		52,039		49,761
Minnesota	46	658		30,115		30,278
Washington	31	943		29,594		29,222
New Jersey	38	726		27,130		27,604
Missouri	20	978		19,303		19,552
New York	22	590		13,082		12,970
California	18	604		10,666		10,873
Other	116	634		75,569		73,495
Total general obligation bonds	900	$	801	$	720,701	$	721,291



	December 31, 2012
U.S. State	# of Issuers	Average Issue Size, Fair Value		Amortized Cost		Fair Value
Ohio	127	$	1,167	$	144,789	$	148,264
Illinois	42	1,366		55,207		57,365
Pennsylvania	55	970		51,932		53,348
Texas	53	931		47,613		49,326
Wisconsin	28	1,096		28,572		30,687
Minnesota	40	719		27,348		28,756
New Jersey	33	856		26,541		28,232
Michigan	22	1,233		26,104		27,130
Washington	22	907		18,976		19,958
Missouri	10	1,482		13,809		14,815
New York	18	639		11,027		11,507
California	11	930		9,734		10,231
Other	85	742		61,047		63,034
Total general obligation bonds	546	$	994	$	522,699	$	542,653



	September 30, 2012
U.S. State	# of Issuers	Average Issue Size, Fair Value		Amortized Cost		Fair Value
Ohio	129	$	1,161	$	144,573	$	149,780
Illinois	57	894		48,519		50,964
Pennsylvania	53	961		49,384		50,925
Texas	55	867		45,658		47,698
Wisconsin	31	973		27,857		30,155
New Jersey	39	735		26,794		28,646
Minnesota	44	632		26,189		27,817
Michigan	24	1,139		26,150		27,331
Washington	23	809		17,505		18,598
Missouri	15	1,025		14,241		15,378
New York	18	583		9,980		10,497
California	16	648		9,747		10,371
Other	90	659		56,930		59,277
Total general obligation bonds	594	$	888	$	503,527	$	527,437

The Corporation owns one revenue bond with an estimated fair value of $0.6 million and an amortized cost of $0.5 million as of September 30, 2013. This bond was purchased in 1999, prior to the Corporation adopting an internal investment policy prohibiting purchases of revenue bonds. The revenue bond's maturity has been pre-refunded with U.S. treasuries. Pre-refunded municipal bonds are those that are backed by an escrow account and invested in U.S. Treasuries which is used to pay bondholders at maturity. Thus the revenue bond carries the credit risk of the U.S. Treasury.

The Corporation's investment policy states that municipal securities purchased are to be investment grade and allows for a 20% maximum portfolio concentration in municipal securities with a combined individual state to total municipal outstanding equal to or less than 25%. A municipal security is investment grade if (1) the security has a low risk of default by the obligor and (2) the full and timely payment of principal and interest is expected over the anticipated life of the instrument. The fact that a municipal security is rated by one nationally recognized credit rating agency is indicative, but not sufficient evidence, that a municipal security is investment grade. In all cases, the Corporation considers and documents within a security pre-purchase analysis factors such as capacity to pay, market and economic data, and such other factors as are available and relevant to the security or issuer. Factors to be considered in the ongoing monitoring of municipal securities and in the pre-purchase analysis include soundness of budgetary position, and sources, strength, and stability of tax or enterprise revenues. The Corporation also considers spreads to U.S. Treasuries on comparable bonds of similar credit quality, in addition to the above analysis, to assess whether municipal securities are investment grade. The Corporation performs a risk analysis for any security that is downgraded below investment grade to determine if the security should be retained or sold. This risk analysis includes, but is not limited to, discussions with the Corporation's credit department as well as third party municipal credit analysts and review of the nationally recognized credit rating agency's analysis describing the downgrade.

The Corporation's evaluation of its municipal bond portfolio at September 30, 2013 did not uncover any facts or circumstances resulting in significantly different credit ratings than those assigned by a nationally recognized credit rating agency.

FRB and FHLB stock constitute the majority of other investments on the consolidated balance sheets.



	September 30, 2013		December 31, 2012		September 30, 2012
FRB stock	$	55,294	$	21,045	$	21,045
FHLB stock	214,586		119,145		119,145
Other	489		527		540
Total other investments	$	270,369	$	140,717	$	140,730

FRB and FHLB stock are 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 $3.4 billion, $1.6 billion and $1.9 billion at September 30, 2013, December 31, 2012 and September 30, 2012, 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.

Realized Gains and Losses

The following table presents the proceeds from sales of available-for-sale securities and the gross realized gains and losses on the sales of those securities that have been included in earnings as a result of those sales. 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,
	2013		2012		2013			2012
Proceeds	$	—	$	29,735	$	2,180,624		$	190,813

Realized gains	$	—	$	553	$	3,786		$	1,361
Realized losses	—		—		(6,589		)	—
Net securities (losses)/gains	$	—	$	553	$	(2,803	)	$	1,361

Gross Unrealized Losses and Fair Value

The following table presents the gross unrealized losses and fair value of securities by length of time that individual securities had been in a continuous loss position by major categories of available-for-sale and held-to-maturity securities.



		September 30, 2013
		Less than 12 months						12 months or longer						Total
		Fair Value		Unrealized Losses			Number Impaired Securities	Fair Value		Unrealized Losses			Number Impaired Securities	Fair Value		Unrealized Losses
Securities available-for-sale
Debt securities
	U.S. states and political subdivisions	$	57,258	$	(3,495	)	100	$	—	$	—		—	$	57,258	$	(3,495	)
	Residential mortgage-backed securities:
	U.S. government agencies	309,239		(10,035		)	23	—		—			—	309,239		(10,035		)
	Commercial mortgage-backed securities:
	U.S. government agencies	50,823		(2,220		)	7	—		—			—	50,823		(2,220		)
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	1,073,105		(38,995		)	69	—		—			—	1,073,105		(38,995		)
	Commercial collateralized mortgage-backed securities:
	U.S. Government agencies	38,938		(1,690		)	5	—		—			—	38,938		(1,690		)
	Collateralized loan obligations:
	Non-agency	165,359		(3,295		)	26	—		—			—	165,359		(3,295		)
	Corporate debt securities	—		—			—	50,850		(10,732		)	8	50,850		(10,732		)
	Total available-for-sale securities	$	1,694,722	$	(59,730	)	230	$	50,850	$	(10,732	)	8	$	1,745,572	$	(70,462	)
Securities held-to-maturity
Debt securities
	U.S. government agency debentures	$	23,864	$	(1,136	)	1	$	—	$	—		—	$	23,864	$	(1,136	)
	U.S. states and political subdivisions	226,853		(9,243		)	362	987		(14		)	1	227,840		(9,257		)
	Residential mortgage-backed securities:
	U.S. government agencies	252,007		(8,578		)	13	—		—			—	252,007		(8,578		)
	Commercial mortgage-backed securities:
	U.S. government agencies	44,168		(1,025		)	7	—		—			—	44,168		(1,025		)
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	1,416,238		(68,719		)	64	—		—			—	1,416,238		(68,719		)
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	191,402		(8,936		)	18	—		—			—	191,402		(8,936		)
	Corporate debt securities	66,774		(501		)	24	—		—			—	66,774		(501		)
	Total held-to-maturity securities	$	2,221,306	$	(98,138	)	489	$	987	$	(14	)	1	$	2,222,293	$	(98,152	)



		December 31, 2012
		Less than 12 months						12 months or longer						Total
		Fair Value		Unrealized Losses			Number Impaired Securities	Fair Value		Unrealized Losses			Number Impaired Securities	Fair Value		Unrealized Losses
Securities available-for-sale
Debt securities
	U.S. states and political subdivisions	$	14,110	$	(229	)	24	$	—	$	—		—	$	14,110	$	(229	)
	Residential mortgage-backed securities:
	U.S. government agencies	14		—			1	13		—			1	27		—
	Commercial mortgage-backed securities:
	U.S. government agencies	31,237		(406		)	3	—		—			—	31,237		(406		)
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	133,008		(258		)	9	389		(2		)	1	133,397		(260		)
	Non-agency	—		—			—	2		—			1	2		—
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	35,316		(138		)	4	—		—			—	35,316		(138		)
	Corporate debt securities	—		—			—	49,652		(11,889		)	8	49,652		(11,889		)
	Total available-for-sale securities	$	213,685	$	(1,031	)	41	$	50,056	$	(11,891	)	11	$	263,741	$	(12,922	)
Securities held-to-maturity
Debt securities
	U.S. states and political subdivisions	$	6,543	$	(70	)	12	$	—	$	—		—	$	6,543	$	(70	)
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	17,413		(16		)	1	—		—			—	17,413		(16		)
	Total held-to-maturity securities	$	23,956	$	(86	)	13	$	—	$	—		—	$	23,956	$	(86	)



		September 30, 2012
		Less than 12 months						12 months or longer						Total
		Fair Value		Unrealized Losses			Number Impaired Securities	Fair Value		Unrealized Losses			Number Impaired Securities	Fair Value		Unrealized Losses
Securities available-for-sale
Debt securities
	U.S. states and political subdivisions	$	3,560	$	(21	)	8	$	—	$	—		—	$	3,560	$	(21	)
	Residential 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		)
	Non-agency	—		—			—	—		—			—	—		—
	Corporate debt securities	—		—			—	47,493		(14,034		)	8	47,493		(14,034		)
	Total available-for-sale securities	$	124,987	$	(400	)	16	$	49,074	$	(14,038	)	9	$	174,061	$	(14,438	)
Securities held-to-maturity
Debt securities
	U.S. states and political subdivisions	$	2,360	$	(17	)	4	$	—	$	—		—	$	2,360	$	(17	)
	Commercial mortgage-backed securities:
	U.S. government agencies	—		—			—	—		—			—	—		—
	Commercial collateralized mortgage-backed securities:													—		—
	U.S. government agencies	—		—			—	—		—			—	—		—
	Total held-to-maturity securities	$	2,360	$	(17	)	4	$	—	$	—		—	$	2,360	$	(17	)

At least quarterly, the Corporation conducts a comprehensive security-level impairment assessment on all securities in an unrealized loss position to determine if 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 OCI. 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 the intent 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 OCI, net of tax.

Management does not believe that the investment securities that were in an unrealized loss position as of September 30, 2013 represent an OTTI. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Corporation does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Corporation will be required to sell the investment securities before recovery of their amortized cost bases, which may be at maturity.

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, 2013. 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.