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.



		March 31, 2016
(In thousands)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale
Debt securities
	U.S. government agency debentures	$	2,500	$	20	$	—		$	2,520
	U.S. states and political subdivisions	169,281		3,894		(34		)	173,141
	Residential mortgage-backed securities:
	U.S. government agencies	889,511		18,398		(253		)	907,656
	Commercial mortgage-backed securities:
	U.S. government agencies	181,846		2,654		(252		)	184,248
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	2,214,035		20,761		(8,059		)	2,226,737
	Non-agency	4		—		—			4
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	269,197		3,976		(291		)	272,882
	Asset-backed securities:
	Collateralized loan obligations	297,885		36		(12,524		)	285,397
	Corporate debt securities	61,724		—		(12,968		)	48,756
	Total debt securities	4,085,983		49,739		(34,381		)	4,101,341
Equity securities
	Marketable equity securities	2,873		—		—			2,873
	Total equity securities	2,873		—		—			2,873
	Total securities available-for-sale	$	4,088,856	$	49,739	$	(34,381	)	$	4,104,214
Securities held-to-maturity
Debt securities
	U.S. government agency debentures	$	25,000	$	26	$	—		$	25,026
	U.S. states and political subdivisions	558,795		17,285		(262		)	575,818
	Residential mortgage-backed securities:
	U.S. government agencies	88,314		1,280		(266		)	89,328
	Commercial mortgage-backed securities:
	U.S. government agencies	489,216		10,159		(212		)	499,163
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	1,113,901		2,414		(14,257		)	1,102,058
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	251,421		2,436		(934		)	252,923
	Corporate debt securities	87,053		905		—			87,958
	Total securities held-to-maturity	$	2,613,700	$	34,505	$	(15,931	)	$	2,632,274



		December 31, 2015
(In thousands)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale
Debt securities
	U.S. treasury notes & bonds	$	5,001	$	—	$	(1	)	$	5,000
	U.S. government agency debentures	2,500		—		(2		)	2,498
	U.S. states and political subdivisions	188,829		4,170		(204		)	192,795
	Residential mortgage-backed securities:
	U.S. government agencies	900,358		11,325		(5,454		)	906,229
	Commercial mortgage-backed securities:
	U.S. government agencies	173,912		220		(2,023		)	172,109
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	2,155,808		2,659		(30,147		)	2,128,320
	Non-agency	4		—		—			4
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	217,008		580		(1,269		)	216,319
	Asset-backed securities:
	Collateralized loan obligations	297,831		26		(8,446		)	289,411
	Corporate debt securities	61,710		—		(9,481		)	52,229
	Total debt securities	4,002,961		18,980		(57,027		)	3,964,914
Equity securities
	Marketable equity securities	2,821		—		—			2,821
	Total equity securities	2,821		—		—			2,821
	Total securities available-for-sale	$	4,005,782	$	18,980	$	(57,027	)	$	3,967,735
Securities held-to-maturity
Debt securities
	U.S. government agency debentures	25,000		19		—			25,019
	U.S. states and political subdivisions	571,738		22,180		(262		)	593,656
	Residential mortgage-backed securities:
	U.S. government agencies	507,908		4,767		(2,999		)	509,676
	Commercial mortgage-backed securities:
	U.S. government agencies	64,951		294		(574		)	64,671
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	1,161,340		75		(35,881		)	1,125,534
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	255,359		676		(3,611		)	252,424
	Corporate debt securities	87,797		364		(22		)	88,139
	Total securities held-to-maturity	$	2,674,093	$	28,375	$	(43,349	)	$	2,659,119



		March 31, 2015
(In thousands)		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities available-for-sale
Debt securities
	U.S. government agency debentures	$	2,500	$	13	$	—		$	2,513
	U.S. states and political subdivisions	208,800		6,750		(386		)	215,164
	Residential mortgage-backed securities:
	U.S. government agencies	924,453		24,799		(1,949		)	947,303
	Commercial mortgage-backed securities:
	U.S. government agencies	139,789		1,231		(661		)	140,359
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	1,895,112		11,305		(13,857		)	1,892,560
	Non-agency	6		—		—			6
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	241,839		2,602		(382		)	244,059
	Asset-backed securities:
	Collateralized loan obligations	297,506		587		(4,131		)	293,962
	Corporate debt securities	61,668		—		(9,404		)	52,264
	Total debt securities	3,771,673		47,287		(30,770		)	3,788,190
Equity Securities
	Marketable equity securities	2,869		—		—			2,869
	Non-marketable equity securities	—		—		—			—
	Total equity securities	2,869		—		—			2,869
	Total securities available-for-sale	$	3,774,542	$	47,287	$	(30,770	)	$	3,791,059
Securities held-to-maturity
Debt securities
	U.S. treasury notes & bonds	$	5,000	$	—	$	—		$	5,000
	U.S. government agency debentures	25,000		—		(178		)	24,822
	U.S states and political subdivisions	523,501		8,864		(1,147		)	531,218
	Residential mortgage-backed securities:
	U.S. government agencies	577,278		10,745		(1,677		)	586,346
	Commercial mortgage-backed securities:
	U.S. government agencies	57,818		765		(108		)	58,475
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	1,320,215		1,959		(24,846		)	1,297,328
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	256,352		1,659		(3,377		)	254,634
	Corporate debt securities	90,010		1,079		—			91,089
	Total securities held-to-maturity	$	2,855,174	$	25,071	$	(31,333	)	$	2,848,912

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. 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. As illustrated in the tables below, the aggregate fair value of the Corporation's general obligation bonds was greater than $10.0 million in 11 of the 37 U.S. states in which it holds investments.



(Dollars in thousands)	March 31, 2016
U.S. State	# of Issuers	Average Issue Size, Fair Value		Amortized Cost		Fair Value
Michigan	137	$	1,364	$	180,322	$	186,935
Ohio	110	1,098		117,643		120,829
Wisconsin	61	615		36,369		37,528
Illinois	53	1,840		95,228		97,511
Texas	53	802		41,356		42,496
Pennsylvania	41	1,035		41,680		42,448
New Jersey	33	736		23,746		24,285
Washington	29	948		26,977		27,497
Minnesota	23	699		15,713		16,069
New York	18	617		10,819		11,104
Missouri	11	1,086		11,637		11,948
Other	107	756		79,847		80,899
Total general obligation bonds	676	$	1,035	$	681,337	$	699,549



(Dollars in thousands)	December 31, 2015
U.S. State	# of Issuers	Average Issue Size, Fair Value		Amortized Cost		Fair Value
Michigan	137	$	1,381	$	180,508	$	189,259
Ohio	111	1,091		116,783		121,117
Illinois	55	1,870		99,524		102,867
Texas	58	807		45,818		46,805
Wisconsin	69	673		44,794		46,454
Pennsylvania	42	1,020		42,185		42,835
Washington	29	950		27,080		27,548
New Jersey	35	725		24,810		25,372
Minnesota	33	667		21,679		22,020
Missouri	15	1,078		15,878		16,174
New York	18	635		11,161		11,422
Other	110	759		81,815		83,477
Total general obligation bonds	712	$	1,033	$	712,035	$	735,350



(Dollars in thousands)	March 31, 2015
U.S. State	# of Issuers	Average Issue Size, Fair Value		Amortized Cost		Fair Value
Michigan	164	$	857	$	138,091	$	140,620
Ohio	136	925		124,908		125,864
Illinois	62	1,841		111,649		114,150
Wisconsin	73	760		53,877		55,497
Texas	63	784		48,388		49,396
Pennsylvania	46	1,018		46,085		46,816
Washington	31	930		28,194		28,836
New Jersey	37	747		26,724		27,623
Minnesota	35	697		23,821		24,405
Missouri	15	1,098		16,032		16,472
New York	19	629		11,646		11,948
Other	121	639		76,127		77,365
Total general obligation bonds	802	$	896	$	705,542	$	718,992

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 of revenue, financial 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 March 31, 2016 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 constitutes the majority of other investments on the Consolidated Balance Sheets.



(In thousands)	March 31, 2016		December 31, 2015		March 31, 2015
FRB stock	$	56,083	$	56,083	$	55,681
FHLB stock	91,714		91,714		92,381
Other	362		375		413
Total other investments	$	148,159	$	148,172	$	148,475

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 $3.4 billion, $2.9 billion, and $3.5 billion at March 31, 2016, December 31, 2015, and March 31, 2015, 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 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 March 31,
(In thousands)	2016		2015
Realized gains	$	295	$	392
Realized losses	—		(38		)
Net securities (losses)/gains	$	295	$	354

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.



		March 31, 2016
		Less than 12 months						12 months or longer						Total
(Dollars in thousands)		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	$	2,880	$	(14	)	6	$	1,899	$	(20	)	4	$	4,779	$	(34	)
	Residential mortgage-backed securities:
	U.S. government agencies	171		—			2	32,960		(253		)	3	33,131		(253		)
	Commercial mortgage-backed securities:
	U.S. government agencies	—		—			0	12,595		(252		)	1	12,595		(252		)
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	96,691		(568		)	6	552,785		(7,491		)	46	649,476		(8,059		)
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	32,200		(107		)	5	22,464		(184		)	2	54,664		(291		)
	Asset-backed securities:
	Collateralized loan obligations	149,999		(6,176		)	27	121,596		(6,348		)	15	271,595		(12,524		)
	Corporate debt securities	—		—			0	48,755		(12,968		)	8	48,755		(12,968		)
	Total securities available-for-sale	$	281,941	$	(6,865	)	46	$	793,054	$	(27,516	)	79	$	1,074,995	$	(34,381	)
Securities held-to-maturity
Debt securities
	U.S. government agency debentures	$	—	$	—		0	$	—	$	—		0	$	—	$	—
	U.S. states and political subdivisions	4,491		(21		)	9	7,793		(241		)	10	12,284		(262		)
	Residential mortgage-backed securities:
	U.S. government agencies	—		—			0	62,997		(212		)	4	62,997		(212		)
	Commercial mortgage-backed securities:
	U.S. government agencies	13,268		(263		)	1	9,438		(3		)	1	22,706		(266		)
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	—		—			0	873,299		(14,257		)	52	873,299		(14,257		)
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	—		—			0	80,216		(934		)	7	80,216		(934		)
	Total securities held-to-maturity	$	17,759	$	(284	)	10	$	1,033,743	$	(15,647	)	74	$	1,051,502	$	(15,931	)



		December 31, 2015
		Less than 12 months						12 months or longer						Total
(Dollars in thousands)		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 government agency debentures	$	2,498	$	(2	)	1	$	—	$	—		0	$	2,498	$	(2	)
	U.S. treasury notes and bonds	5,000		(1		)	1	—		—			0	5,000		(1		)
	U.S. states and political subdivisions	10,178		(37		)	20	5,899		(167		)	9	16,077		(204		)
	Residential mortgage-backed securities:
	U.S. government agencies	328,156		(3,026		)	27	95,895		(2,428		)	7	424,051		(5,454		)
	Commercial mortgage-backed securities:
	U.S. government agencies	107,074		(1,447		)	15	12,401		(576		)	1	119,475		(2,023		)
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	1,130,779		(10,587		)	78	597,403		(19,560		)	49	1,728,182		(30,147		)
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	113,825		(893		)	12	23,400		(376		)	2	137,225		(1,269		)
	Asset-backed securities:
	Collateralized loan obligations	151,810		(3,576		)	26	126,422		(4,870		)	15	278,232		(8,446		)
	Corporate debt securities	—		—			0	52,229		(9,481		)	8	52,229		(9,481		)
	Total securities available-for-sale	$	1,849,320	$	(19,569	)	180	$	913,649	$	(37,458	)	91	$	2,762,969	$	(57,027	)
Securities held-to-maturity
Debt securities
	U.S. states and political subdivisions	$	18,465	$	(224	)	21	$	4,174	$	(38	)	6	$	22,639	$	(262	)
	Residential mortgage-backed securities:
	U.S. government agencies	85,738		(715		)	6	97,880		(2,284		)	6	183,618		(2,999		)
	Commercial mortgage-backed securities:
	U.S. government agencies	34,833		(346		)	6	9,269		(228		)	1	44,102		(574		)
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	140,514		(1,225		)	12	941,982		(34,656		)	55	1,082,496		(35,881		)
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	71,812		(384		)	7	117,992		(3,227		)	11	189,804		(3,611		)
	Corporate debt securities	19,243		(22		)	6	—		—			0	19,243		(22		)
	Total securities held-to-maturity	$	370,605	$	(2,916	)	58	$	1,171,297	$	(40,433	)	79	$	1,541,902	$	(43,349	)



		March 31, 2015
		Less than 12 months						12 months or longer						Total
(Dollars in thousands)		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	$	14,380	$	(117	)	23	$	6,004	$	(269	)	10	$	20,384	$	(386	)
	Residential mortgage-backed securities:
	U.S. government agencies	74,517		(360		)	5	108,052		(1,589		)	8	182,569		(1,949		)
	Commercial mortgage-backed securities:
	U.S. government agencies	49,129		(175		)	7	17,690		(486		)	2	66,819		(661		)
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	70,574		(762		)	6	745,621		(13,095		)	53	816,195		(13,857		)
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	13,206		(24		)	2	61,132		(358		)	6	74,338		(382		)
	Asset-backed securities:
	Collateralized loan obligations	24,087		(209		)	3	181,498		(3,922		)	27	205,585		(4,131		)
	Corporate debt securities	—		—			0	52,263		(9,404		)	8	52,263		(9,404		)
	Total securities available-for-sale	$	245,893	$	(1,647	)	46	$	1,172,260	$	(29,123	)	114	$	1,418,153	$	(30,770	)
Securities held-to-maturity
Debt securities
	U.S. treasury notes & bonds	$	5,000	$	—		1	$	—	$	—		0	$	5,000	$	—
	U.S. government agency debentures	—		—			0	24,822		(178		)	1	24,822		(178		)
	U.S. states and political subdivisions	38,202		(1,093		)	26	4,448		(54		)	6	42,650		(1,147		)
	Residential mortgage-backed securities:
	U.S. government agencies	28,386		(123		)	2	110,329		(1,554		)	6	138,715		(1,677		)
	Commercial mortgage-backed securities:
	U.S. government agencies	—		—			0	9,554		(108		)	1	9,554		(108		)
	Residential collateralized mortgage-backed securities:
	U.S. government agencies	19,016		(71		)	1	1,095,375		(24,775		)	56	1,114,391		(24,846		)
	Commercial collateralized mortgage-backed securities:
	U.S. government agencies	—		—			0	144,970		(3,377		)	13	144,970		(3,377		)
	Corporate debt securities	—		—			0	—		—			0	—		—
	Total securities held-to-maturity	$	90,604	$	(1,287	)	30	$	1,389,498	$	(30,046	)	83	$	1,480,102	$	(31,333	)

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. 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 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 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.

The investment securities portfolio was in a net unrealized gain position of $33.9 million at March 31, 2016, compared to a net unrealized loss position of $53.0 million at December 31, 2015 and a net unrealized gain position of $10.3 million at March 31, 2015. Gross unrealized losses were $50.3 million as of March 31, 2016, compared to $100.4 million at December 31, 2015, and $62.1 million at March 31, 2015. As of March 31, 2016, gross unrealized losses are concentrated within agency MBS, CLOs, and corporate debt securities. Securities classified as corporate debt would include eight, single issuer, trust preferred securities with stated maturities. Such investments are only 1% of the fair value of the available-for-sale 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 the market conditions which 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 agency MBSs, CLOs, and corporate debt securities, and 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 other-than-temporarily impaired at March 31, 2016 and has recognized the total amount of the impairment in OCI, net of tax.

The new Volcker Rule, as originally adopted, may affect the Corporation’s ability to hold CLOs. As of March 31, 2016, the Corporation holds $285.4 million of CLOs with a gross unrealized loss position of $12.5 million. Management believes that its holdings of CLOs are not ownership interests in covered funds prohibited by the Volcker Rule regulations and, therefore, expects to be able to hold these investments until their stated maturities. Management seeks to maintain a CLO portfolio consistent with the requirements of the Volcker Rule, and new CLO investments are being made in accordance with the strategy.

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 March 31, 2016. Estimated lives on MBSs may differ from contractual maturities as issuers may have the right to call or prepay obligations with or without call or prepayment penalties.