SECURITIES

The amortized cost and fair value of securities are as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Securities Available for Sale
June 30, 2015
U.S. Treasury	$	29,670	$	258	$	—		$	29,928
U.S. government-sponsored entities		403,396		1,853		(1,173	)		404,076
Residential mortgage-backed securities:
Agency mortgage-backed securities		588,103		6,454		(801	)		593,756
Agency collateralized mortgage obligations		561,212		2,324		(7,939	)		555,597
Non-agency collateralized mortgage obligations		1,270		9		—			1,279
Commercial mortgage-backed securities		5,004		2		—			5,006
States of the U.S. and political subdivisions		11,138		359		(40	)		11,457
Other debt securities		16,671		312		(742	)		16,241

Total debt securities		1,616,464		11,571		(10,695	)		1,617,340
Equity securities		975		305		—			1,280

	$	1,617,439	$	11,876	$	(10,695	)	$	1,618,620


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
December 31, 2014
U.S. Treasury	$	29,604	$	78	$	—		$	29,682
U.S. government-sponsored entities		338,330		742		(1,939	)		337,133
Residential mortgage-backed securities:
Agency mortgage-backed securities		546,572		7,548		(35	)		554,085
Agency collateralized mortgage obligations		580,601		1,617		(9,047	)		573,171
Non-agency collateralized mortgage obligations		1,414		17		—			1,431
Commercial mortgage-backed securities		7,891		—		(11	)		7,880
States of the U.S. and political subdivisions		12,713		477		(32	)		13,158
Other debt securities		16,615		420		(857	)		16,178

Total debt securities		1,533,740		10,899		(11,921	)		1,532,718
Equity securities		1,031		316		—			1,347

	$	1,534,771	$	11,215	$	(11,921	)	$	1,534,065

Securities Held to Maturity
June 30, 2015
U.S. Treasury	$	500	$	152	$	—		$	652
U.S. government-sponsored entities		146,561		1,054		(379	)		147,236
Residential mortgage-backed securities:
Agency mortgage-backed securities		670,817		12,981		(1,006	)		682,792
Agency collateralized mortgage obligations		484,832		2,351		(6,793	)		480,390
Non-agency collateralized mortgage obligations		3,375		14		(3	)		3,386
Commercial mortgage-backed securities		17,410		231		—			17,641
States of the U.S. and political subdivisions		194,565		1,936		(2,558	)		193,943

	$	1,518,060	$	18,719	$	(10,739	)	$	1,526,040

December 31, 2014
U.S. Treasury	$	502	$	168	$	—		$	670
U.S. government-sponsored entities		101,602		885		(524	)		101,963
Residential mortgage-backed securities:
Agency mortgage-backed securities		677,169		16,712		(346	)		693,535
Agency collateralized mortgage obligations		501,965		1,858		(7,329	)		496,494
Non-agency collateralized mortgage obligations		4,285		28		—			4,313
Commercial mortgage-backed securities		17,560		179		—			17,739
States of the U.S. and political subdivisions		150,272		3,315		(43	)		153,544

	$	1,453,355	$	23,145	$	(8,242	)	$	1,468,258

The Corporation classifies securities as trading securities when management intends to sell such securities in the near term. Such securities are carried at fair value, with unrealized gains (losses) reflected through the consolidated statements of comprehensive income. The Corporation classified certain securities acquired in conjunction with its acquisitions as trading securities. The Corporation both acquired and sold these trading securities during the quarterly periods in which each of the acquisitions occurred. As of June 30, 2015 and December 31, 2014, the Corporation did not hold any trading securities.

Gross gains and gross losses were realized on securities as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015			2014
Gross gains	$	14	$	739	$	14		$	18,748
Gross losses		—		37		(9	)		(8,511	)

	$	14	$	776	$	5		$	10,237

During the first quarter of 2014, the Corporation strategically sold its entire portfolio of pooled trust preferred securities (TPS) with net proceeds of $51,540 and a gain of $13,766. These were previously classified as collateralized debt obligations (CDOs) available for sale. Of the 23 pooled securities sold, one was determined to be a disallowed investment under the Volcker Rule (Section 619) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), and as such, was required to be disposed of by July 2016. Partially offsetting this gain was a net loss of $3,529 relating to the sale of other securities. By selling these securities, the Corporation strengthened the risk profile of its investment portfolio, improved its capital levels due to lowered risk-weighted assets and generated capital to support future growth.

As of June 30, 2015, the amortized cost and fair value of securities, by contractual maturities, were as follows:


	Available for Sale				Held to Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	4,990	$	5,040	$	1,010	$	1,017
Due from one to five years		438,979		440,208		140,854		141,072
Due from five to ten years		10,014		10,304		72,031		73,550
Due after ten years		6,892		6,150		127,731		126,192

		460,875		461,702		341,626		341,831
Residential mortgage-backed securities:
Agency mortgage-backed securities		588,103		593,756		670,817		682,792
Agency collateralized mortgage obligations		561,212		555,597		484,832		480,390
Non-agency collateralized mortgage obligations		1,270		1,279		3,375		3,386
Commercial mortgage-backed securities		5,004		5,006		17,410		17,641
Equity securities		975		1,280		—		—

	$	1,617,439	$	1,618,620	$	1,518,060	$	1,526,040

Maturities may differ from contractual terms because borrowers may have the right to call or prepay obligations with or without penalties. Periodic payments are received on mortgage-backed securities based on the payment patterns of the underlying collateral.

At June 30, 2015 and December 31, 2014, securities with a carrying value of $1,961,096 and $1,036,380, respectively, were pledged to secure public deposits, trust deposits and for other purposes as required by law. Securities with a carrying value of $240,738 and $892,647 at June 30, 2015 and December 31, 2014, respectively, were pledged as collateral for short-term borrowings.

Following are summaries of the fair values and unrealized losses of securities, segregated by length of impairment:


	Less than 12 Months							12 Months or More							Total
	#		Fair Value		Unrealized Losses			#		Fair Value		Unrealized Losses			#		Fair Value		Unrealized Losses
Securities Available for Sale
June 30, 2015
U.S. government-sponsored entities		5	$	84,445	$	(571	)		5	$	55,389	$	(602	)		10	$	139,834	$	(1,173	)
Residential mortgage-backed securities:
Agency mortgage-backed securities		11		186,261		(801	)		—		—		—			11		186,261		(801	)
Agency collateralized mortgage obligations		6		104,538		(563	)		18		237,775		(7,376	)		24		342,313		(7,939	)
States of the U.S. and political subdivisions		1		2,079		(3	)		1		1,153		(37	)		2		3,232		(40	)
Other debt securities		—		—		—			4		6,150		(742	)		4		6,150		(742	)

		23	$	377,323	$	(1,938	)		28	$	300,467	$	(8,757	)		51	$	677,790	$	(10,695	)


	Less than 12 Months							12 Months or More							Total
	#		Fair Value		Unrealized Losses			#		Fair Value		Unrealized Losses			#		Fair Value		Unrealized Losses
December 31, 2014
U.S. government-sponsored entities		7	$	89,986	$	(275	)		7	$	99,326	$	(1,664	)		14	$	189,312	$	(1,939	)
Residential mortgage-backed securities:
Agency mortgage-backed securities		2		45,145		(35	)		—		—		—			2		45,145		(35	)
Agency collateralized mortgage obligations		9		166,908		(1,238	)		16		225,700		(7,809	)		25		392,608		(9,047	)
Commercial mortgage-backed securities		1		7,880		(11	)		—		—		—			1		7,880		(11	)
States of the U.S. and political subdivisions		—		—		—			1		1,159		(32	)		1		1,159		(32	)
Other debt securities		—		—		—			4		6,030		(857	)		4		6,030		(857	)

		19	$	309,919	$	(1,559	)		28	$	332,215	$	(10,362	)		47	$	642,134	$	(11,921	)

Securities Held to Maturity
June 30, 2015
U.S. government-sponsored entities		3	$	44,772	$	(227	)		1	$	14,849	$	(152	)		4	$	59,621	$	(379	)
Residential mortgage-backed securities:
Agency mortgage-backed securities		10		115,966		(974	)		1		1,127		(32	)		11		117,093		(1,006	)
Agency collateralized mortgage obligations		7		95,239		(884	)		14		176,572		(5,909	)		21		271,811		(6,793	)
Non-agency collateralized mortgage obligations		2		1,731		(3	)		—		—		—			2		1,731		(3	)
States of the U.S. and political subdivisions		45		83,795		(2,558	)		—		—		—			45		83,795		(2,558	)

		67	$	341,503	$	(4,646	)		16	$	192,548	$	(6,093	)		83	$	534,051	$	(10,739	)

December 31, 2014
U.S. government-sponsored entities		2	$	24,989	$	(40	)		2	$	29,516	$	(484	)		4	$	54,505	$	(524	)
Residential mortgage-backed securities:
Agency mortgage-backed securities		1		1,099		(1	)		4		45,042		(345	)		5		46,141		(346	)
Agency collateralized mortgage obligations		8		104,071		(630	)		14		189,642		(6,699	)		22		293,713		(7,329	)
States of the U.S. and political subdivisions		1		1,427		(4	)		4		5,453		(39	)		5		6,880		(43	)

		12	$	131,586	$	(675	)		24	$	269,653	$	(7,567	)		36	$	401,239	$	(8,242	)

The Corporation does not intend to sell the debt securities and it is not more likely, than not, that the Corporation will be required to sell the securities before recovery of their amortized cost basis.

The Corporation’s remaining portfolio of TPS consists of four single-issuer securities, which are primarily from money-center and large regional banks and are included in other debt securities. These TPS had an amortized cost and estimated fair value of $6,892 and $6,150 at June 30, 2015, respectively. The Corporation has concluded from its analysis performed at June 30, 2015 that it is probable that the Corporation will collect all contractual principal and interest payments related to these securities.

Other-Than-Temporary Impairment

The Corporation evaluates its investment securities portfolio for other-than-temporary impairment (OTTI) on a quarterly basis. Impairment is assessed at the individual security level. The Corporation considers an investment security impaired if the fair value of the security is less than its cost or amortized cost basis. The following table presents a summary of the cumulative credit-related OTTI charges recognized as components of earnings for securities for which a portion of an OTTI is recognized in other comprehensive income:


	Collateralized Debt Obligations			Equities		Total
For the Six Months Ended June 30, 2015
Beginning balance		—		$	27	$	27
Loss where impairment was not previously recognized		—			—		—
Additional loss where impairment was previously recognized		—			—		—
Reduction due to credit impaired securities sold		—			—		—

Ending balance		—		$	27	$	27

For the Six Months Ended June 30, 2014
Beginning balance	$	17,155		$	27	$	17,182
Loss where impairment was not previously recognized		—			—		—
Additional loss where impairment was previously recognized		—			—		—
Reduction due to credit impaired securities sold		(17,155	)		—		(17,155	)

Ending balance	$	—		$	27	$	27

The Corporation did not recognize any impairment losses on securities for the six months ended June 30, 2015 or 2014.

States of the U.S. and Political Subdivisions

The Corporation’s municipal bond portfolio of $206,022 as of June 30, 2015 is highly rated with an average entity-specific rating of AA and 99.0% of the portfolio rated A or better. General obligation bonds comprise 99.6% of the portfolio. Geographically, municipal bonds support the Corporation’s primary footprint as 92.5% of the securities are from municipalities located throughout Pennsylvania, Ohio and Maryland. The average holding size of the securities in the municipal bond portfolio is $1,355. In addition to the strong stand-alone ratings, 84.0% of the municipalities have some formal credit enhancement insurance that strengthens the creditworthiness of their issue. Management also reviews the credit profile of each issuer on a quarterly basis.