NOTE D: INVESTMENT SECURITIES

The amortized cost and estimated fair value of investment securities as of June 30, 2013 and December 31, 2012 are as follows:

	June 30, 2013				December 31, 2012
		Gross	Gross			Gross	Gross
	Amortized	Unrealized	Unrealized	Fair	Amortized	Unrealized	Unrealized	Fair
(000's omitted)	Cost	Gains	Losses	Value	Cost	Gains	Losses	Value
Held-to-Maturity Portfolio:
U.S. Treasury and agency securities	$539,979	$39,627	$1,786	$577,820	$548,634	$59,081	$0	$607,715
Obligations of state and political subdivisions	61,826	3,196	0	65,022	65,742	5,850	0	71,592
Government agency mortgage-backed securities	14,475	148	0	14,623	20,578	1,079	0	21,657
Corporate debt securities	2,914	23	0	2,937	2,924	53	0	2,977
Other securities	13	0	0	13	16	0	0	16
Total held-to-maturity portfolio	$619,207	$42,994	$1,786	$660,415	$637,894	$66,063	$0	$703,957

Available-for-Sale Portfolio:
U.S. Treasury and agency securities	$764,446	$2,553	$9,129	$757,870	$988,217	$91,040	$0	$1,079,257
Obligations of state and political subdivisions	604,692	16,634	10,483	610,843	629,883	33,070	61	662,892
Government agency mortgage-backed securities	232,707	8,697	2,717	238,687	253,013	16,989	51	269,951
Pooled trust preferred securities	56,796	0	9,506	47,290	61,979	0	12,379	49,600
Government agency collateralized mortgage obligations	25,222	1,116	0	26,338	32,359	1,579	3	33,935
Corporate debt securities	24,082	942	226	24,798	24,136	1,265	44	25,357
Marketable equity securities	351	142	15	478	351	94	43	402
Total available-for-sale portfolio	$1,708,296	$30,084	$32,076	$1,706,304	$1,989,938	$144,037	$12,581	$2,121,394

Other Securities:
Federal Home Loan Bank common stock	$20,171			$20,171	$38,111			$38,111
Federal Reserve Bank common stock	16,050			16,050	16,050			16,050
Other equity securities	4,780			4,780	5,078			5,078
Total other securities	$41,001			$41,001	$59,239			$59,239

A summary of investment securities that have been in a continuous unrealized loss position for less than, or greater, than twelve months is as follows:

As of June 30, 2013

	Less than 12 Months			12 Months or Longer			Total
			Gross			Gross			Gross
		Fair	Unrealized		Fair	Unrealized		Fair	Unrealized
(000's omitted)	#	Value	Losses	#	Value	Losses	#	Value	Losses
Held-to-Maturity Portfolio:
U.S. Treasury and agency securities/
Total held-to-maturity portfolio	5	$99,373	$1,786	0	$0	$0	5	$99,373	$1,786

Available-for-Sale Portfolio:
U.S. Treasury and agency securities	15	$352,566	$9,129	0	$0	$0	15	$352,566	$9,129
Obligations of state and political subdivisions	314	202,253	10,449	2	908	34	316	203,161	10,483
Government agency mortgage-backed securities	46	57,788	2,717	0	0	0	46	57,788	2,717
Pooled trust preferred securities	0	0	0	3	47,290	9,506	3	47,290	9,506
Corporate debt securities	1	3,012	54	1	2,747	172	2	5,759	226
Government agency collateralized mortgage obligations	4	335	0	1	8	0	5	343	0
Marketable equity securities	0	0	0	1	186	15	1	186	15
Total available-for-sale portfolio	380	615,954	22,349	8	51,139	9,727	388	667,093	32,076
Total investment portfolio	385	$715,327	$24,135	8	$51,139	$9,727	393	$766,466	$33,862

As of December 31, 2012

	Less than 12 Months			12 Months or Longer			Total
			Gross			Gross			Gross
		Fair	Unrealized		Fair	Unrealized		Fair	Unrealized
(000's omitted)	#	Value	Losses	#	Value	Losses	#	Value	Losses
Available-for-Sale Portfolio:
Obligations of state and political subdivisions	19	$11,503	$61	0	$0	$0	19	$11,503	$61
Pooled trust preferred securities	0	0	0	3	49,600	12,379	3	49,600	12,379
Government agency mortgage-backed securities	8	14,354	51	0	0	0	8	14,354	51
Corporate debt securities	1	2,905	44	0	0	0	1	2,905	44
Government agency collateralized mortgage obligations	4	426	2	2	1,041	1	6	1,467	3
Marketable equity securities	0	0	0	1	158	43	1	158	43
Total available-for-sale/investment portfolio	32	$29,188	$158	6	$50,799	$12,423	38	$79,987	$12,581

Included in the available-for-sale portfolio are pooled trust preferred, class A-1 securities with a current total par value of $58.0 million and unrealized losses of $9.5 million at June 30, 2013. The underlying collateral of these assets is principally trust preferred securities of smaller regional banks and insurance companies. The Company’s securities are in the super-senior cash flow tranche of the investment pools. All other tranches in these pools will incur losses before the super senior tranche is impacted. As of June 30, 2013, an additional 41% - 44% of the underlying collateral in these securities would have to be in deferral or default concurrently to result in an expectation of non-receipt of contractual cash flows.

A detailed review of the pooled trust preferred securities was completed as of June 30, 2013 and management concluded that it does not believe any individual unrealized loss represents an other-than-temporary impairment. This review included an analysis of collateral reports, a cash flow analysis, including varying degrees of projected deferral/default scenarios, and a review of various financial ratios of the underlying issuers. Based on the analysis performed, significant further deferral/defaults and further erosion in other underlying performance conditions would have to exist before the Company would incur a loss. To date, the Company has received all scheduled principal and interest payments and expects to fully collect all future contractual principal and interest payments. The Company does not intend to sell and it is not more likely than not that the Company will be required to sell the underlying securities. Subsequent changes in market or credit conditions could change those evaluations.

Management believes the unrealized losses in the portfolios are primarily attributable to changes in interest rates. The unrealized losses reported pertaining to government guaranteed mortgage-backed securities relate primarily to securities issued by GNMA, FNMA and FHLMC, which are currently rated AAA by Moody’s Investor Services, AA+ by Standard & Poor’s and are guaranteed by the U.S. government. The obligations of state and political subdivisions are typically general purpose debt obligations of various states and political subdivisions. The majority of the obligations of state and political subdivisions carry a credit rating of A or better, as well as a secondary level of credit enhancement. The Company does not intend to sell these securities, nor is it more likely than not that the Company will be required to sell these securities, prior to recovery of the amortized cost. Thus, management does not believe any individual unrealized loss as of June 30, 2013 represents OTTI.

The amortized cost and estimated fair value of debt securities at June 30, 2013, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

	Held-to-Maturity		Available-for-Sale
	Amortized	Fair	Amortized	Fair
(000's omitted)	Cost	Value	Cost	Value
Due in one year or less	$8,786	$8,860	$35,212	$35,723
Due after one through five years	360,724	390,838	146,830	151,709
Due after five years through ten years	186,760	194,038	769,425	772,445
Due after ten years	48,462	52,056	498,549	480,924
Subtotal	604,732	645,792	1,450,016	1,440,801
Government agency collateralized mortgage obligations	0	0	25,222	26,338
Government agency mortgage-backed securities	14,475	14,623	232,707	238,687
Total	$619,207	$660,415	1,707,945	$1,705,826

During the first quarter of 2013 the Company initiated a balance sheet restructuring program through the sale of certain longer duration investment securities and retirement of a portion of the company’s existing FHLB borrowings. During the six month period ending June 30, 2013 the Company sold $648.8 million of U.S. Treasury and agency securities, realizing $63.8 million of gains. The proceeds from those sales were utilized to retire $501.6 million of FHLB borrowings with $63.5 million of associated early extinguishments costs.