NOTE D: INVESTMENT SECURITIES

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

	September 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	$540,649	$38,553	$2,717	$576,485	$548,634	$59,081	$0	$607,715
Obligations of state and political subdivisions	61,638	2,863	0	64,501	65,742	5,850	0	71,592
Government agency mortgage-backed securities	12,706	41	1	12,746	20,578	1,079	0	21,657
Corporate debt securities	2,909	39	0	2,948	2,924	53	0	2,977
Other securities	8	0	0	8	16	0	0	16
Total held-to-maturity portfolio	$617,910	$41,496	$2,718	$656,688	$637,894	$66,063	$0	$703,957

Available-for-Sale Portfolio:
U.S. Treasury and agency securities	$888,404	$2,824	$13,956	$877,272	$988,217	$91,040	$0	$1,079,257
Obligations of state and political subdivisions	621,802	15,352	11,159	625,995	629,883	33,070	61	662,892
Government agency mortgage-backed securities	238,348	9,191	2,640	244,899	253,013	16,989	51	269,951
Pooled trust preferred securities	56,540	0	5,289	51,251	61,979	0	12,379	49,600
Corporate debt securities	24,055	930	178	24,807	24,136	1,265	44	25,357
Government agency collateralized mortgage obligations	22,996	940	0	23,936	32,359	1,579	3	33,935
Marketable equity securities	351	150	9	492	351	94	43	402
Total available-for-sale portfolio	$1,852,496	$29,387	$33,231	$1,848,652	$1,989,938	$144,037	$12,581	$2,121,394

Other Securities:
Federal Home Loan Bank common stock	$31,187			$31,187	$38,111			$38,111
Federal Reserve Bank common stock	16,050			16,050	16,050			16,050
Other equity securities	4,775			4,775	5,078			5,078
Total other securities	$52,012			$52,012	$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 September 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	5	$99,031	$2,717	0	$0	$0	5	$99,031	$2,717
Government agency mortgage-backed securities	2	1,127	1	0	0	0	2	1,127	1
Total held-to-maturity portfolio	7	$100,158	$2,718	0	$0	$0	7	$100,158	$2,718

Available-for-Sale Portfolio:
U.S. Treasury and agency securities	25	$641,200	$13,956	0	$0	$0	25	$641,200	$13,956
Obligations of state and political subdivisions	314	206,198	11,125	2	904	34	316	207,102	11,159
Government agency mortgage-backed securities	45	61,198	2,508	1	1,555	132	46	62,753	2,640
Pooled trust preferred securities	0	0	0	3	51,251	5,289	3	51,251	5,289
Corporate debt securities	1	3,038	23	1	2,749	155	2	5,787	178
Government agency collateralized mortgage obligations	0	0	0	1	7	0	1	7	0
Marketable equity securities	1	192	9	0	0	0	1	192	9
Total available-for-sale portfolio	386	911,826	27,621	8	56,466	5,610	394	968,292	33,231
Total investment portfolio	393	$1,011,984	$30,339	8	$56,466	$5,610	401	$1,068,450	$35,949

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
Government agency mortgage-backed securities	8	14,354	51	0	0	0	8	14,354	51
Pooled trust preferred securities	0	0	0	3	49,600	12,379	3	49,600	12,379
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 $57.7 million and unrealized losses of $5.3 million at September 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 September 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 September 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 September 30, 2013 represents OTTI.

The amortized cost and estimated fair value of debt securities at September 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	$8,413	$8,465	$31,654	$32,117
Due after one through five years	427,267	463,526	148,887	153,709
Due after five years through ten years	121,465	120,742	988,465	987,770
Due after ten years	48,059	51,209	421,795	405,729
Subtotal	605,204	643,942	1,590,801	1,579,325
Government agency collateralized mortgage obligations	0	0	22,996	23,936
Government agency mortgage-backed securities	12,706	12,746	238,348	244,899
Total	$617,910	$656,688	$1,852,145	$1,848,160

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 first half of 2013, the Company sold $648.7 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.