Investment Securities

The amortized cost and fair value of investment securities available for sale as of September 30, 2018 and December 31, 2017 are as follows:

As of September 30, 2018



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	100	$	—	$	—		$	100
Obligations of the U.S. government and agencies	196,334		17		(5,898		)	190,453
Obligations of state and political subdivisions	15,890		1		(92		)	15,799
Mortgage-backed securities	292,005		344		(7,928		)	284,421
Collateralized mortgage obligations	37,811		—		(1,618		)	36,193
Other investment securities	1,100		—		(2		)	1,098
Total	$	543,240	$	362	$	(15,538	)	$	528,064

As of December 31, 2017



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Treasury securities	$	200,077	$	11	$	—		$	200,088
Obligations of the U.S. government and agencies	153,028		75		(2,059		)	151,044
Obligations of state and political subdivisions	21,352		11		(53		)	21,310
Mortgage-backed securities	275,958		887		(1,855		)	274,990
Collateralized mortgage obligations	37,596		14		(948		)	36,662
Other investment securities	4,813		318		(23		)	5,108
Total	$	692,824	$	1,316	$	(4,938	)	$	689,202

The following tables present the aggregate amount of gross unrealized losses as of September 30, 2018 and December 31, 2017 on available for sale investment securities classified according to the amount of time those securities have been in a continuous unrealized loss position:

As of September 30, 2018



	Less than 12 Months					12 Months or Longer					Total
(dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Obligations of the U.S. government and agencies	$	82,187	$	(1,634	)	$	107,601	$	(4,264	)	$	189,788	$	(5,898	)
Obligations of state and political subdivisions	11,009		(21		)	2,303		(71		)	13,312		(92		)
Mortgage-backed securities	136,170		(3,037		)	130,269		(4,891		)	266,439		(7,928		)
Collateralized mortgage obligations	10,939		(86		)	24,945		(1,532		)	35,884		(1,618		)
Other investment securities	549		(1		)	249		(1		)	798		(2		)
Total	$	240,854	$	(4,779	)	$	265,367	$	(10,759	)	$	506,221	$	(15,538	)

As of December 31, 2017



	Less than 12 Months					12 Months or Longer					Total
(dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Obligations of the U.S. government and agencies	$	114,120	$	(1,294	)	$	26,726	$	(765	)	$	140,846	$	(2,059	)
Obligations of state and political subdivisions	11,144		(29		)	2,709		(24		)	13,853		(53		)
Mortgage-backed securities	177,919		(1,293		)	31,787		(562		)	209,706		(1,855		)
Collateralized mortgage obligations	5,166		(47		)	26,686		(901		)	31,852		(948		)
Other investment securities	1,805		(23		)	—		—			1,805		(23		)
Total	$	310,154	$	(2,686	)	$	87,908	$	(2,252	)	$	398,062	$	(4,938	)

Management evaluates the Corporation’s investment securities that are in an unrealized loss position in order to determine if the decline in fair value is other than temporary. The investment portfolio includes debt securities issued by U.S. government agencies, U.S. government-sponsored agencies, state and local municipalities and other issuers. All fixed income investment securities in the Corporation’s investment portfolio are rated as investment-grade or higher. Factors considered in the evaluation include the current economic climate, the length of time and the extent to which the fair value has been below cost, interest rates and the bond rating of each security. The unrealized losses presented in the tables above are temporary in nature and are primarily related to market interest rates rather than the underlying credit quality of the issuers or collateral. Management does not believe that these unrealized losses are other-than-temporary. Management does not have the intent to sell these securities prior to their maturity or the recovery of their cost bases and believes that it is more likely than not that it will not have to sell these securities prior to their maturity or the recovery of their cost bases.

As of September 30, 2018 and December 31, 2017, securities having a fair value of $121.1 million and $126.2 million, respectively, were specifically pledged as collateral for public funds, trust deposits, the FRB discount window program, FHLB borrowings and other purposes. Advances by the FHLB are collateralized by a blanket lien on non-pledged, mortgage-related loans as part of the Corporation’s borrowing agreement with the FHLB as well as certain securities individually pledged by the Corporation.

The amortized cost and fair value of available for sale investment and mortgage-related securities available for sale as of September 30, 2018 and December 31, 2017, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.



	September 30, 2018				December 31, 2017
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Investment securities:
Due in one year or less	$	12,265	$	12,237	$	211,019	$	211,019
Due after one year through five years	176,700		171,374		126,452		124,797
Due after five years through ten years	24,459		23,839		23,147		22,804
Due after ten years	—		—		15,439		15,421
Subtotal	213,424		207,450		376,057		374,041
Mortgage-related securities⁽¹⁾	329,816		320,614		313,554		311,652
Mutual funds with no stated maturity	—		—		3,213		3,509
Total	$	543,240	$	528,064	$	692,824	$	689,202

(1) Expected maturities of mortgage-related securities may differ from contractual maturities as borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The amortized cost and fair value of investment securities held to maturity as of September 30, 2018 and December 31, 2017 are as follows:

As of September 30, 2018



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Mortgage-backed securities	$	8,916	$	—	$	(372	)	$	8,544

As of December 31, 2017



(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Mortgage-backed securities	$	7,932	$	5	$	(86	)	$	7,851

The following tables present the aggregate amount of gross unrealized losses as of September 30, 2018 and December 31, 2017 on held to maturity securities classified according to the amount of time those securities have been in a continuous unrealized loss position:

As of September 30, 2018



	Less than 12 Months					12 Months or Longer					Total
(dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Mortgage-backed securities	$	3,882	$	(132	)	$	4,662	$	(240	)	$	8,544	$	(372	)

As of December 31, 2017



	Less than 12 Months					12 Months or Longer					Total
(dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Mortgage-backed securities	$	2,756	$	(25	)	$	3,866	$	(61	)	$	6,622	$	(86	)

The amortized cost and fair value of held to maturity investment securities as of September 30, 2018 and December 31, 2017, by contractual maturity, are shown below:



	September 30, 2018				December 31, 2017
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Mortgage-backed securities⁽¹⁾	$	8,916	$	8,544	$	7,932	$	7,851

As of September 30, 2018 and December 31, 2017, the Corporation’s investment securities held in trading accounts totaled $8.3 million and $4.6 million, respectively, and primarily consist of deferred compensation trust accounts which are invested in listed mutual funds whose diversification is at the discretion of the deferred compensation plan participants and a rabbi trust account established to fund certain unqualified pension obligations. During the first quarter of 2018, $3.2 million of investment securities included within the rabbi trust account were reclassified from available for sale to trading. Investment securities held in trading accounts are reported at fair value, with adjustments in fair value reported through income.