4. INVESTMENT SECURITIES

The following tables detail the amortized cost and the estimated fair value of our available-for-sale investment securities. None of our investment securities is classified as trading or held-to-maturity.


			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
	Cost		Gains		Losses			Value
	(In Thousands)
Available-for-sale securities:
March 31, 2014:
State and political subdivisions	$	111,583	$	1,475	$	(2,483	)	$	110,575
U.S. Government and government sponsored enterprises (“GSE”)		32,022		73		(12	)		32,083
Collateralized Mortgage Obligation (“CMO”)		114,037		30		(3,984	)		110,083
Federal National Mortgage Association (“FNMA”) Mortgage-Backed Securities (“MBS”)		380,387		87		(10,004	)		370,470
Federal Home Loan Mortgage Corporation MBS (“FHLMC”)		136,274		26		(3,401	)		132,899
Government National Mortgage Association MBS (“GNMA”)		104,361		367		(1,587	)		103,141

	$	878,664	$	2,058	$	(21,471	)	$	859,251

December 31, 2013
State and political subdivisions		105,354		257		(5,426	)		100,185
GSE		32,082		93		(17	)		32,158
CMO		103,064		28		(5,535	)		97,557
FNMA MBS		382,909		20		(15,801	)		367,128
FHLMC MBS		129,460		29		(4,994	)		124,495
GNMA MBS		97,830		743		(2,981	)		95,592

	$	850,699	$	1,170	$	(34,754	)	$	817,115

The scheduled maturities of investment securities available-for-sale at March 31, 2014 and December 31, 2013 were as follows:


	Available-for-Sale
	Amortized		Fair
	Cost		Value
	(In Thousands)
March 31, 2014
Within one year	$	16,194	$	16,233
After one year but within five years		40,883		41,046
After five years but within ten years		294,552		286,670
After ten years		527,035		515,302

	$	878,664	$	859,251

December 31, 2013
Within one year	$	16,319	$	16,378
After one year but within five years		19,761		19,986
After five years but within ten years		229,033		217,911
After ten years		585,586		562,840

	$	850,699	$	817,115

All securities were AAA-rated at the time of purchase and remained at investment grade at March 31, 2014. All securities were re-evaluated for OTTI at March 31, 2014. The result of this evaluation showed no OTTI during the first quarter of 2014. The weighted average duration of MBS was 5.4 years at March 31, 2014.

MBS have expected maturities that differ from their contractual maturities. These differences arise because borrowers may have the right to call or prepay obligations with or without a prepayment penalty.

At March 31, 2014, investment securities with market values aggregating $517.4 million were pledged as collateral for retail customer repurchase agreements, municipal deposits, and other obligations. From time to time, investment securities are also pledged as collateral for FHLB borrowings. There were no FHLB pledged investment securities at March 31, 2014.

During the first three months of 2014, we sold $37.8 million of investment securities during the period categorized as available-for-sale for net gains of $578,000 (no losses were incurred). In the first quarter of 2013, proceeds from the sale of investment securities available-for-sale were $139.2 million and resulted in net gains of $1.6 million.

As of March 31, 2014, our investment securities portfolio had remaining unamortized premiums of $25.4 million and $207,000 of unaccreted discounts.

At March 31, 2014, we owned investment securities totaling $740.8 million in which the amortized cost basis exceeded fair value. Total unrealized losses on those securities were $21.5 million at March 31, 2014. The temporary impairment is the result of changes in market interest rates subsequent to the purchase of the securities. Our investment portfolio is reviewed each quarter for indications of impairment. This review includes analyzing the length of time and the extent to which the fair value has been lower than the cost, the financial condition and near-term prospects of the issuer, including any specific events which may influence the operations of the issuer and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in the market. We evaluate our intent and ability to hold securities based upon our investment strategy for the particular type of security and our cash flow needs, liquidity position, capital adequacy and interest rate risk position. In addition, we do not have the intent to sell, nor is it more likely-than-not we will be required to sell these securities before we are able to recover the amortized cost basis.

For these investment securities with unrealized losses, the table below shows our gross unrealized losses and fair value by investment category and length of time that individual securities were in a continuous unrealized loss position at March 31, 2014.

The tables below show our investment securities’ gross unrealized losses and fair value by investment category and length of time that individual securities were in a continuous unrealized loss position at March 31, 2014 and December 31, 2013.


	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(In Thousands)
Available-for-sale
State and political subdivisions	$	42,003	$	1,722	$	13,374	$	761	$	55,377	$	2,483
GSE		5,982		12		—		—		5,982		12
CMO		82,229		2,719		25,974		1,265		108,203		3,984
FNMA MBS		341,483		8,989		17,955		1,015		359,438		10,004
FHLMC MBS		116,004		2,700		11,593		701		127,597		3,401
GNMA MBS		65,773		966		18,433		621		84,206		1,587

Total temporarily impaired investments	$	653,474	$	17,108	$	87,329	$	4,363	$	740,803	$	21,471


	Less than 12 months				12 months or longer				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss
	(In Thousands)
Available-for-sale
State and political subdivisions	$	83,036	$	5,426	$	—	$	—	$	83,036	$	5,426
GSE		3,972		13		2,001		4		5,973		17
CMO		73,109		4,173		21,590		1,362		94,699		5,535
FNMA MBS		346,266		14,386		17,800		1,415		364,066		15,801
FHLMC MBS		116,732		4,548		7,307		446		124,039		4,994
GNMA MBS		57,076		1,897		18,829		1,084		75,905		2,981

Total temporarily impaired investments	$	680,191	$	30,443	$	67,527	$	4,311	$	747,718	$	34,754