Note 3. Investment Securities, Available-for-Sale

A comparison of the amortized cost and estimated fair value of the Company’s investment securities designated as available-for-sale is presented below.



	December 31, 2013
	Weighted		Amortized		Gross Unrealized			Fair
(Dollars in thousands)	Yield		Cost		Gains	Losses		Value
U.S. government sponsored enterprises
Maturing after one year through five years	2.32	%	$	10,405	187	—		10,592
Maturing after five years through ten years	2.00	%	36		—	—		36
	2.32	%	10,441		187	—		10,628
State and local governments
Maturing within one year	2.22	%	5,964		57	—		6,021
Maturing after one year through five years	2.06	%	174,826		3,486	(448	)	177,864
Maturing after five years through ten years	3.21	%	58,835		831	(1,040	)	58,626
Maturing after ten years	4.41	%	1,137,722		27,247	(22,402	)	1,142,567
	4.06	%	1,377,347		31,621	(23,890	)	1,385,078
Corporate bonds
Maturing within one year	2.17	%	91,687		719	—		92,406
Maturing after one year through five years	2.09	%	341,799		3,203	(1,676	)	343,326
Maturing after five years through ten years	2.23	%	6,851		—	(82	)	6,769
	2.11	%	440,337		3,922	(1,758	)	442,501
Residential mortgage-backed securities	2.48	%	1,380,816		14,071	(10,265	)	1,384,622
Total investment securities	3.10	%	$	3,208,941	49,801	(35,913	)	3,222,829

Note 3. Investment Securities, Available-for-Sale (continued)



	December 31, 2012
	Weighted		Amortized		Gross Unrealized			Fair
(Dollars in thousands)	Yield		Cost		Gains	Losses		Value
U.S. government and federal agency
Maturing within one year	1.62	%	$	201	1	—		202
U.S. government sponsored enterprises
Maturing after one year through five years	2.30	%	17,064		371	—		17,435
Maturing after five years through ten years	2.03	%	44		1	—		45
	2.29	%	17,108		372	—		17,480
State and local governments
Maturing within one year	2.01	%	4,288		28	(2	)	4,314
Maturing after one year through five years	2.11	%	149,497		4,142	(142	)	153,497
Maturing after five years through ten years	2.95	%	38,346		1,102	(99	)	39,349
Maturing after ten years	4.70	%	935,897		82,823	(1,362	)	1,017,358
	4.29	%	1,128,028		88,095	(1,605	)	1,214,518
Corporate bonds
Maturing within one year	1.73	%	18,412		51	—		18,463
Maturing after one year through five years	2.22	%	250,027		4,018	(238	)	253,807
Maturing after five years through ten years	2.23	%	16,144		381	—		16,525
	2.19	%	284,583		4,450	(238	)	288,795
Collateralized debt obligations
Maturing after ten years	8.03	%	1,708		—	—		1,708
Residential mortgage-backed securities	1.95	%	2,156,049		8,860	(4,607	)	2,160,302
Total investment securities	2.71	%	$	3,587,677	101,778	(6,450	)	3,683,005

Included in the residential mortgage-backed securities are $2,602,000 and $46,733,000 as of December 31, 2013 and 2012, respectively, of non-guaranteed private label whole loan mortgage-backed securities of which none of the underlying collateral is considered “subprime.”

Maturities of securities do not reflect repricing opportunities present in adjustable rate securities, nor do they reflect expected shorter maturities based upon early prepayment of principal. Weighted-average yields are based on the interest method taking into account premium amortization, discount accretion and mortgage-backed securities’ prepayment provisions. Weighted-average yields on tax-exempt investment securities exclude the federal income tax benefit.

Effective January 1, 2014, the Company reclassified obligations of state and local government securities with a fair value of approximately $484,583,000, inclusive of a net unrealized gain of $4,624,000, from AFS classification to HTM classification. The reclassification changed the allocation of the Company’s entire investment securities portfolio from 100 percent AFS to approximately 85 percent AFS and 15 percent HTM.

Note 3. Investment Securities, Available-for-Sale (continued)

The cost of each investment sold is determined by specific identification. Gain or loss on sale of investments consists of the following:



	Years ended
(Dollars in thousands)	December 31, 2013			December 31, 2012	December 31, 2011
Gross proceeds	$	181,971		—	18,916
Less amortized cost	(182,270		)	—	(18,570	)
Net (loss) gain on sale of investments	$	(299	)	—	346
Gross gain on sale of investments	$	3,723		—	1,048
Gross loss on sale of investments	(4,022		)	—	(702	)
Net (loss) gain on sale of investments	$	(299	)	—	346

At December 31, 2013 and 2012, the Company had investment securities with fair values of $1,635,316,000 and $1,525,400,000, respectively, pledged as collateral for FHLB advances, FRB discount window borrowings, securities sold under agreements to repurchase (“repurchase agreements”), interest rate swap agreements and deposits of several local government units.

Investments with an unrealized loss position are summarized as follows:



	December 31, 2013
	Less than 12 Months				12 Months or More			Total
(Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value	Unrealized Loss		Fair Value	Unrealized Loss
U.S. government sponsored enterprises	$	3	—		—	—		3	—
State and local governments	408,812		(17,838	)	74,161	(6,052	)	482,973	(23,890	)
Corporate bonds	129,515		(1,672	)	1,702	(86	)	131,217	(1,758	)
Residential mortgage-backed securities	457,611		(10,226	)	1,993	(39	)	459,604	(10,265	)
Total temporarily impaired securities	$	995,941	(29,736	)	77,856	(6,177	)	1,073,797	(35,913	)



	December 31, 2012
	Less than 12 Months				12 Months or More			Total
(Dollars in thousands)	Fair Value		Unrealized Loss		Fair Value	Unrealized Loss		Fair Value	Unrealized Loss
State and local governments	$	102,896	(1,531	)	4,533	(74	)	107,429	(1,605	)
Corporate bonds	41,856		(238	)	—	—		41,856	(238	)
Residential mortgage-backed securities	955,235		(4,041	)	62,905	(566	)	1,018,140	(4,607	)
Total temporarily impaired securities	$	1,099,987	(5,810	)	67,438	(640	)	1,167,425	(6,450	)

Based on an analysis of its investment securities with unrealized losses as of December 31, 2013 and 2012, the Company determined that none of such securities had other-than-temporary impairment and the unrealized losses were primarily the result of interest rate changes and market spreads subsequent to acquisition. The fair value of the debt securities is expected to recover as payments are received and the securities approach maturity. At December 31, 2013, management determined that it did not intend to sell investment securities with unrealized losses, and there was no expected requirement to sell any of its investment securities with unrealized losses before recovery of their amortized cost.