INVESTMENT SECURITIES

The amortized cost and fair value of investment securities that are classified as held-to-maturity (“HTM”) and available-for-sale (“AFS”) are as follows:



	September 30, 2018									December 31, 2017
(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)			Estimated Fair Value

Held-to-Maturity
U.S. Government agencies	$	34,983	$	—	$	(113	)	$	34,870	$	46,945	$	7	$	(228	)	$	46,724
Mortgage-backed securities	13,933		—		(698		)	13,235		16,132		8		(287		)	15,853
State and political subdivisions	272,396		2,369		(2,020		)	272,745		301,491		5,962		(222		)	307,231
Other securities	1,994		—		(6		)	1,988		3,490		—		—			3,490
Total HTM	$	323,306	$	2,369	$	(2,837	)	$	322,838	$	368,058	$	5,977	$	(737	)	$	373,298

Available-for-Sale
U.S. Government agencies	$	145,808	$	—	$	(4,348	)	$	141,460	$	141,559	$	116	$	(1,951	)	$	139,724
Mortgage-backed securities	1,471,687		127		(52,188		)	1,419,626		1,208,017		246		(20,946		)	1,187,317
State and political subdivisions	291,731		12		(9,304		)	282,439		144,642		532		(2,009		)	143,165
Other securities	151,572		2,718		(1		)	154,289		118,106		1,206		(1		)	119,311
Total AFS	$	2,060,798	$	2,857	$	(65,841	)	$	1,997,814	$	1,612,324	$	2,100	$	(24,907	)	$	1,589,517

Securities with limited marketability, such as stock in the Federal Reserve Bank and the Federal Home Loan Bank, are carried at cost and are reported as other AFS securities in the table above.

Certain investment securities are valued at less than their historical cost. Total fair value of these investments at September 30, 2018 and December 31, 2017, was $2.0 billion and $1.4 billion, which is approximately 86.0% and 73.5%, respectively, of the Company’s combined AFS and HTM investment portfolios.

The following table shows the gross unrealized losses and fair value of the Company’s investments with unrealized losses, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at September 30, 2018:



	Less Than 12 Months					12 Months or More					Total
(In thousands)	Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses			Estimated Fair Value		Gross Unrealized Losses

Held-to-Maturity
U.S. Government agencies	$	3,972	$	(11	)	$	30,898	$	(102	)	$	34,870	$	(113	)
Mortgage-backed securities	3,830		(106		)	9,404		(592		)	13,234		(698		)
State and political subdivisions	123,574		(1,682		)	8,539		(338		)	132,113		(2,020		)
Other securities	1,166		(6		)	—		—			1,166		(6		)
Total HTM	$	132,542	$	(1,805	)	$	48,841	$	(1,032	)	$	181,383	$	(2,837	)

Available-for-Sale
U.S. Government agencies	$	56,785	$	(689	)	$	84,675	$	(3,659	)	$	141,460	$	(4,348	)
Mortgage-backed securities	586,783		(11,469		)	808,969		(40,719		)	1,395,752		(52,188		)
State and political subdivisions	182,036		(4,510		)	95,076		(4,794		)	277,112		(9,304		)
Other securities	—		—			99		(1		)	99		(1		)
Total AFS	$	825,604	$	(16,668	)	$	988,819	$	(49,173	)	$	1,814,423	$	(65,841	)

These declines primarily resulted from the rate for these investments yielding less than current market rates. Based on evaluation of available evidence, management believes the declines in fair value for these securities are temporary. Management does not have the intent to sell these securities and management believes it is more likely than not the Company will not have to sell these securities before recovery of their amortized cost basis less any current period credit losses.

Declines in the fair value of HTM and AFS securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers, among other things, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Management has the ability and intent to hold the securities classified as HTM until they mature, at which time the Company expects to receive full value for the securities. Furthermore, as of September 30, 2018, management also had the ability and intent to hold the securities classified as AFS for a period of time sufficient for a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the bonds approach their maturity date or repricing date or if market yields for such investments decline. Management does not believe any of the securities are impaired due to reasons of credit quality. Accordingly, as of September 30, 2018, management believes the impairments detailed in the table above are temporary. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

Income earned on securities for the three and nine months ended September 30, 2018 and 2017, is as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(In thousands)	2018		2017		2018		2017
Taxable:
Held-to-maturity	$	528	$	625	$	1,641	$	1,922
Available-for-sale	10,364		5,949		29,614		18,003

Non-taxable:
Held-to-maturity	1,828		2,135		5,661		6,635
Available-for-sale	1,920		509		4,642		2,099
Total	$	14,640	$	9,218	$	41,558	$	28,659

The amortized cost and estimated fair value by maturity of securities are shown in the following table. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. Accordingly, actual maturities may differ from contractual maturities.



	Held-to-Maturity				Available-for-Sale
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value

One year or less	$	50,503	$	50,366	$	120	$	119
After one through five years	60,633		60,313		35,703		34,714
After five through ten years	91,862		91,364		22,485		21,698
After ten years	106,375		107,560		379,331		367,466
Securities not due on a single maturity date	13,933		13,235		1,471,687		1,419,626
Other securities (no maturity)	—		—		151,472		154,191
Total	$	323,306	$	322,838	$	2,060,798	$	1,997,814

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $933.5 million at September 30, 2018 and $1.2 billion at December 31, 2017.

There were approximately $41,000 of gross realized gains and no gross realized losses from the sale of securities during the three months ended September 30, 2018, and approximately $54,000 of gross realized gains and $1,000 of gross realized losses from the sale of securities during the nine months ended September 30, 2018. There were approximately $3,000 of gross realized gains and no realized losses from the sale of securities during the three months ended September 30, 2017, and approximately $2.3 million of gross realized gains and $5,000 of gross realized losses from the sale of securities during the nine months ended September 30, 2017.

The state and political subdivision debt obligations are predominately non-rated bonds representing small issuances, primarily in Arkansas, Missouri, Oklahoma, Tennessee and Texas issues, which are evaluated on an ongoing basis.