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:



	Years Ended December 31,
	2018									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	$	16,990	$	—	$	(49	)	$	16,941	$	46,945	$	7	$	(228	)	$	46,724
Mortgage-backed securities	13,346		5		(412		)	12,939		16,132		8		(287		)	15,853
State and political subdivisions	256,863		3,029		(954		)	258,938		301,491		5,962		(222		)	307,231
Other securities	1,995		17		—			2,012		3,490		—		—			3,490
Total HTM	$	289,194	$	3,051	$	(1,415	)	$	290,830	$	368,058	$	5,977	$	(737	)	$	373,298

Available-for-Sale
U.S. Government agencies	$	157,523	$	518	$	(3,740	)	$	154,301	$	141,559	$	116	$	(1,951	)	$	139,724
Mortgage-backed securities	1,552,487		3,097		(32,684		)	1,522,900		1,208,017		246		(20,946		)	1,187,317
State and political subdivisions	320,142		171		(5,470		)	314,843		144,642		532		(2,009		)	143,165
Other securities	157,471		2,251		(14		)	159,708		118,106		1,206		(1		)	119,311
Total AFS	$	2,187,623	$	6,037	$	(41,908	)	$	2,151,752	$	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 December 31, 2018 and 2017, was $1.7 billion and $1.4 billion, which is approximately 70.3% 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:



	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
December 31, 2018

Held-to-Maturity
U.S. Government agencies	$	992	$	(2	)	$	15,948	$	(47	)	$	16,940	$	(49	)
Mortgage-backed securities	—		—			12,177		(412		)	12,177		(412		)
State and political subdivisions	39,149		(208		)	50,889		(746		)	90,038		(954		)
Total HTM	$	40,141	$	(210	)	$	79,014	$	(1,205	)	$	119,155	$	(1,415	)

Available-for-Sale
U.S. Government agencies	$	26,562	$	(221	)	$	108,636	$	(3,519	)	$	135,198	$	(3,740	)
Mortgage-backed securities	163,560		(1,146		)	1,037,679		(31,538		)	1,201,239		(32,684		)
State and political subdivisions	129,075		(1,406		)	132,020		(4,064		)	261,095		(5,470		)
Other securities	65		(13		)	99		(1		)	164		(14		)
Total AFS	$	319,262	$	(2,786	)	$	1,278,434	$	(39,122	)	$	1,597,696	$	(41,908	)

December 31, 2017

Held-to-Maturity
U.S. Government agencies	$	11,961	$	(6	)	$	32,778	$	(222	)	$	44,739	$	(228	)
Mortgage-backed securities	5,471		(47		)	8,946		(240		)	14,417		(287		)
State and political subdivisions	40,299		(198		)	1,887		(24		)	42,186		(222		)
Total HTM	$	57,731	$	(251	)	$	43,611	$	(486	)	$	101,342	$	(737	)

Available-for-Sale
U.S. Government agencies	$	91,988	$	(921	)	$	25,742	$	(1,030	)	$	117,730	$	(1,951	)
Mortgage-backed securities	510,770		(4,516		)	609,329		(16,430		)	1,120,099		(20,946		)
State and political subdivisions	25,049		(202		)	75,404		(1,807		)	100,453		(2,009		)
Other securities	—		—			99		(1		)	99		(1		)
Total AFS	$	627,807	$	(5,639	)	$	710,574	$	(19,268	)	$	1,338,381	$	(24,907	)

The declines reflected in the preceding table 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 December 31, 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 December 31, 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 years ended December 31, 2018, 2017 and 2016, is as follows:



(In thousands)	2018		2017		2016
Taxable:
Held-to-maturity	$	2,157	$	2,521	$	3,778
Available-for-sale	40,926		25,996		17,928

Non-taxable:
Held-to-maturity	7,424		8,693		10,641
Available-for-sale	6,811		2,905		1,132
Total	$	57,318	$	40,115	$	33,479

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	$	29,579	$	29,515	$	120	$	119
After one through five years	60,564		60,514		35,518		34,923
After five through ten years	88,770		88,971		39,426		39,360
After ten years	96,935		98,891		407,815		400,011
Securities not due on a single maturity date	13,346		12,939		1,552,487		1,522,900
Other securities (no maturity)	—		—		152,257		154,439
Total	$	289,194	$	290,830	$	2,187,623	$	2,151,752

The carrying value, which approximates the fair value, of securities pledged as collateral, to secure public deposits and for other purposes, amounted to $1.0 billion at December 31, 2018 and $1.2 billion at December 31, 2017.

There were $65,000 of gross realized gains and $4,000 of gross realized losses from the sale of securities during the year ended December 31, 2018. There were $2.4 million of gross realized gains and $1.3 million of gross realized losses from the sale of securities during the year ended December 31, 2017. There were $5.8 million of gross realized gains and no gross realized losses from the sale of securities during the year ended December 31, 2016. The income tax expense/benefit related to security gains/losses was 26.135% of the gross amounts in 2018 and 39.225% in 2017 and 2016.

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.