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INVESTMENT SECURITIES
 12 Months Ended
Dec. 31, 2014
INVESTMENT SECURITIES  
INVESTMENT SECURITIES
NOTE 6 — INVESTMENT SECURITIES
 
The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and fair value by major categories of available-for-sale securities:
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
 
 
(In thousands)
 
As of December 31, 2014
 

 

 

 

Investment securities available-for-sale:
 

 

 

 

U.S. Treasury securities
$
873,101

$
1,971

$
(1,637
)
$
873,435

U.S. government agency and U.S. government sponsored enterprise debt securities
311,927

490

(1,393
)
311,024

U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 

 

 

 

Commercial mortgage-backed securities
140,957

1,056

(593
)
141,420

Residential mortgage-backed securities
785,412

9,754

(4,078
)
791,088

Municipal securities
245,408

6,202

(1,162
)
250,448

Other residential mortgage-backed securities:
 

 

 

 

Investment grade (1)
52,694

1,359

(135
)
53,918

Other commercial mortgage-backed securities:
 

 

 

 

Investment grade (1)
34,000

53

—

34,053

Corporate debt securities:
 

 

 

 

Investment grade (1)
116,236

—

(1,054
)
115,182

Non-investment grade (1)
17,881

—

(3,200
)
14,681

Other securities
41,589

243

(716
)
41,116

Total investment securities available-for-sale
$
2,619,205

$
21,128

$
(13,968
)
$
2,626,365

As of December 31, 2013
 

 

 

 

Investment securities available-for-sale:
 

 

 

 

U.S. Treasury securities
$
495,053

$
201

$
(3,622
)
$
491,632

U.S. government agency and U.S. government sponsored enterprise debt securities
406,807

242

(12,726
)
394,323

U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 

 

 

 

Commercial mortgage-backed securities
182,257

1,062

(4,449
)
178,870

Residential mortgage-backed securities
892,435

7,729

(14,927
)
885,237

Municipal securities
297,390

1,122

(17,533
)
280,979

Other residential mortgage-backed securities:
 

 

 

 

Investment grade (1)
48,129

—

(1,802
)
46,327

Other commercial mortgage-backed securities:
 

 

 

 

Investment grade (1)
51,000

617

—

51,617

Corporate debt securities:
 

 

 

 

Investment grade (1)
312,726

613

(3,344
)
309,995

Non-investment grade (1)
20,668

62

(5,629
)
15,101

Other securities
80,025

555

(864
)
79,716

Total investment securities available-for-sale
$
2,786,490

$
12,203

$
(64,896
)
$
2,733,797

(1)
Investment securities rated BBB- or higher by S&P, or Baa3 or higher by Moody are considered investment grade.  Conversely, investment securities rated below BBB- by S&P, or below Baa3 by Moody are considered non-investment grade.

 
 

 Realized Gains and Losses

The following table presents the proceeds, gross realized gains, and gross realized losses related to the sales of investment securities for the years ended December 31, 2014, 2013, and 2012:
 
2014
2013
2012
 
 

(In thousands)
Proceeds from sales
$
623,689

$
663,569

$
1,230,134

Gross realized gains
$
10,978

$
13,904

$
28,211

Gross realized losses
$
127

$(1) 
$
1,815

$
27,454

Related tax expense
$
4,557

$
5,077

$
318

(1)
The gross $127 thousand of losses resulted from the investment securities acquired from MetroCorp which were sold immediately after the acquisition closed.

Declines in the fair value of securities below their cost that are deemed to be an OTTI are recognized in earnings to the extent the impairment is related to credit losses. The following table presents a rollforward of the amounts related to the OTTI credit losses recognized in earnings for the years ended December 31, 2014, 2013, and 2012:
2014
2013
2012
 
(In thousands)
Beginning balance
$
115,511

$
115,511

$
115,412

Addition of OTTI that was not previously recognized
—

—

—

Additional increases to the amount related to the credit loss for which an OTTI was previously recognized
—

—

99

Reduction for securities sold
(3,173
)
—

—

Ending balance
$
112,338

$
115,511

$
115,511


The Company believes that it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. No OTTI credit losses were recognized for the years ended December 31, 2014 and 2013. For the year ended December 31, 2012, the Company recorded $5.2 million of OTTI on a pre-tax basis, of which $99 thousand was credit-related impairment losses that was recorded through earnings, and $5.1 million was non-credit related impairment losses that was recorded through other comprehensive income for the pooled trust preferred securities which was due to credit downgrades caused by increases in market spreads, concerns regarding the housing market and lack of liquidity in the market. For the year ended December 31, 2014, the Company realized a gain of $802 thousand from the sale of a non-investment grade corporate debt security with previously recognized OTTI credit losses of $3.2 million.


Unrealized Losses

The following tables present the Company’s investment portfolio’s gross unrealized losses and related fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of December 31, 2014 and 2013:
 
Less Than 12 Months
12 Months or More
Total
 
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
 
(In thousands)
As of December 31, 2014
 

 

 

 

 

 

Investment securities available-for-sale:
 

 

 

 

 

 

U.S. Treasury securities
$
170,260

$
(266
)
$
163,800

$
(1,371
)
$
334,060

$
(1,637
)
U.S. government agency and U.S. government sponsored enterprise debt securities
69,438

(504
)
124,104

(889
)
193,542

(1,393
)
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 

 

 

 

 

 

Commercial mortgage-backed securities
45,405

(257
)
16,169

(336
)
61,574

(593
)
Residential mortgage-backed securities
81,927

(270
)
241,047

(3,808
)
322,974

(4,078
)
Municipal securities
6,391

(26
)
61,107

(1,136
)
67,498

(1,162
)
Other residential mortgage-backed securities:
 

 

 

 

 

 

Investment grade
—

—

7,217

(135
)
7,217

(135
)
Corporate debt securities:
 

 

 

 

 

 

Investment grade
25,084

(12
)
90,098

(1,042
)
115,182

(1,054
)
Non-investment grade
—

—

14,681

(3,200
)
14,681

(3,200
)
Other securities
15,885

(716
)
—

—

15,885

(716
)
Total investment securities available-for-sale
$
414,390

$
(2,051
)
$
718,223

$
(11,917
)
$
1,132,613

$
(13,968
)
 
 
Less Than 12 Months
12 Months or More
Total
 
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
Fair
Value
Unrealized
Losses
 
(In thousands)
As of December 31, 2013
 

 

 

 

 

 

Investment securities available-for-sale:
 

 

 

 

 

 

U.S. Treasury securities
$
337,248

$
(3,622
)
$
—

$
—

$
337,248

$
(3,622
)
U.S. government agency and U.S. government sponsored enterprise debt securities
387,097

(12,726
)
—

—

387,097

(12,726
)
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 

 

 

 

 

 

Commercial mortgage-backed securities
114,754

(3,280
)
16,065

(1,169
)
130,819

(4,449
)
Residential mortgage-backed securities
502,285

(10,570
)
92,540

(4,357
)
594,825

(14,927
)
Municipal securities
173,782

(10,765
)
47,892

(6,768
)
221,674

(17,533
)
Other residential mortgage-backed securities:
 

 

 

 

 

 

Investment grade
46,327

(1,802
)
—

—

46,327

(1,802
)
Corporate debt securities:
 

 

 

 

 

 

Investment grade
193,482

(1,538
)
79,442

(1,806
)
272,924

(3,344
)
Non-investment grade
—

—

14,422

(5,629
)
14,422

(5,629
)
Other securities
48,098

(864
)
—

—

48,098

(864
)
Total investment securities available-for-sale
$
1,803,073

$
(45,167
)
$
250,361

$
(19,729
)
$
2,053,434

$
(64,896
)
 

 

At each reporting date, the Company examines all individual securities that are in an unrealized loss position for OTTI.  Specific investment related factors, such as the nature of the investments, the severity and duration of the loss, the probability of collecting all amounts due, the analysis of the issuers of the securities and whether there has been any cause for default on the securities and any change in the rating of the securities by various rating agencies, are examined to assess impairment. Additionally, the Company evaluates whether the creditworthiness of the issuer calls the realization of contractual cash flows into question. The Company takes into consideration the financial resources, intent and its overall ability to hold the securities and not be required to sell them until their fair values recover.

The majority of the total unrealized losses related to securities are related to residential agency mortgage-backed securities, non-investment grade corporate debt securities and U.S. Treasury securities. As of December 31, 2014, residential agency mortgage-backed securities, non-investment grade corporate debt securities and U.S. Treasury securities represented 30%, 1% and 33%, respectively, of the total investment securities available-for-sale portfolio. As of December 31, 2013, residential agency mortgage-backed securities, non-investment grade corporate debt securities and U.S. Treasury securities represented 32%, 1% and 18%, respectively, of the total investment securities available-for-sale portfolio. The unrealized losses on these securities are primarily attributed to yield curve movement, together with the widened liquidity spread and credit spread. The issuers of these securities have not, to the Company's knowledge, established any cause for default on these securities. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated.

Management believes the impairments relating to the years ended December 31, 2014 and 2013 detailed in the tables of gross unrealized losses above are temporary and are not impaired due to reasons of credit quality. Accordingly, no impairment loss has been recorded in the Company’s consolidated statements of income for the years ended December 31, 2014 and 2013.

 Investment Securities Maturities
 
The following table presents the scheduled maturities of investment securities as of December 31, 2014:
Amortized
Cost
Estimated
Fair Value
 
(In thousands)
Due within one year
$
343,193

$
339,814

Due after one year through five years
1,018,469

1,022,566

Due after five years through ten years
328,317

329,172

Due after ten years
929,226

934,813

Total investment securities available-for-sale
$
2,619,205

$
2,626,365

 
Actual maturities of mortgage-backed securities can differ from contractual maturities because borrowers have the right to prepay obligations. In addition, such factors as prepayments and interest rates may affect the yields on the carrying values of mortgage-backed securities.

As of December 31, 2014 and 2013, investment securities available-for-sale with a par value of $1.93 billion and $1.97 billion, respectively, were pledged to secure public deposits, FHLB advances, repurchase agreements, the Federal Reserve Bank’s discount window, or for other purposes required or permitted by law.