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AVAILABLE-FOR-SALE INVESTMENT SECURITIES
 9 Months Ended
Sep. 30, 2015
Investments, Debt and Equity Securities [Abstract]  
AVAILABLE-FOR-SALE INVESTMENT SECURITIES
NOTE 7 — AVAILABLE-FOR-SALE INVESTMENT SECURITIES

The following table presents the amortized cost, gross unrealized gains, gross unrealized losses and fair value by major categories of available-for-sale investment securities:
 
 
 
 
 
 
 
 
 
($ in thousands)
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
September 30, 2015
 
 

 
 

 
 

 
 

Available-for-sale investment securities:
 
 

 
 

 
 

 
 

U.S. Treasury securities
 
$
750,032

 
$
2,581

 
$
(8
)
 
$
752,605

U.S. government agency and U.S. government sponsored enterprise debt securities
 
701,919

 
1,544

 
(1,619
)
 
701,844

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

 
 

 
 

 
 

Commercial mortgage-backed securities
 
271,171

 
2,584

 
(405
)
 
273,350

Residential mortgage-backed securities
 
746,632

 
10,081

 
(1,815
)
 
754,898

Municipal securities
 
203,832

 
4,604

 
(1,611
)
 
206,825

Other residential mortgage-backed securities:
 
 
 
 
 
 
 
 

Investment grade (1)
 
65,706

 
947

 
(116
)
 
66,537

Corporate debt securities:
 
 
 
 
 
 
 
 

Investment grade (1)
 
142,216

 
22

 
(1,112
)
 
141,126

Non-investment grade (1)
 
11,525

 
—

 
(1,001
)
 
10,524

Other securities
 
44,280

 
693

 
(405
)
 
44,568

Total available-for-sale investment securities
 
$
2,937,313

 
$
23,056

 
$
(8,092
)
 
$
2,952,277

December 31, 2014
 
 

 
 

 
 

 
 

Available-for-sale investment securities:
 
 

 
 

 
 

 
 

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
 
41,691

 
393

 
(716
)
 
41,368

Total available-for-sale investment securities
 
$
2,619,307

 
$
21,278

 
$
(13,968
)
 
$
2,626,617

 
 
 
 
 
 
 
 
 
(1)
Available-for-sale investment securities rated BBB- or higher by S&P or Baa3 or higher by Moody’s are considered investment grade. Conversely, available-for-sale investment securities rated lower than BBB- by S&P or lower than Baa3 by Moody’s 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 available-for-sale investment securities for the three and nine months ended September 30, 2015 and 2014:
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
($ in thousands)
 
2015
 
2014
 
2015
 
2014
 
Proceeds from sales
 
$
855,425

 
$
43,788

 
$
1,328,487

 
$
395,630

 
Gross realized gains
 
$
17,036

 
$
2,514

 
$
26,994

 
$
6,730

 
Gross realized losses
 
$
—

 
$
—

 
$
—

 
$
127

(1) 
Related tax expense
 
$
7,155

 
$
1,056

 
$
11,337

 
$
2,773

 
 
 
 
 
 
 
 
 
 
 
(1)
The gross $127 thousand of losses resulted from the available-for-sale 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 other-than-temporary impairment (“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 three and nine months ended September 30, 2015 and 2014:
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
($ in thousands)
 
2015
 
2014
 
2015
 
2014
 
Beginning balance
 
$
106,688

 
$
115,511

 
$
112,338

 
$
115,511

 
Addition of OTTI previously not recognized
 
—

 
—

 
—

 
—

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

 
—

 
—

 
—

 
Reduction for securities sold
 
(74,765
)
 
—

 
(80,415
)
 
—

 
Ending balance
 
$
31,923

 
$
115,511

 
$
31,923

 
$
115,511

 
 
 
 
 
 
 
 
 
 
 


No OTTI credit losses were recognized for the three and nine months ended September 30, 2015 and 2014. For the three months ended September 30, 2015, the Company realized a gain of $10.9 million from the sale of non-investment grade corporate debt securities with previously recognized OTTI credit losses of $74.8 million. For the nine months ended September 30, 2015, the Company realized a gain of $11.9 million from the sale of non-investment grade corporate debt securities with previously recognized OTTI credit losses of $80.4 million. There were no sales of investment securities with previously recognized OTTI credit losses for the three and nine months ended September 30, 2014.

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 September 30, 2015 and December 31, 2014:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less Than 12 Months
 
12 Months or More
 
Total
($ in thousands)
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
September 30, 2015
 
 

 
 

 
 

 
 

 
 

 
 

Available-for-sale investment securities:
 
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury securities
 
$
10,332

 
$
(1
)
 
$
20,479

 
$
(7
)
 
$
30,811

 
$
(8
)
U.S. government agency and U.S. government sponsored enterprise debt securities
 
180,594

 
(1,619
)
 
—

 
—

 
180,594

 
(1,619
)
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 

 
 

Commercial mortgage-backed securities
 
13,279

 
(63
)
 
21,500

 
(342
)
 
34,779

 
(405
)
Residential mortgage-backed securities
 
122,716

 
(520
)
 
69,189

 
(1,295
)
 
191,905

 
(1,815
)
Municipal securities
 
47,613

 
(1,028
)
 
14,536

 
(583
)
 
62,149

 
(1,611
)
Other residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 

 
 

Investment grade
 
7,289

 
(25
)
 
6,576

 
(91
)
 
13,865

 
(116
)
Corporate debt securities:
 
 
 
 
 
 
 
 
 
 

 
 

Investment grade
 
45,013

 
(87
)
 
90,114

 
(1,025
)
 
135,127

 
(1,112
)
Non-investment grade
 
—

 
—

 
10,524

 
(1,001
)
 
10,524

 
(1,001
)
Other securities
 
7,202

 
(6
)
 
8,601

 
(399
)
 
15,803

 
(405
)
Total available-for-sale investment securities
 
$
434,038

 
$
(3,349
)
 
$
241,519

 
$
(4,743
)
 
$
675,557

 
$
(8,092
)
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less Than 12 Months
 
12 Months or More
 
Total
($ in thousands)
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
 
Fair
Value
 
Gross
Unrealized
Losses
December 31, 2014
 
 

 
 

 
 

 
 

 
 

 
 

Available-for-sale investment securities:
 
 

 
 

 
 

 
 

 
 

 
 

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 available-for-sale investment securities
 
$
414,390

 
$
(2,051
)
 
$
718,223

 
$
(11,917
)
 
$
1,132,613

 
$
(13,968
)
 
 
 
 
 
 
 
 
 
 
 
 
 


For each reporting period, 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 corporate debt securities, residential mortgage-backed securities, and U.S. government agency and U.S. government sponsored enterprise debt securities. As of September 30, 2015, corporate debt securities, residential mortgage-backed securities, and U.S. government agency and U.S. government sponsored enterprise debt securities represented 5%, 26%, and 24%, respectively, of the total available-for-sale investment securities portfolio. As of December 31, 2014, corporate debt securities, residential agency mortgage-backed securities, and U.S. government agency and U.S. government sponsored enterprise debt securities represented 5%, 30%, and 12%, respectively, of the total available-for-sale investment securities portfolio. The unrealized losses on these securities were 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 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 three and nine months ended September 30, 2015 and 2014.

Available-for-Sale Investment Securities Maturities

The following table presents the scheduled maturities of available-for-sale investment securities as of September 30, 2015:
 
 
 
 
 
($ in thousands)
 
Amortized Cost
 
Fair Value
Due within one year
 
$
672,392

 
$
672,656

Due after one year through five years
 
994,971

 
1,000,431

Due after five years through ten years
 
339,821

 
339,094

Due after ten years
 
930,129

 
940,096

Total available-for-sale investment securities
 
$
2,937,313

 
$
2,952,277

 
 
 
 
 


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.

Available-for-sale investment securities with a par value of $974.7 million and $1.93 billion were pledged to secure public deposits, repurchase agreements, the Federal Reserve Bank’s discount window, or for other purposes required or permitted by law as of September 30, 2015 and December 31, 2014, respectively.