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INVESTMENT SECURITIES
 6 Months Ended
Jun. 30, 2016
Investments, Debt and Equity Securities [Abstract]  
INVESTMENT SECURITIES
NOTE 5 — INVESTMENT SECURITIES

The following table presents the amortized cost, gross unrealized gains and losses and fair value by major categories of available-for-sale investment securities, which are carried at fair value, and a held-to-maturity investment security, which is carried at amortized cost:
 
($ in thousands)
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair
Value
As of June 30, 2016
 
 

 
 

 
 

 
 

Available-for-sale investment securities:
 
 

 
 

 
 

 
 

U.S. Treasury securities
 
$
485,137

 
$
3,423

 
$
—

 
$
488,560

U.S. government agency and U.S. government sponsored enterprise debt securities
 
701,085

 
3,035

 
(191
)
 
703,929

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

 
 

 
 

 
 

Commercial mortgage-backed securities
 
305,724

 
3,443

 
(803
)
 
308,364

Residential mortgage-backed securities
 
1,050,583

 
10,041

 
(1,723
)
 
1,058,901

Municipal securities
 
149,711

 
4,246

 
(54
)
 
153,903

Non-agency residential mortgage-backed securities:
 
 
 
 
 
 
 
 

Investment grade (1)
 
54,728

 
1,276

 
(29
)
 
55,975

Corporate debt securities:
 
 
 
 
 
 
 
 

Investment grade (1)
 
418,104

 
475

 
(1,715
)
 
416,864

Non-investment grade (1)
 
10,191

 
—

 
(1,783
)
 
8,408

Other securities
 
44,785

 
706

 
(63
)
 
45,428

Total available-for-sale investment securities
 
3,220,048

 
26,645

 
(6,361
)
 
3,240,332

 
 
 
 
 
 
 
 
 
Held-to-maturity investment security:
 
 
 
 
 
 
 
 
Non-agency commercial mortgage-backed security
 
159,208

 
—

 
(929
)
 
158,279

Total investment securities
 
$
3,379,256

 
$
26,645

 
$
(7,290
)
 
$
3,398,611

 
 
 
 
 
 
 
 
 
As of December 31, 2015
 
 

 
 

 
 

 
 

Available-for-sale investment securities:
 
 

 
 

 
 

 
 

U.S. Treasury securities
 
$
1,002,874

 
$
33

 
$
(4,392
)
 
$
998,515

U.S. government agency and U.S. government sponsored enterprise debt securities
 
771,288

 
555

 
(2,994
)
 
768,849

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

 
 

 
 

 
 

Commercial mortgage-backed securities
 
354,418

 
268

 
(3,024
)
 
351,662

Residential mortgage-backed securities
 
996,255

 
7,542

 
(6,401
)
 
997,396

Municipal securities
 
173,785

 
2,657

 
(793
)
 
175,649

Non-agency residential mortgage-backed securities:
 
 
 
 
 
 
 
 

Investment grade (1)
 
62,133

 
433

 
(173
)
 
62,393

Corporate debt securities:
 
 
 
 
 
 
 
 

Investment grade (1)
 
366,921

 
132

 
(2,340
)
 
364,713

Non-investment grade (1)
 
11,491

 
—

 
(1,849
)
 
9,642

Other securities
 
44,664

 
124

 
(381
)
 
44,407

Total available-for-sale investment securities
 
$
3,783,829

 
$
11,744

 
$
(22,347
)
 
$
3,773,226

 
 
 
 
 
 
 
 
 
(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. Classifications are based on the lower of the credit ratings by S&P or Moody’s.

Unrealized Losses

The following table presents 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:
 
($ in thousands)
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
As of June 30, 2016
 
 

 
 

 
 

 
 

 
 

 
 

Available-for-sale investment securities:
 
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury securities
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

U.S. government agency and U.S. government sponsored enterprise debt securities
 
85,210

 
(191
)
 
—

 
—

 
85,210

 
(191
)
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 
 

 
 

 
 

 
 

 
 

 
 

Commercial mortgage-backed securities
 
50,477

 
(476
)
 
24,377

 
(327
)
 
74,854

 
(803
)
Residential mortgage-backed securities
 
295,399

 
(1,097
)
 
26,327

 
(626
)
 
321,726

 
(1,723
)
Municipal securities
 
4,398

 
(50
)
 
2,896

 
(4
)
 
7,294

 
(54
)
Non-agency residential mortgage-backed securities:
 
 

 
 

 
 

 
 

 
 

 
 

Investment grade
 
7,470

 
(29
)
 
—

 
—

 
7,470

 
(29
)
Corporate debt securities:
 
 

 
 

 
 

 
 

 
 

 
 

Investment grade
 
149,452

 
(533
)
 
91,236

 
(1,182
)
 
240,688

 
(1,715
)
Non-investment grade
 
—

 
—

 
8,408

 
(1,783
)
 
8,408

 
(1,783
)
Other securities
 
4,500

 
(1
)
 
8,938

 
(62
)
 
13,438

 
(63
)
Total available-for-sale investment securities
 
$
596,906

 
$
(2,377
)
 
$
162,182

 
$
(3,984
)
 
$
759,088

 
$
(6,361
)
Held-to-maturity investment security:
 
 
 
 
 
 
 
 
 
 
 
 
Non-agency commercial mortgage-backed security
 
158,279

 
$
(929
)
 
—

 
—

 
158,279

 
(929
)
Total investment securities
 
$
755,185

 
$
(3,306
)
 
$
162,182

 
$
(3,984
)
 
$
917,367

 
$
(7,290
)
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2015
 
 

 
 

 
 

 
 

 
 

 
 

Available-for-sale investment securities:
 
 

 
 

 
 

 
 

 
 

 
 

U.S. Treasury securities
 
$
907,400

 
$
(4,250
)
 
$
20,282

 
$
(142
)
 
$
927,682

 
$
(4,392
)
U.S. government agency and U.S. government sponsored enterprise debt securities
 
541,385

 
(2,994
)
 
—

 
—

 
541,385

 
(2,994
)
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 

 
 

Commercial mortgage-backed securities
 
252,340

 
(2,562
)
 
20,793

 
(462
)
 
273,133

 
(3,024
)
Residential mortgage-backed securities
 
535,842

 
(4,530
)
 
58,315

 
(1,871
)
 
594,157

 
(6,401
)
Municipal securities
 
48,495

 
(437
)
 
14,739

 
(356
)
 
63,234

 
(793
)
Non-agency residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 

 
 

Investment grade
 
5,123

 
(1
)
 
6,242

 
(172
)
 
11,365

 
(173
)
Corporate debt securities:
 
 
 
 
 
 
 
 
 
 

 
 

Investment grade
 
218,944

 
(1,189
)
 
89,989

 
(1,151
)
 
308,933

 
(2,340
)
Non-investment grade
 
—

 
—

 
9,642

 
(1,849
)
 
9,642

 
(1,849
)
Other securities
 
17,990

 
(112
)
 
8,731

 
(269
)
 
26,721

 
(381
)
Total available-for-sale investment securities
 
$
2,527,519

 
$
(16,075
)
 
$
228,733

 
$
(6,272
)
 
$
2,756,252

 
$
(22,347
)
 

  
For each reporting period, the Company examines all individual securities that are in an unrealized loss position for OTTI.  For discussion of the factors and criteria the Company uses in analyzing securities for OTTI, please see Note 1 — Summary of Significant Accounting Policies to the Consolidated Financial Statements of the Company’s 2015 Form 10-K.

The unrealized losses were primarily attributed to the widened liquidity spread and credit spread in addition to yield curve movement. 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.

The Company believes the gross unrealized losses detailed in the previous tables are temporary and are not due to reasons of credit quality. As a result, the Company expects to recover the entire amortized cost basis of these securities. Accordingly, no impairment loss has been recorded in the Company’s Consolidated Statements of Income for the three and six months ended June 30, 2016 and 2015.

During the first quarter of 2016, the Company obtained a non-agency mortgage-backed investment security, through a securitization of multifamily real estate loans, which was classified as held-to-maturity and is measured at amortized cost. The Company has the intent and ability to hold the security to maturity. For detailed discussion, please refer to Note 7 — Loans Receivable And Allowance For Credit Losses to the Consolidated Financial Statements.

OTTI

The following table presents a rollforward of the amounts related to the OTTI credit losses recognized in earnings for the three and six months ended June 30, 2016 and 2015:
 
 
 
 
 
 
 
 
 
($ in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Beginning balance
 
$
—

 
$
106,688

 
$
—

 
$
112,338

Addition of OTTI previously not recognized
 
—

 
—

 
—

 
—

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

 
—

 
—

 
—

Reduction for securities sold
 
—

 
—

 
—

 
(5,650
)
Ending balance
 
$
—

 
$
106,688

 
$
—

 
$
106,688

 


No OTTI credit losses were recognized for the three and six months ended June 30, 2016 and 2015. There were no sales of any investment securities with previously recognized OTTI credit losses for the three months ended June 30, 2016 and 2015. For the six months ended June 30, 2015, the Company realized a gain of $960 thousand from the sale of a non-investment grade corporate debt security with previously recognized OTTI credit losses of $5.7 million. There were no sale transactions of any investment securities with previously recognized OTTI credit losses for the six months ended June 30, 2016.

Realized Gains and Losses

The following table presents the proceeds, gross realized gains and losses related to the sales of available-for-sale investment securities for the three and six months ended June 30, 2016 and 2015:
 
($ in thousands)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2016
 
2015
 
2016
 
2015
Proceeds from sales
 
$
211,990

 
$
292,561

 
$
864,743

 
$
473,062

Gross realized gains
 
$
2,836

 
$
5,554

 
$
6,803

 
$
9,958

Gross realized losses
 
$
—

 
$
—

 
$
125

 
$
—

Related tax expense
 
$
1,192

 
$
2,333

 
$
2,808

 
$
4,182

 


There were no sales of held-to-maturity investment securities for the three and six months ended June 30, 2016 and 2015.

Scheduled Maturities of Investment Securities
 
The following table presents the scheduled maturities of available-for-sale investment securities as of June 30, 2016:
 
($ in thousands)
 
Amortized
Cost
 
Estimated
Fair Value
Due within one year
 
$
854,642

 
$
854,787

Due after one year through five years
 
625,607

 
633,105

Due after five years through ten years
 
350,091

 
352,152

Due after ten years
 
1,389,708

 
1,400,288

Total available-for-sale investment securities
 
$
3,220,048

 
$
3,240,332

 

The following table presents the scheduled maturity of the held-to-maturity investment security as of June 30, 2016:
 
($ in thousands)
 
Amortized
Cost
 
Estimated
Fair Value
Due after ten years
 
$
159,208

 
$
158,279

 


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 fair values of $1.06 billion and $873.0 million as of June 30, 2016 and December 31, 2015, respectively, were pledged to secure public deposits, repurchase agreements, the Federal Reserve Bank’s discount window, and for other purposes required or permitted by law.