NOTE 3. SECURITIES AVAILABLE FOR SALE AND HELD TO MATURITY

The following is a summary of securities available for sale and held to maturity:

(In thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
March 31, 2015
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	149,454	$	6,391	$	(395	)	$	155,450
Government-guaranteed residential mortgage-backed securities	64,456		696		(113		)	65,039
Government-sponsored residential mortgage-backed securities	750,730		13,157		(1,466		)	762,421
Corporate bonds	55,560		411		(614		)	55,357
Trust preferred securities	12,773		736		(82		)	13,427
Other bonds and obligations	3,203		—		(7		)	3,196
Total debt securities	1,036,176		21,391		(2,677		)	1,054,890
Marketable equity securities	38,150		7,536		(920		)	44,766
Total securities available for sale	1,074,326		28,927		(3,597		)	1,099,656

Securities held to maturity
Municipal bonds and obligations	4,847		—		—			4,847
Government-sponsored residential mortgage-backed securities	70		5		—			75
Tax advantaged economic development bonds	37,570		1,921		—			39,491
Other bonds and obligations	331		—		—			331
Total securities held to maturity	42,818		1,926		—			44,744

Total	$	1,117,144	$	30,853	$	(3,597	)	$	1,144,400

December 31, 2014
Securities available for sale
Debt securities:
Municipal bonds and obligations	$	127,014	$	6,859	$	(174	)	$	133,699
Government-guaranteed residential mortgage-backed securities	68,972		702		(206		)	69,468
Government-sponsored residential mortgage-backed securities	755,893		7,421		(3,130		)	760,184
Corporate bonds	55,134		120		(1,103		)	54,151
Trust preferred securities	16,607		820		(1,212		)	16,215
Other bonds and obligations	3,211		—		(52		)	3,159
Total debt securities	1,026,831		15,922		(5,877		)	1,036,876
Marketable equity securities	48,993		7,322		(1,373		)	54,942
Total securities available for sale	1,075,824		23,244		(7,250		)	1,091,818

Securities held to maturity
Municipal bonds and obligations	4,997		—		—			4,997
Government-sponsored residential mortgage-backed securities	70		4		—			74
Tax advantaged economic development bonds	37,948		1,680		(34		)	39,594
Other bonds and obligations	332		—		—			332
Total securities held to maturity	43,347		1,684		(34		)	44,997

Total	$	1,119,171	$	24,928	$	(7,284	)	$	1,136,815

The amortized cost and estimated fair value of available for sale (“AFS”) and held to maturity (“HTM”) securities, segregated by contractual maturity at March 31, 2015 are presented below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations. Mortgage-backed securities are shown in total, as their maturities are highly variable. Equity securities have no maturity and are also shown in total.

	Available for sale				Held to maturity
	Amortized		Fair		Amortized		Fair
(In thousands)	Cost		Value		Cost		Value

Within 1 year	$	31,062	$	30,557	$	1,214	$	1,214
Over 1 year to 5 years	1,256		1,264		16,802		17,774
Over 5 years to 10 years	17,319		17,698		12,232		12,532
Over 10 years	171,353		177,911		12,500		13,149
Total bonds and obligations	220,990		227,430		42,748		44,669

Marketable equity securities	38,150		44,766		—		—
Residential mortgage-backed securities	815,186		827,460		70		75

Total	$	1,074,326	$	1,099,656	$	42,818	$	44,744

Securities with unrealized losses, segregated by the duration of their continuous unrealized loss positions, are summarized as follows:

	Less Than Twelve Months				Over Twelve Months				Total
	Gross				Gross				Gross
	Unrealized		Fair		Unrealized		Fair		Unrealized		Fair
(In thousands)	Losses		Value		Losses		Value		Losses		Value
March 31, 2015

Securities available for sale
Debt securities:
Municipal bonds and obligations	$	62	$	19,756	$	333	$	11,796	$	395	$	31,552
Government-guaranteed residential mortgage-backed securities	11		5,638		102		6,701		113		12,339
Government-sponsored residential mortgage-backed securities	—		—		1,466		142,786		1,466		142,786
Corporate bonds	614		33,680		—		—		614		33,680
Trust preferred securities	82		2,192		—		—		82		2,192
Other bonds and obligations	—		—		7		2,057		7		2,057
Total debt securities	769		61,266		1,908		163,340		2,677		224,606

Marketable equity securities	636		7,364		284		4,576		920		11,940
Total securities available for sale	1,405		68,630		2,192		167,916		3,597		236,546

Securities held to maturity
Tax advantaged economic development bonds	—		—		—		—		—		—
Total securities held to maturity	—		—		—		—		—		—

Total	$	1,405	$	68,630	$	2,192	$	167,916	$	3,597	$	236,546

December 31, 2014

Securities available for sale
Debt securities:
Municipal bonds and obligations	$	8	$	1,001	$	166	$	7,206	$	174	$	8,207
Government guaranteed residential mortgage-backed securities	46		7,122		160		16,727		206		23,849
Government-sponsored residential mortgage-backed securities	236		30,672		2,894		167,473		3,130		198,145
Corporate bonds	1,103		39,571		—		—		1,103		39,571
Trust preferred securities	65		935		1,147		2,408		1,212		3,343
Other bonds and obligations	—				52		3,035		52		3,035
Total debt securities	1,458		79,301		4,419		196,849		5,877		276,150

Marketable equity securities	1,039		9,902		334		4,755		1,373		14,657
Total securities available for sale	2,497		89,203		4,753		201,604		7,250		290,807

Securities held to maturity
Tax advantaged economic development bonds	—		—		34		7,972		34		7,972
Total securities held to maturity	—		—		34		7,972		34		7,972

Total	$	2,497	$	89,203	$	4,787	$	209,576	$	7,284	$	298,779

Debt Securities

The Company expects to recover its amortized cost basis on all debt securities in its AFS and HTM portfolios. Furthermore, the Company does not intend to sell nor does it anticipate that it will be required to sell any of its securities in an unrealized loss position as of March 31, 2015, prior to this recovery. The Company’s ability and intent to hold these securities until recovery is supported by the Company’s strong capital and liquidity positions as well as its historically low portfolio turnover. The following summarizes, by investment security type, the basis for the conclusion that the debt securities in an unrealized loss position within the Company’s AFS and HTM portfolios were not other-than-temporarily impaired at March 31, 2015:

AFS municipal bonds and obligations

At March 31, 2015, 28 of the total 190 securities in the Company’s portfolio of AFS municipal bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 1.2% of the amortized cost of securities in unrealized loss positions. The Company continually monitors the municipal bond sector of the market carefully and periodically evaluates the appropriate level of exposure to the market. At this time, the Company feels the bonds in this portfolio carry minimal risk of default and the Company is appropriately compensated for that risk. There were no material underlying credit downgrades during the first quarter of 2015. All securities are performing.

AFS residential mortgage-backed securities

At March 31, 2015, 36 out of the total 198 securities in the Company’s portfolios of AFS residential mortgage-backed securities were in unrealized loss positions. Aggregate unrealized losses represented 1.0% of the amortized cost of securities in unrealized loss positions. The Federal National Mortgage Association (“FNMA”), Federal Home Loan Mortgage Corporation (“FHLMC”) and Government National Mortgage Association (“GNMA”) guarantee the contractual cash flows of all of the Company’s residential mortgage-backed securities. The securities are investment grade rated and there were no material underlying credit downgrades during the past quarter. All securities are performing.

AFS corporate bonds

At March 31, 2015, 2 out of 6 securities in the Company’s portfolio of AFS corporate bonds were in an unrealized loss position. The aggregate unrealized loss represents 1.8% of the amortized cost of bonds in unrealized loss positions. The Company reviews the financial strength of all of these bonds and has concluded that the amortized cost remains supported by the expected future cash flows of these securities. Neither bond is investment grade rated.

At March 31, 2015, $0.5 million of the total unrealized losses was attributable to a $31.1 million investment. The Company evaluated this security, with a Level 2 fair value of $30.6 million, for potential other-than-temporary impairment (“OTTI”) at March 31, 2015 and determined that OTTI was not evident based on both the Company’s ability and intent to hold the security until the recovery of its remaining amortized cost.

AFS trust preferred securities

At March 31, 2015, 2 out of the 4 securities in the Company’s portfolio of AFS trust preferred securities were in unrealized loss positions. Aggregate unrealized losses represented 3.6% of the amortized cost of securities in unrealized loss positions. The Company’s evaluation of the present value of expected cash flows on these securities supports its conclusions about the recoverability of the securities’ amortized cost basis. Both securities are investment grade rated. The Company reviews the financial strength of all of the single issue trust issuers and has concluded that the amortized cost remains supported by the market value of these securities and they are performing.

AFS other bonds and obligations

At March 31, 2015, 4 of the total 8 securities in the Company’s portfolio of other bonds and obligations were in unrealized loss positions. Aggregate unrealized losses represented 0.4% of the amortized cost of securities in unrealized loss positions. The securities are investment grade rated and there were no material underlying credit downgrades during first quarter of 2015. All securities are performing.

Marketable Equity Securities

In evaluating its marketable equity securities portfolio for OTTI, the Company considers its ability to more likely than not hold an equity security to recovery. The Company additionally considers other various factors including the length of time and the extent to which the fair value has been less than cost and the financial condition and near term prospects of the issuer. Any OTTI is recognized immediately through earnings.

At March 31, 2015, 6 out of the total 29 securities in the Company’s portfolio of marketable equity securities were in an unrealized loss position. The unrealized loss represented 7.2% of the amortized cost of the securities. The Company has the ability and intent to hold the securities until recovery of their cost basis and does not consider the securities other-than-temporarily impaired at March 31, 2015. As new information becomes available in future periods, changes to the Company’s assumptions may be warranted and could lead to a different conclusion regarding the OTTI of these securities.