Investment Securities

At March 31, 2015, the Company had $1.05 billion and $473.7 million in available for sale and held to maturity investment securities, respectively. Many factors, including lack of liquidity in the secondary market for certain securities, variations in pricing information, regulatory actions, changes in the business environment or any changes in the competitive marketplace could have an adverse effect on the Company’s investment portfolio which could result in other-than-temporary impairment on certain investment securities in future periods. The total number of held to maturity and available for sale securities in an unrealized loss position as of March 31, 2015 totaled 131, compared with 206 at December 31, 2014. All securities with unrealized losses at March 31, 2015 were analyzed for other-than-temporary impairment. Based upon this analysis, the Company believes that as of March 31, 2015, such securities with unrealized loss positions do not represent impairments that are other-than-temporary.

Securities Available for Sale

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the fair value for securities available for sale at March 31, 2015 and December 31, 2014 (in thousands):



	March 31, 2015
	Amortized cost		Gross unrealized gains	Gross unrealized losses		Fair value
US Treasury obligations	$	8,013	58	—		8,071
Agency obligations	94,719		442	(4	)	95,157
Mortgage-backed securities	913,848		19,120	(855	)	932,113
State and municipal obligations	5,934		149	—		6,083
Corporate obligations	5,517		87	(8	)	5,596
Equity securities	397		142	—		539
	$	1,028,428	19,998	(867	)	1,047,559



	December 31, 2014
	Amortized cost		Gross unrealized gains	Gross unrealized losses		Fair value
US Treasury obligations	$	8,016	3	(3	)	8,016
Agency obligations	94,871		268	(63	)	95,076
Mortgage-backed securities	944,796		15,610	(3,149	)	957,257
State and municipal obligations	6,855		147	—		7,002
Corporate obligations	6,526		9	(15	)	6,520
Equity securities	397		127	—		524
	$	1,061,461	16,164	(3,230	)	1,074,395

The amortized cost and fair value of securities available for sale at March 31, 2015, by contractual maturity, are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.



	March 31, 2015
	Amortized cost		Fair value
Due in one year or less	$	30,687	30,771
Due after one year through five years	77,505		77,984
Due after five years through ten years	3,017		3,102
Due after ten years	2,974		3,050
	$	114,183	114,907

Mortgage-backed securities totaling $913.8 million at amortized cost and $932.1 million at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments. Also excluded from the table above are equity securities of $397,000 at amortized cost and $539,000 at fair value.

There were no sales of securities from the available for sale portfolio during the three months ended March 31, 2015. For the same period last year, proceeds from the sale of securities available for sale were $6,085,000, resulting in gross losses of $365,000 and no gross gains. Also, for the three months ended March 31, 2015, proceeds from calls on securities available for sale totaled $465,000, resulting in gross gains of $2,000 and no gross losses. For the three months ended March 31, 2014, proceeds from calls on securities available for sale totaled $740,000 resulting in gross gains of $2,000 and no gross losses.

The following table presents a roll-forward of the credit loss component of other-than-temporary impairment (“OTTI”) on debt securities for which a non-credit component of OTTI was recognized in other comprehensive income. OTTI recognized in earnings for credit-impaired debt securities is presented in two components based upon whether the current period is the first time a debt security was credit-impaired (initial credit impairment), or whether the current period is not the first time a debt security was credit-impaired (subsequent credit impairment). Changes in the credit loss component of credit-impaired debt securities were as follows (in thousands):



	Three months ended March 31,
	2015		2014
Beginning credit loss amount	$	—	1,674
Add: Initial OTTI credit losses	—		—
Subsequent OTTI credit losses	—		—
Less: Realized losses for securities sold	—		1,540
Securities intended or required to be sold	—		—
Increases in expected cash flows on debt securities	—		—
Ending credit loss amount	$	—	134

The Company did not incur an OTTI charge on securities in the available for sale portfolio for the three months ended March 31, 2015 or 2014. For the three months ended March 31, 2014, the Company realized a $365,000 loss on the sale of a previously impaired non-agency mortgage-backed security, and had previously incurred cumulative credit losses of $1.5 million on this security.

The following tables represent the Company’s disclosure regarding securities available for sale with temporary impairment at March 31, 2015 and December 31, 2014 (in thousands):



	March 31, 2015 Unrealized Losses
	Less than 12 months				12 months or longer			Total
	Fair value		Gross unrealized losses		Fair value	Gross unrealized losses		Fair value	Gross unrealized losses
Agency obligations	8,092		(4	)	—	—		8,092	(4	)
Mortgage-backed securities	97,490		(350	)	54,204	(505	)	151,694	(855	)
Corporate obligations	995		(8	)	—	—		995	(8	)
	$	106,577	(362	)	54,204	(505	)	160,781	(867	)



	December 31, 2014 Unrealized Losses
	Less than 12 months				12 months or longer				Total
	Fair value		Gross unrealized losses		Fair value	Gross unrealized losses			Fair value	Gross unrealized losses
US Treasury obligations	$	5,937	(3	)	—	—		5,937,000	5,937	(3	)
Agency obligations	$	24,404	(40	)	5,010	(23	)		29,414	(63	)
Mortgage-backed securities	55,488		(221	)	206,669	(2,928	)		262,157	(3,149	)
Corporate obligations	3,466		(15	)	—	—		3,466,000	3,466	(15	)
	$	89,295	(279	)	211,679	(2,951	)		300,974	(3,230	)

The temporary loss position associated with securities available for sale was the result of changes in market interest rates relative to the coupon of the individual security and changes in credit spreads. The Company does not have the intent to sell securities in a temporary loss position at March 31, 2015, nor is it more likely than not that the Company will be required to sell the securities before their prices recover.

The number of available for sale securities in an unrealized loss position at March 31, 2015 totaled 21, compared with 43 at December 31, 2014. At March 31, 2015, there were four private label mortgage-backed securities in an unrealized loss position, with an amortized cost of $3,003,000 and an unrealized loss of $21,000. These private label mortgage-backed securities were above investment grade at March 31, 2015.

The Company estimates the loss projections for each security by stressing the individual loans collateralizing the security and applying a range of expected default rates, loss severities, and prepayment speeds in conjunction with the underlying credit enhancement for each security. Based on specific assumptions about collateral and vintage, a range of possible cash flows was identified to determine whether other-than-temporary impairment existed during the three months ended March 31, 2015. The Company believes that no other-than-temporary impairment of the securities available for sale portfolio existed at March 31, 2015.

Investment Securities Held to Maturity

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and the estimated fair value for investment securities held to maturity at March 31, 2015 and December 31, 2014 (in thousands):



	March 31, 2015
	Amortized cost		Gross unrealized gains	Gross unrealized losses		Fair value
Agency obligations	$	7,131	21	(9	)	7,143
Mortgage-backed securities	2,511		109	—		2,620
State and municipal obligations	453,339		14,715	(933	)	467,121
Corporate obligations	10,723		65	(1	)	10,787
	$	473,704	14,910	(943	)	487,671

	December 31, 2014
	Amortized cost		Gross unrealized gains	Gross unrealized losses		Fair value
Agency obligations	$	6,813	17	(20	)	6,810
Mortgage-backed securities	2,816		123	—		2,939
State and municipal obligations	449,410		13,814	(986	)	462,238
Corporate obligations	10,489		29	(32	)	10,486
	$	469,528	13,983	(1,038	)	482,473

The Company generally purchases securities for long-term investment purposes, and differences between amortized cost and fair values may fluctuate during the investment period. For the three months ended March 31, 2015, proceeds from calls on securities available for sale totaled $4,073,000, with no gross gains or losses recognized. For the three months ended March 31, 2014, the Company recognized gains of $13,000 and no gross losses related to calls of certain securities in the held to maturity portfolio, with proceeds from the calls totaling $6,395,000. There were no sales of securities from the held to maturity portfolio for the three months ended March 31, 2015 and 2014.

The amortized cost and fair value of investment securities in the held to maturity portfolio at March 31, 2015 by contractual maturity are shown below (in thousands). Expected maturities may differ from contractual maturities due to prepayment or early call privileges of the issuer.



	March 31, 2015
	Amortized cost		Fair value
Due in one year or less	$	8,452	8,503
Due after one year through five years	59,079		60,587
Due after five years through ten years	186,690		194,565
Due after ten years	216,972		221,396
	$	471,193	485,051

Mortgage-backed securities totaling $2.5 million at amortized cost and $2.6 million at fair value are excluded from the table above as their expected lives are likely to be shorter than the contractual maturity date due to principal prepayments.

The following tables represent the Company’s disclosure on investment securities held to maturity with temporary impairment at March 31, 2015 and December 31, 2014 (in thousands):



	March 31, 2015 Unrealized Losses
	Less than 12 months				12 months or longer			Total
	Fair value		Gross unrealized losses		Fair value	Gross unrealized losses		Fair value	Gross unrealized losses
Agency obligations	$	299	(1	)	1,972	(8	)	2,271	(9	)
State and municipal obligations	42,209		(470	)	16,422	(463	)	58,631	(933	)
Corporate obligations	250		—		501	(1	)	751	(1	)
	$	42,758	(471	)	18,895	(472	)	61,653	(943	)



	December 31, 2014 Unrealized Losses
	Less than 12 months				12 months or longer			Total
	Fair value		Gross unrealized losses		Fair value	Gross unrealized losses		Fair value	Gross unrealized losses
Agency obligations	$	3,735	(20	)	—	—		3,735	(20	)
State and municipal obligations	27,679		(217	)	47,079	(769	)	74,758	(986	)
Corporate obligations	6,888		(32	)	—	—		6,888	(32	)
	$	38,302	(269	)	47,079	(769	)	85,381	(1,038	)

Based upon the review of the held to maturity securities portfolio, the Company believes that as of March 31, 2015, securities with unrealized loss positions shown above do not represent impairments that are other-than-temporary. The review of the portfolio for other-than-temporary impairment considers the percentage and length of time the fair value of an investment is below book value, as well as general market conditions, changes in interest rates, credit risks, whether the Company has the intent to sell the securities and whether it is more likely than not that the Company would be required to sell the securities before their prices recover.

The number of securities in an unrealized loss position at March 31, 2015 totaled 110, compared with 163 at December 31, 2014. The decrease in the number of securities in an unrealized loss position at March 31, 2015, was largely due to a reduction in market interest rates from December 31, 2014. All temporarily impaired investment securities were investment grade at March 31, 2015.