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Investment Securities
 9 Months Ended
Sep. 30, 2016
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
Investment Securities
At September 30, 2016, the Company had $1.03 billion and $476.4 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 ("OTTI") 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 September 30, 2016 totaled 76, compared with 163 at December 31, 2015. All securities with unrealized losses at September 30, 2016 were analyzed for other-than-temporary impairment. Based upon this analysis, the Company believes that as of September 30, 2016, such securities with unrealized losses 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 September 30, 2016 and December 31, 2015 (in thousands):
 

September 30, 2016
 

Amortized
cost

Gross
unrealized
gains

Gross
unrealized
losses
 
Fair
value
US Treasury obligations
 
$
7,998

 
33

 
—

 
8,031

Agency obligations

69,169


221


—

 
69,390

Mortgage-backed securities

915,693


20,275


(187
)
 
935,781

State and municipal obligations

4,162


191


—

 
4,353

Corporate obligations
 
14,014

 
127

 
(9
)
 
14,132

Equity securities

397


151


—

 
548

 

$
1,011,433


20,998


(196
)
 
1,032,235

 
 
December 31, 2015
 
 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Fair
value
US Treasury obligations
 
$
8,006

 
—

 
(2
)
 
8,004

Agency obligations
 
82,396

 
82

 
(148
)
 
82,330

Mortgage-backed securities
 
857,430

 
9,828

 
(3,397
)
 
863,861

State and municipal obligations
 
4,193

 
115

 
—

 
4,308

Corporate obligations
 
5,516

 
6

 
(10
)
 
5,512

Equity securities
 
397

 
122

 
—

 
519

 
 
$
957,938

 
10,153

 
(3,557
)
 
964,534


The amortized cost and fair value of securities available for sale at September 30, 2016, 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.
 
 
September 30, 2016
 
 
Amortized
cost
 
Fair
value
Due in one year or less
 
$
43,489

 
43,565

Due after one year through five years
 
35,924

 
36,103

Due after five years through ten years
 
15,930

 
16,238

Due after ten years
 
—

 
—

 
 
$
95,343

 
95,906


Mortgage-backed securities totaling $915.7 million at amortized cost and $935.8 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 $548,000 at fair value.
For the three months ended September 30, 2016, proceeds from sales on securities available for sale totaled $1.2 million resulting in no gross gains and $45,000 of gross losses. No securities were sold from the available for sale portfolio during the three months ended September 30, 2015.
For the nine months ended September 30, 2016, proceeds from the sale of securities available for sale were $3.4 million, resulting in gross gains of $95,000 and gross losses of $45,000. For the same period last year, proceeds from the sale of securities available for sale were $14.0 million, resulting in gross gains of $643,000 and no gross losses. For the nine months ended September 30, 2016, there were no calls of securities in the available for sale portfolio. For the same period last year, proceeds from calls on securities available for sale totaled $465,000, resulting in gross gains of $2,000 and no gross losses.
The Company did not incur an OTTI charge on securities in the available for sale portfolio for the three and nine months ended September 30, 2016 and 2015.
The following tables represent the Company’s disclosure regarding securities available for sale with temporary impairment at September 30, 2016 and December 31, 2015 (in thousands):
 

September 30, 2016 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
Mortgage-backed securities

$
61,786

 
(181
)
 
398

 
(6
)
 
62,184

 
(187
)
Corporate obligations
 
—

 
—

 
992

 
(9
)
 
992

 
(9
)


$
61,786

 
(181
)
 
1,390

 
(15
)
 
63,176

 
(196
)
 

December 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
U.S. Treasury obligations
 
$
8,004

 
(2
)
 
—

 
—

 
8,004

 
(2
)
Agency obligations
 
59,197

 
(148
)
 
—

 
—

 
59,197

 
(148
)
Mortgage-backed securities
 
327,263

 
(2,427
)
 
47,911

 
(970
)
 
375,174

 
(3,397
)
Corporate obligations
 
500

 
—

 
992

 
(10
)
 
1,492

 
(10
)


$
394,964

 
(2,577
)
 
48,903

 
(980
)
 
443,867

 
(3,557
)

The temporary loss position associated with certain 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 September 30, 2016, 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 September 30, 2016 totaled 16, compared with 64 at December 31, 2015. At September 30, 2016, there were three private label mortgage-backed securities in an unrealized loss position, with an amortized cost of $523,000 and an unrealized loss of $6,000. None of these private label mortgage-backed securities were below investment grade at September 30, 2016.
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 OTTI existed during the nine months ended September 30, 2016. The Company believes that no OTTI of the securities available for sale portfolio existed for the three and nine months ended September 30, 2016.
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 September 30, 2016 and December 31, 2015 (in thousands):
 
 
September 30, 2016
 
 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Fair
value
Agency obligations

$
2,688

 
3

 
(3
)
 
2,688

Mortgage-backed securities

1,037

 
42

 
—

 
1,079

State and municipal obligations

462,603

 
19,411

 
(320
)
 
481,694

Corporate obligations

10,031

 
31

 
(7
)
 
10,055

 

$
476,359

 
19,487

 
(330
)
 
495,516

 
 
 
 
 
 
 
 
 

 
 
December 31, 2015
 
 
Amortized
cost
 
Gross
unrealized
gains
 
Gross
unrealized
losses
 
Fair
value
Agency obligations
 
$
4,096

 
9

 
(8
)
 
4,097

Mortgage-backed securities
 
1,597

 
61

 
—

 
1,658

State and municipal obligations
 
458,062

 
15,094

 
(495
)
 
472,661

Corporate obligations
 
9,929

 
11

 
(25
)
 
9,915

 
 
$
473,684

 
15,175

 
(528
)
 
488,331


The Company generally purchases securities for long-term investment purposes, and differences between amortized cost and fair values may fluctuate during the investment period. There were no sales of securities from the held to maturity portfolio for the three and nine months ended September 30, 2016 and 2015. For the three and nine months ended September 30, 2016, proceeds from calls on certain securities in the held to maturity portfolio totaled $20.3 million and $35.2 million, respectively, with gross gains recognized of $2,000 and $4,000, respectively and no gross losses in either period. For the three and nine months ended September 30, 2015, proceeds from calls of certain securities in the held to maturity portfolio totaled $8.0 million and $21.2 million, respectively, with gross gains totaling $5,000 and no gross losses recognized in either period.
The amortized cost and fair value of investment securities in the held to maturity portfolio at September 30, 2016 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.
 
 
September 30, 2016
 
 
Amortized
cost
 
Fair
value
Due in one year or less

$
14,256

 
14,296

Due after one year through five years

50,309

 
51,462

Due after five years through ten years

238,948

 
250,709

Due after ten years

171,809

 
177,970



$
475,322

 
494,437


Mortgage-backed securities totaling $1.0 million at amortized cost and $1.1 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.
The following tables represent the Company’s disclosure on investment securities held to maturity with temporary impairment at September 30, 2016 and December 31, 2015 (in thousands):
 
 
September 30, 2016 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

$
1,697

 
(3
)
 
—

 
—

 
1,697

 
(3
)
State and municipal obligations

19,572

 
(165
)
 
6,815

 
(155
)
 
26,387

 
(320
)
Corporate obligations

3,452

 
(7
)
 
—

 
—

 
3,452

 
(7
)
 

$
24,721

 
(175
)
 
6,815

 
(155
)
 
31,536

 
(330
)
 
 
December 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
 
$
1,244

 
(6
)
 
278

 
(2
)
 
1,522

 
(8
)
State and municipal obligations
 
24,266

 
(165
)
 
17,746

 
(330
)
 
42,012

 
(495
)
Corporate obligations
 
5,840

 
(18
)
 
744

 
(7
)
 
6,584

 
(25
)
 
 
$
31,350

 
(189
)
 
18,768

 
(339
)
 
50,118

 
(528
)

Based upon the review of the held to maturity securities portfolio, the Company believes that as of September 30, 2016, securities with unrealized loss positions shown above do not represent impairments that are other-than-temporary. The review of the portfolio for OTTI 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 held to maturity securities in an unrealized loss position at September 30, 2016 totaled 60, compared with 99 at December 31, 2015. The decrease in the number of securities in an unrealized loss position at September 30, 2016, was largely due to a decrease in market interest rates from December 31, 2015. All temporarily impaired investment securities were investment grade at September 30, 2016.