Note 3 Investment Securities

The Company’s investment securities portfolio is comprised of available-for-sale and held-to-maturity investment securities. These investment securities totaled $1.2 billion at March 31, 2017 and were comprised of $0.9 billion of available-for-sale securities and $0.3 billion of held-to-maturity securities. At December 31, 2016, investment securities totaled $1.2 billion and included $0.9 billion of available-for-sale securities and $0.3 billion of held-to-maturity securities.

Available-for-sale

At March 31, 2017 and December 31, 2016, the Company held $0.9 billion of available-for-sale investment securities. Available-for-sale securities are summarized as follows as of the dates indicated:


	March 31, 2017
	Amortized		Gross		Gross
	cost		unrealized gains		unrealized losses		Fair value
Mortgage-backed securities (“MBS”):
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	206,779	$	3,798	$	(543)	$	210,034
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		721,536		1,955		(15,282)		708,209
Municipal securities		3,228		—		(9)		3,219
Other securities		419		—		—		419
Total investment securities available-for-sale	$	931,962	$	5,753	$	(15,834)	$	921,881


	December 31, 2016
	Amortized		Gross		Gross
	cost		unrealized gains		unrealized losses		Fair value
Mortgage-backed securities (“MBS”):
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	223,781	$	3,909	$	(530)	$	227,160
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		666,616		2,124		(16,001)		652,739
Municipal securities		3,921		—		(7)		3,914
Other securities		419		—		—		419
Total investment securities available-for-sale	$	894,737	$	6,033	$	(16,538)	$	884,232

At March 31, 2017 and December 31, 2016, mortgage-backed securities represented primarily all of the Company’s available-for-sale investment portfolio and all mortgage-backed securities were backed by government sponsored enterprises (“GSE”) collateral such as Federal Home Loan Mortgage Corporation (“FHLMC”) and Federal National Mortgage Association (“FNMA”), and the government sponsored agency Government National Mortgage Association (“GNMA”).

The table below summarizes the available-for-sale securities with unrealized losses as of the dates shown, along with the length of the impairment period:


	March 31, 2017
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities (“MBS”):
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	92,828	$	(543)	$	—	$	—	$	92,828	$	(543)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		200,493		(3,023)		365,901		(12,259)		566,394		(15,282)
Municipal securities		3,058		(9)		—		—		3,058		(9)
Total	$	296,379	$	(3,575)	$	365,901	$	(12,259)	$	662,280	$	(15,834)


	December 31, 2016
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities (“MBS”):
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	100,898	$	(530)	$	—	$	—	$	100,898	$	(530)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		137,576		(2,976)		385,707		(13,025)		523,283		(16,001)
Municipal securities		3,058		(7)		—		—		3,058		(7)
Total	$	241,532	$	(3,513)	$	385,707	$	(13,025)	$	627,239	$	(16,538)

Management evaluated all of the available-for-sale securities in an unrealized loss position and concluded that no OTTI existed at March 31, 2017 or December 31, 2016. The unrealized losses in the Company's investments issued or guaranteed by U.S. government agencies or sponsored enterprises at March 31, 2017 were caused by changes in interest rates. The portfolio included 74 securities, having an aggregate fair value of $662.3 million, which were in an unrealized loss position at March 31, 2017, compared to 61 securities, with an aggregate fair value of $627.2 million at December 31, 2016. The Company has no intention to sell these securities before recovery of their amortized cost and believes it will not be required to sell the securities before the recovery of their amortized cost.

Certain securities are pledged as collateral for public deposits, securities sold under agreements to repurchase, and to secure borrowing capacity at the Federal Reserve Bank and the Federal Home Loan Bank (“FHLB”), if needed. The fair value of available-for-sale investment securities pledged as collateral totaled $272.1 million and $373.7 million at March 31, 2017 and December 31, 2016, respectively. Certain investment securities may also be pledged as collateral for the line of credit at the FHLB; at March 31, 2017 and December 31, 2016, no securities were pledged for this purpose.

Mortgage-backed securities do not have a single maturity date and actual maturities may differ from contractual maturities depending on the repayment characteristics and experience of the underlying financial instruments. The estimated weighted average life of the available-for-sale mortgage-backed securities portfolio was 3.5 years and 3.4 years at March 31, 2017 and December 31, 2016, respectively. This estimate is based on assumptions and actual results may differ. At March 31, 2017 and December 31, 2016, the duration of the total available-for-sale investment portfolio was 3.2 years.

As of March 31, 2017, municipal securities with an amortized cost and fair value of $2.3 million were due in one year, municipal securities with an amortized cost and fair value of $0.3 million were due after one year through five years, while municipal securities with an amortized cost and fair value of $0.6 million were due after five years through ten years. Other securities of $0.4 million as of March 31, 2017, have no stated contractual maturity date.

Held-to-maturity

At March 31, 2017 and December 31, 2016, the Company held $313.4 million and $332.5 million of held-to-maturity investment securities, respectively. Held-to-maturity investment securities are summarized as follows as of the dates indicated:


	March 31, 2017
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Mortgage-backed securities (“MBS”):
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	247,775	$	1,367	$	(202)	$	248,940
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		65,671		7		(1,348)		64,330
Total investment securities held-to-maturity	$	313,446	$	1,374	$	(1,550)	$	313,270


	December 31, 2016
			Gross		Gross
	Amortized		unrealized		unrealized
	cost		gains		losses		Fair value
Mortgage-backed securities (“MBS”):
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	263,411	$	1,685	$	(234)	$	264,862
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		69,094		16		(1,399)		67,711
Total investment securities held-to-maturity	$	332,505	$	1,701	$	(1,633)	$	332,573

The table below summarizes the held-to-maturity securities with unrealized losses as of the dates shown, along with the length of the impairment period:


	March 31, 2017
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities (“MBS”):
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	23,896	$	(202)	$	—	$	—	$	23,896	$	(202)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		25,504		(347)		30,768		(1,001)		56,272		(1,348)
Total	$	49,400	$	(549)	$	30,768	$	(1,001)	$	80,168	$	(1,550)


	December 31, 2016
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	value		losses		value		losses		value		losses
Mortgage-backed securities (“MBS”):
Residential mortgage pass-through securities issued or guaranteed by U.S. Government agencies or sponsored enterprises	$	27,799	$	(234)	$	—	$	—	$	27,799	$	(234)
Other residential MBS issued or guaranteed by U.S. Government agencies or sponsored enterprises		26,992		(357)		32,146		(1,042)		59,138		(1,399)
Total	$	54,791	$	(591)	$	32,146	$	(1,042)	$	86,937	$	(1,633)

The held-to-maturity portfolio included 14 securities, having an aggregate fair value of $80.2 million, which were in an unrealized loss position at March 31, 2017, compared to 15 securities, with a fair value of $86.9 million, at December 31, 2016.

Management evaluated all of the held-to-maturity securities in an unrealized loss position and concluded that no OTTI existed at March 31, 2017 or December 31, 2016. The unrealized losses in the Company's investments issued or guaranteed by U.S. government agencies or sponsored enterprises at March 31, 2017 were caused by changes in interest rates. The Company has no intention to sell these securities before recovery of their amortized cost and believes it will not be required to sell the securities before the recovery of their amortized cost.

The carrying value of held-to-maturity investment securities pledged as collateral totaled $136.7 million and $119.2 million at March 31, 2017 and December 31, 2016, respectively.

Actual maturities of mortgage-backed securities may differ from scheduled maturities depending on the repayment characteristics and experience of the underlying financial instruments. The estimated weighted average expected life of the held-to-maturity mortgage-backed securities portfolio as of March 31, 2017 and December 31, 2016 was 3.3 years and 3.5 years, respectively. This estimate is based on assumptions and actual results may differ. The duration of the total held-to-maturity investment portfolio was 3.1 years and 3.2 years as of March 31, 2017 and December 31, 2016, respectively.