Securities Available for Sale

The amortized cost and approximate fair value of investments in securities, all of which are classified as available for sale according to management’s intent, are summarized as follows:



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(dollars in thousands)
As of December 31, 2016
U.S. Treasury securities	$	227,265	$	1,417	$	(15	)	$	228,667
Mortgage-backed securities:
Government National Mortgage Association	633,330		485		(8,123		)	625,692
Federal National Mortgage Association	281,741		—		(3,179		)	278,562
Small Business Assistance Program	167,328		283		(1,653		)	165,958
States and political subdivision securities	68,410		2		(1,808		)	66,604
Corporate debt securities	4,998		24		—			5,022
Other	1,013		40		—			1,053
Total	$	1,384,085	$	2,251	$	(14,778	)	$	1,371,558



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
	(dollars in thousands)
As of September 30, 2016
U.S. Treasury securities	$	227,007	$	3,973	$	—		$	230,980
U.S. Agency securities	—		—		—			—
Mortgage-backed securities:
Government National Mortgage Association	664,529		3,172		(1,922		)	665,779
Federal National Mortgage Association	212,452		1,324		—			213,776
Small Business Assistance Program	142,921		2,362		—			145,283
States and political subdivision securities	55,525		123		(164		)	55,484
Corporate debt securities	4,998		24		—			5,022
Other	1,013		49		—			1,062
Total	$	1,308,445	$	11,027	$	(2,086	)	$	1,317,386

The amortized cost and approximate fair value of debt securities available for sale as of December 31, 2016 and September 30, 2016, by contractual maturity, are shown below. Maturities of mortgage-backed securities may differ from contractual maturities because the mortgages underlying the securities may be called or repaid without penalty.



	December 31, 2016				September 30, 2016
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
	(dollars in thousands)
Due in one year or less	$	5,182	$	5,173	$	3,706	$	3,709
Due after one year through five years	274,901		275,386		265,253		269,242
Due after five years through ten years	20,468		19,612		18,449		18,413
Due after ten years	122		122		122		122
	300,673		300,293		287,530		291,486
Mortgage-backed securities	1,082,399		1,070,212		1,019,902		1,024,838
Securities without contractual maturities	1,013		1,053		1,013		1,062
Total	$	1,384,085	$	1,371,558	$	1,308,445	$	1,317,386

Proceeds from sales of securities available for sale were $0.0 million for the three months ended December 31, 2016 and 2015, respectively. Gross gains (pre-tax) of $0.0 million and gross losses (pre-tax) of $0.0 million were realized on the sales for the three months ended December 31, 2016 and 2015, respectively, using the specific identification method. The Company recognized no other-than-temporary impairment for the three months ended December 31, 2016. The Company recognized an other-than-temporary impairment in net loss on sale of securities in the consolidated statements of comprehensive income of $0.4 million on two security holdings attributable to credit for the three months ended December 31, 2015.

Securities with an estimated fair value of approximately $952.0 million and $971.3 million at December 31, 2016 and September 30, 2016, respectively, were pledged as collateral on public deposits, securities sold under agreements to repurchase, and for other purposes as required or permitted by law. The counterparties do not have the right to sell or pledge the securities the Company has pledged as collateral.

As detailed in the following tables, certain investments in debt securities, which are approximately 76% and 25% of the Company’s investment portfolio at December 31, 2016 and September 30, 2016, respectively, are reported in the consolidated financial statements at an amount less than their amortized cost. Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information, implicit or explicit government guarantees, and information obtained from regulatory filings, management believes the declines in fair value of these securities are temporary. As the Company does not intend to sell the securities and it is not more likely than not that the Company will be required to sell the securities before the recovery of their amortized cost basis, which may be maturity, the Company does not consider the securities to be other-than-temporarily impaired at December 31, 2016 or September 30, 2016.

The following table presents the Company’s gross unrealized losses and approximate fair value in investments, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:



						December 31, 2016
	Less than 12 months					12 months or more					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(dollars in thousands)
U.S. Treasury securities	$	—	$	—		$	9,463	$	(15	)	$	9,463	$	(15	)
Mortgage-backed securities	320,099		(4,424		)	643,908		(8,531		)	964,007		(12,955		)
States and political subdivision securities	63,813		(1,808		)	—		—			63,813		(1,808		)
Total	$	383,912	$	(6,232	)	$	653,371	$	(8,546	)	$	1,037,283	$	(14,778	)



						September 30, 2016
	Less than 12 months					12 months or more					Total
	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
	(dollars in thousands)
U.S. Treasury securities	$	—	$	—		$	—	$	—		$	—	$	—
Mortgage-backed securities	$	17,528	$	(6	)	$	284,995	$	(1,916	)	$	302,523	$	(1,922	)
States and political subdivision securities	27,933		(164		)	—		—			27,933		(164		)
Total	$	45,461	$	(170	)	$	284,995	$	(1,916	)	$	330,456	$	(2,086	)

As of December 31, 2016 and September 30, 2016, the Company had 297 and 110 securities, respectively, in an unrealized loss position.

The components of accumulated other comprehensive income (loss) from net unrealized gains (losses) on securities available for sale for the three months ended December 31, 2016 and 2015, are as follows:



	Three Months Ended December 31,
	2016			2015
	(dollars in thousands)
Beginning balance accumulated other comprehensive income	$	5,534		$	2,318
Net unrealized holding (loss) arising during the period	(21,468		)	(11,915		)
Reclassification adjustment for net gain (loss) realized in net income	—			(354		)
Net change in unrealized (loss) before income taxes	(21,468		)	(12,269		)
Income tax benefit	8,158			4,662
Net change in unrealized (loss) on securities after taxes	(13,310		)	(7,607		)
Ending balance accumulated other comprehensive (loss)	$	(7,776	)	$	(5,289	)