Note 3. Securities

At September 30, 2015, the Company had total securities of $8.97 billion, comprised of securities available-for-sale at fair value of $5.31 billion, securities held-to-maturity at amortized cost of $3.51 billion and trading securities at fair value of $154.7 million. At December 31, 2014, the Company had total securities of $9.48 billion, comprised of securities available-for-sale at fair value of $5.88 billion, securities held-to-maturity at amortized cost of $3.43 billion and trading securities at fair value of $173.2 million.

The following is a summary of amortized cost and estimated fair value for the major categories of securities available-for-sale and securities held-to-maturity at September 30, 2015 and December 31, 2014:

			Gross		Gross
	Amortized		Unrealized		Unrealized
(in thousands)	Cost		Gains		Losses			Fair Value
September 30, 2015
Securities available-for-sale:
U.S. Treasury	$	390,098	$	232	$	(1	)	$	390,329
Federal agency - Debt	285,616		758		(14		)	286,360
Federal agency - MBS	91,690		1,851		(660		)	92,881
CMOs - Federal agency	3,538,000		19,867		(21,739		)	3,536,128
CMOs - Non-agency	20,749		25		(343		)	20,431
State and municipal	356,623		4,249		(128		)	360,744
Other debt securities	621,224		1,119		(29		)	622,314

Total securities available-for-sale	$	5,304,000	$	28,101	$	(22,914	)	$	5,309,187


Securities held-to-maturity (1):
Federal agency - Debt	$	445,721	$	11,742	$	(27	)	$	457,436
Federal agency - MBS	575,071		19,039		(227		)	593,883
CMOs - Federal agency	1,630,388		44,862		(2,057		)	1,673,193
State and municipal	769,646		21,704		(2,788		)	788,562
Other debt securities	85,629		200		(1		)	85,828

Total securities held-to-maturity	$	3,506,455	$	97,547	$	(5,100	)	$	3,598,902


December 31, 2014
Securities available-for-sale:
U.S. Treasury	$	116,919	$	17	$	(10	)	$	116,926
Federal agency - Debt	1,401,303		558		(3,280		)	1,398,581
Federal agency - MBS	102,939		2,601		(1,014		)	104,526
CMOs - Federal agency	3,599,831		19,628		(38,869		)	3,580,590
CMOs - Non-agency	24,385		40		(411		)	24,014
State and municipal	473,272		6,139		(380		)	479,031
Other debt securities	174,352		1,817		—			176,169

Total debt securities	5,893,001		30,800		(43,964		)	5,879,837
Equity securities and mutual funds	1,508		1,988		(350		)	3,146

Total securities available-for-sale	$	5,894,509	$	32,788	$	(44,314	)	$	5,882,983


Securities held-to-maturity (1):
Federal agency - Debt	$	292,932	$	6,430	$	(255	)	$	299,107
Federal agency - MBS	553,589		13,427		(2,275		)	564,741
CMOs - Federal agency	1,811,574		29,998		(10,292		)	1,831,280
State and municipal	682,705		22,732		(1,997		)	703,440
Other debt securities	86,231		72		(224		)	86,079

Total securities held-to-maturity	$	3,427,031	$	72,659	$	(15,043	)	$	3,484,647

(1)

Securities held-to-maturity are presented in the consolidated balance sheets at amortized cost.

Proceeds from sales of securities available-for-sale were $0.7 million and $401.5 million for the three and nine months ended September 30, 2015, compared with $1.0 million and $627.1 million for the three and nine months ended September 30, 2014. There were no sales of securities held-to-maturity during the three and nine months ended September 30, 2015 and 2014. The following table provides the gross realized gains and losses on the sales and calls of securities (including trading securities):

	For the three months ended						For the nine months ended
	September 30,						September 30,
(in thousands)	2015			2014			2015			2014
Gross realized gains	$	50		$	19		$	5,475		$	7,989
Gross realized losses	(20		)	(5		)	(144		)	(486		)

Net realized gains	$	30		$	14		$	5,331		$	7,503

Interest income on securities for the three months ended September 30, 2015 and 2014 is comprised of: (i) taxable interest income of $33.4 million and $37.5 million, respectively, (ii) nontaxable interest income of $7.2 million and $6.4 million, respectively, and (iii) dividend income of $22 thousand for the current and prior-year quarter. Interest income on securities for the nine months ended September 30, 2015 and 2014 is comprised of: (i) taxable interest income of $102.5 million and $111.0 million, respectively, (ii) nontaxable interest income of $21.3 million and $17.9 million, respectively, and (iii) dividend income of $52 thousand and $47 thousand, respectively.

The following table provides the expected remaining maturities of debt securities included in the securities portfolio at September 30, 2015, except for maturities of mortgage-backed securities which are allocated according to the average life of expected cash flows. Average expected maturities will differ from contractual maturities because of the amortizing nature of the loan collateral and prepayment behavior of borrowers.

(in thousands)	One year or less		Over 1 year through 5 years		Over 5 years through 10 years		Over 10 years		Total

Securities available-for-sale:
U.S. Treasury	$	269,754	$	120,575	$	—	$	—	$	390,329
Federal agency - Debt	179,603		106,757		—		—		286,360
Federal agency - MBS	1,819		91,062		—		—		92,881
CMOs - Federal agency	119,443		3,248,817		167,868		—		3,536,128
CMOs - Non-agency	1,079		13,234		6,118		—		20,431
State and municipal	165,254		192,119		—		3,371		360,744
Other	126,850		495,464		—		—		622,314

Total debt securities available-for-sale	$	863,802	$	4,268,028	$	173,986	$	3,371	$	5,309,187


Amortized cost	$	861,509	$	4,264,720	$	174,371	$	3,400	$	5,304,000


Securities held-to-maturity:
Federal agency - Debt	$	—	$	45,000	$	209,125	$	191,596	$	445,721
Federal agency - MBS	10		74,949		495,583		4,529		575,071
CMOs - Federal agency	8,724		773,640		848,024		—		1,630,388
State and municipal	897		210,551		458,753		99,445		769,646
Other	—		85,629		—		—		85,629

Total debt securities held-to-maturity at amortized cost	$	9,631	$	1,189,769	$	2,011,485	$	295,570	$	3,506,455

Impairment Assessment

The Company performs a quarterly assessment of debt and equity securities in its investment portfolio to determine whether a decline in fair value below amortized cost is other-than-temporary. Amortized cost includes adjustments made to the cost of an investment for amortization, accretion, collection of cash and previous other-than-temporary impairment recognized in earnings. The Company’s impairment assessment of debt securities takes the following factors into consideration: the length of time and the extent to which the market value has been less than cost; the financial condition and near-term prospects of the issuer, including events specific to the issuer or industry; defaults or deferrals of scheduled interest and principal payments; external credit ratings; and whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis. For equity securities, the evaluation of whether an impairment is other-than-temporary is based on whether and when an equity security will recover in value and whether the Company has the intent and ability to hold the equity security until the anticipated recovery in value occurs. If a decline in fair value is determined to be other-than-temporary, the cost basis of the individual security is written down to fair value which then becomes the security’s new cost basis. The new cost basis is not adjusted for subsequent recoveries in fair value.

Other-than-temporary impairment losses on equity securities are recognized in earnings. For debt securities, if the Company intends to sell an impaired security or it is more likely than not it will be required to sell a security prior to recovery of its amortized cost, an impairment loss is recognized in earnings for the entire difference between the amortized cost and fair value of the security on the measurement date. If the Company does not intend to sell the security or it is not more likely than not it will be required to sell the security prior to recovery of its amortized cost, the credit loss component of impairment is recognized in earnings. A credit loss is the difference between the amortized cost of the security and the present value of cash flows expected to be collected, discounted at the security’s effective interest rate at the date of acquisition. Impairment associated with factors other than credit, such as market liquidity, is recognized in other comprehensive income, net of tax.

Securities Deemed to be Other-Than-Temporarily Impaired

The Company recorded no impairment losses in earnings on securities available-for-sale for the three months ended September 30, 2015 and $0.3 million for the nine months ended September 30, 2015. The Company recorded impairment losses in earnings of $0.1 million and $0.3 million for the three and nine months ended September 30, 2014. The Company recognized after-tax amounts of $0.2 million and $0.1 million of non-credit-related other-than-temporary impairment in accumulated other comprehensive income or loss (“AOCI”) on securities classified as available-for-sale at September 30, 2015 and 2014, respectively. No impairment losses were recognized in earnings or AOCI for securities held-to-maturity during the three and nine months ended September 30, 2015 and 2014.

The following table summarizes the changes in cumulative credit-related other-than-temporary impairment recognized in earnings for debt securities for the three and nine months ended September 30, 2015 and 2014. Credit-related other-than-temporary impairment that was recognized in earnings is reflected as an “Initial credit-related impairment” if the period reported is the first time the security had a credit impairment. A credit-related other-than-temporary impairment is reflected as a “Subsequent credit-related impairment” if the period reported is not the first time the security had a credit impairment. Cumulative impairment is reduced for securities with previously recognized credit-related impairment that were sold or redeemed during the period. Cumulative impairment is further adjusted for other changes in expected cash flows.

	For the three months ended				For the nine months ended
	September 30,				September 30,
(in thousands)	2015		2014		2015		2014
Balance, beginning of period	$	2,587	$	2,395	$	2,470	$	4,549
Subsequent credit-related impairment	—		75		117		323
Reduction for securities sold or redeemed	—		—		—		(2,402		)

Balance, end of period	$	2,587	$	2,470	$	2,587	$	2,470

The following table provides a summary of the gross unrealized losses and fair value of investment securities that are not deemed to be other-than-temporarily impaired aggregated by investment category and length of time that the securities have been in a continuous unrealized loss position as of September 30, 2015 and December 31, 2014. The table also includes investment securities that had both a credit-related impairment recognized in earnings and a non-credit-related impairment recognized in AOCI.

	Less than 12 months				12 months or greater				Total
(in thousands)	Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss		Fair Value		Estimated Unrealized Loss
September 30, 2015
Securities available-for-sale:
U.S. Treasury	$	17,001	$	1	$	—	$	—	$	17,001	$	1
Federal agency - Debt	17,556		14		—		—		17,556		14
Federal agency - MBS	—		—		53,639		660		53,639		660
CMOs - Federal agency	690,496		3,947		1,197,026		17,792		1,887,522		21,739
CMOs - Non-agency	—		—		12,739		343		12,739		343
State and municipal	65,670		99		3,470		29		69,140		128
Other debt securities	199,833		29		—		—		199,833		29

Total securities available-for-sale	$	990,556	$	4,090	$	1,266,874	$	18,824	$	2,257,430	$	22,914


Securities held-to-maturity:
Federal agency - Debt	$	—	$	—	$	5,739	$	27	$	5,739	$	27
Federal agency - MBS	21,649		25		26,077		202		47,726		227
CMOs - Federal agency	136,388		596		184,818		1,461		321,206		2,057
State and municipal	118,335		1,727		33,839		1,061		152,174		2,788
Other debt securities	15,100		1		—		—		15,100		1

Total securities held-to-maturity	$	291,472	$	2,349	$	250,473	$	2,751	$	541,945	$	5,100


December 31, 2014
Securities available-for-sale:
U.S. Treasury	$	15,814	$	10	$	—	$	—	$	15,814	$	10
Federal agency - Debt	1,008,234		2,622		135,868		658		1,144,102		3,280
Federal agency - MBS	35		—		57,970		1,014		58,005		1,014
CMOs - Federal agency	871,026		3,417		1,261,695		35,452		2,132,721		38,869
CMOs - Non-agency	1,949		15		12,720		396		14,669		411
State and municipal	130,208		314		4,183		66		134,391		380

Total debt securities	2,027,266		6,378		1,472,436		37,586		3,499,702		43,964
Equity securities and mutual funds	538		350		—		—		538		350

Total securities available-for-sale	$	2,027,804	$	6,728	$	1,472,436	$	37,586	$	3,500,240	$	44,314


Securities held-to-maturity:
Federal agency - Debt	$	—	$	—	$	26,316	$	255	$	26,316	$	255
Federal agency - MBS	4,800		21		114,856		2,254		119,656		2,275
CMOs - Federal agency	202,014		2,247		588,019		8,045		790,033		10,292
State and municipal	14,851		76		95,647		1,921		110,498		1,997
Other debt securities	61,813		224		—		—		61,813		224

Total securities held-to-maturity	$	283,478	$	2,568	$	824,838	$	12,475	$	1,108,316	$	15,043

At September 30, 2015, the Company had securities available-for-sale with a fair value of $2.26 billion and securities held-to-maturity with a fair value of $541.9 million in an unrealized loss position. The debt securities in an unrealized loss position totaled 332 and included 1 U.S. Treasury note, 3 federal agency debt securities, 13 federal agency MBS, 113 federal agency CMOs, 3 non-agency CMOs, 196 state and municipal securities and 3 other debt securities.

At December 31, 2014, the Company had securities available-for-sale with a fair value of $3.50 billion and securities held-to-maturity with a fair value of $1.11 billion in an unrealized loss position. The debt securities in an unrealized loss position totaled 436 and included 2 U.S. Treasury notes, 37 federal agency debt securities, 23 federal agency MBS, 141 federal agency CMOs, 3 non-agency CMOs, 225 state and municipal securities and 5 other debt securities. At December 31, 2014, the Company had one equity security in an unrealized loss position.