Investment Securities

A Summary of the amortized cost and fair value of investment securities is presented below:



	At December 31,
	2016									2015
(In thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Available-for-sale:
U.S. Treasury Bills	$	734	$	—	$	—		$	734	$	924	$	—	$	—		$	924
Agency CMO	419,865		3,344		(3,503		)	419,706		546,168		5,532		(2,946		)	548,754
Agency MBS	969,460		4,398		(19,509		)	954,349		1,075,941		6,459		(17,291		)	1,065,109
Agency CMBS	587,776		63		(14,567		)	573,272		215,670		639		(959		)	215,350
CMBS	473,974		4,093		(702		)	477,365		574,686		7,485		(2,905		)	579,266
CLO	425,083		2,826		(519		)	427,390		431,837		592		(3,270		)	429,159
Single issuer trust preferred securities	30,381		—		(1,748		)	28,633		42,168		—		(4,998		)	37,170
Corporate debt securities	108,490		1,502		(350		)	109,642		104,031		2,290		—			106,321
Equities - financial institutions	—		—		—			—		3,499		—		(921		)	2,578
Total available-for-sale	$	3,015,763	$	16,226	$	(40,898	)	$	2,991,091	$	2,994,924	$	22,997	$	(33,290	)	$	2,984,631
Held-to-maturity:
Agency CMO	$	339,455	$	1,977	$	(3,824	)	$	337,608	$	407,494	$	3,717	$	(2,058	)	$	409,153
Agency MBS	2,317,449		26,388		(41,768		)	2,302,069		2,030,176		38,813		(19,908		)	2,049,081
Agency CMBS	547,726		694		(1,348		)	547,072		686,086		4,253		(325		)	690,014
Municipal bonds and notes	655,813		4,389		(25,749		)	634,453		435,905		12,019		(417		)	447,507
CMBS	298,538		4,107		(411		)	302,234		360,018		5,046		(2,704		)	362,360
Private Label MBS	1,677		12		—			1,689		3,373		46		—			3,419
Total held-to-maturity	$	4,160,658	$	37,567	$	(73,100	)	$	4,125,125	$	3,923,052	$	63,894	$	(25,412	)	$	3,961,534

Other-Than-Temporary Impairment

The balance of OTTI, included in the amortized cost columns above, is related to certain CLO positions that were previously considered Covered Funds as defined by Section 619 of the Dodd-Frank Act commonly known as the Volcker Rule. The Company has taken measures to bring its CLO positions into conformance with the Volcker Rule.

To the extent that changes occur in interest rates, credit movements, and other factors that impact fair value and expected recovery of amortized cost of its investment securities, the Company may be required to recognize OTTI in earnings, in future periods.

The following table presents the changes in OTTI:



	Years ended December 31,
(In thousands)	2016			2015			2014
Beginning balance	$	3,288		$	3,696		$	16,633
Reduction for securities sold or called	(194		)	(518		)	(14,082		)
Additions for OTTI not previously recognized	149			110			1,145
Ending balance	$	3,243		$	3,288		$	3,696

Fair Value and Unrealized Losses

The following tables provide information on fair value and unrealized losses for the individual securities with an unrealized loss, aggregated by investment security type and length of time that the individual securities have been in a continuous unrealized loss position:



	At December 31, 2016
	Less Than Twelve Months					Twelve Months or Longer					Total
(Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			# of Holdings	Fair Value		Unrealized Losses
Available-for-sale:
Agency CMO	$	107,853	$	(2,168	)	$	67,351	$	(1,335	)	15	$	175,204	$	(3,503	)
Agency MBS	512,075		(10,503		)	252,779		(9,006		)	97	764,854		(19,509		)
Agency CMBS	554,246		(14,567		)	—		—			32	554,246		(14,567		)
CMBS	12,427		(24		)	63,930		(678		)	12	76,357		(702		)
CLO	49,946		(54		)	50,237		(465		)	5	100,183		(519		)
Single issuer trust preferred securities	—		—			28,633		(1,748		)	5	28,633		(1,748		)
Corporate debt securities	—		—			7,384		(350		)	2	7,384		(350		)
Equities-financial institutions	—		—			—		—			—	—		—
Total available-for-sale in an unrealized loss position	$	1,236,547	$	(27,316	)	$	470,314	$	(13,582	)	168	$	1,706,861	$	(40,898	)
Held-to-maturity:
Agency CMO	$	163,439	$	(3,339	)	$	17,254	$	(485	)	16	$	180,693	$	(3,824	)
Agency MBS	1,394,623		(32,942		)	273,779		(8,826		)	150	1,668,402		(41,768		)
Agency CMBS	347,725		(1,348		)	—		—			25	347,725		(1,348		)
Municipal bonds and notes	384,795		(25,745		)	1,192		(4		)	196	385,987		(25,749		)
CMBS	60,768		(411		)	—		—			8	60,768		(411		)
Total held-to-maturity in an unrealized loss position	$	2,351,350	$	(63,785	)	$	292,225	$	(9,315	)	395	$	2,643,575	$	(73,100	)



	At December 31, 2015
	Less Than Twelve Months					Twelve Months or Longer					Total
(Dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			# of Holdings	Fair Value		Unrealized Losses
Available-for-sale:
Agency CMO	$	195,369	$	(2,195	)	$	26,039	$	(751	)	14	$	221,408	$	(2,946	)
Agency MBS	481,839		(6,386		)	351,911		(10,905		)	84	833,750		(17,291		)
Agency CMBS	124,241		(959		)	—		—			7	124,241		(959		)
CMBS	276,330		(2,879		)	19,382		(26		)	29	295,712		(2,905		)
CLO	211,515		(2,709		)	15,708		(561		)	13	227,223		(3,270		)
Single issuer trust preferred securities	4,087		(128		)	33,083		(4,870		)	8	37,170		(4,998		)
Corporate debt securities	—		—			—		—			—	—		—
Equities-financial institutions	2,578		(921		)	—		—			1	2,578		(921		)
Total available-for-sale in an unrealized loss position	$	1,295,959	$	(16,177	)	$	446,123	$	(17,113	)	156	$	1,742,082	$	(33,290	)
Held-to-maturity:
Agency CMO	$	143,364	$	(1,304	)	$	27,928	$	(754	)	13	$	171,292	$	(2,058	)
Agency MBS	551,918		(7,089		)	470,828		(12,819		)	87	1,022,746		(19,908		)
Agency CMBS	110,864		(325		)	—		—			7	110,864		(325		)
Municipal bonds and notes	29,034		(130		)	13,829		(287		)	27	42,863		(417		)
CMBS	142,382		(1,983		)	30,129		(721		)	18	172,511		(2,704		)
Total held-to-maturity in an unrealized loss position	$	977,562	$	(10,831	)	$	542,714	$	(14,581	)	152	$	1,520,276	$	(25,412	)

Impairment Analysis

The following impairment analysis by investment security type, summarizes the basis for evaluating if investment securities within the Company’s available-for-sale and held-to-maturity portfolios have been impacted by OTTI. Unless otherwise noted for an investment security type, management does not intend to sell these investments and has determined, based upon available evidence, that it is more likely than not that the Company will not be required to sell these securities before the recovery of their amortized cost. As such, based on the following impairment analysis, the Company does not consider these securities, in unrealized loss positions, to be other-than-temporarily impaired at December 31, 2016.

Available-for-Sale Securities

Agency CMO. There were unrealized losses of $3.5 million on the Company’s investment in Agency CMO at December 31, 2016, compared to $2.9 million at December 31, 2015. Unrealized losses increased due to higher market rates which resulted in lower security prices since December 31, 2015. These investments are issued by a government or government sponsored agency and therefore, are backed by certain government guarantees, either direct or indirect. There has been no change in the credit quality, and the contractual cash flows are performing as expected.

Agency MBS. There were unrealized losses of $19.5 million on the Company’s investment in residential mortgage-backed securities issued by government agencies at December 31, 2016, compared to $17.3 million at December 31, 2015. Unrealized losses increased due to higher market rates which resulted in lower security prices since December 31, 2015. These investments are issued by a government or government sponsored agency and therefore, are backed by certain government guarantees, either direct or indirect. There has been no change in the credit quality, and the contractual cash flows are performing as expected.

Agency CMBS. There were unrealized losses of $14.6 million on the Company's investment in commercial mortgage-backed securities issued by government agencies at December 31, 2016, compared to $1.0 million at December 31, 2015. Unrealized losses increased due to higher market rates which resulted in lower security prices since December 31, 2015. These investments are issued by a government or government sponsored agency and therefore, are backed by certain government guarantees, either direct or indirect. There has been no change in the credit quality, and the contractual cash flows are performing as expected.

CMBS. There were unrealized losses of $702 thousand on the Company’s investment in CMBS at December 31, 2016, compared to $2.9 million at December 31, 2015. The portfolio of mainly floating rate CMBS experienced reduced market spreads which resulted in higher market prices and smaller unrealized losses at December 31, 2016 compared to December 31, 2015. Internal and external metrics are considered when evaluating potential OTTI. Internal stress tests are performed on individual bonds to monitor potential losses under stress scenarios. Contractual cash flows for the bonds continue to perform as expected.

CLO. There were unrealized losses of $519 thousand on the Company’s investments in CLO at December 31, 2016 compared to $3.3 million unrealized losses at December 31, 2015. Unrealized losses decreased due to reduced market spreads for the asset class which resulted in higher security prices since December 31, 2015. Internal stress tests are performed on individual bonds to monitor potential losses under stress scenarios.

Single issuer trust preferred securities. There were unrealized losses of $1.7 million on the Company's investment in single issuer trust preferred securities at December 31, 2016, compared to $5.0 million at December 31, 2015. Unrealized losses decreased due to reduced market spreads which resulted in higher security prices since December 31, 2015. The single issuer portfolio consists of three investments issued by two large capitalization money center financial institutions, which continue to service the debt. A security was transferred to corporate debt securities as detailed below. The Company performs periodic credit reviews of the issuer to assess the likelihood for ultimate recovery of amortized cost.

Corporate debt securities. There were $350 thousand unrealized losses on the Company's corporate debt securities at December 31, 2016, as a result of a mandatory exchange in a security reclassification from single issuer trust preferred securities. The company performs periodic credit reviews of the issuer to assess the likelihood for ultimate recovery of amortized cost.

Held-to-Maturity Securities

Agency CMO. There were unrealized losses of $3.8 million on the Company’s investment in Agency CMO at December 31, 2016, compared to $2.1 million at December 31, 2015. Unrealized losses increased due to higher market rates which resulted in lower security prices since December 31, 2015. These investments are issued by a government or government sponsored agency and therefore, are backed by certain government guarantees, either direct or indirect. There has been no change in the credit quality, and the contractual cash flows are performing as expected.

Agency MBS. There were unrealized losses of $41.8 million on the Company’s investment in residential mortgage-backed securities issued by government agencies at December 31, 2016, compared to $19.9 million at December 31, 2015. Unrealized losses increased due to higher market rates which resulted in lower security prices since December 31, 2015. These investments are issued by a government or government sponsored agency and therefore, are backed by certain government guarantees, either direct or indirect. There has been no change in the credit quality, and the contractual cash flows are performing as expected.

Agency CMBS. There were unrealized losses of $1.3 million on the Company’s investment in commercial mortgage-backed securities issued by government agencies at December 31, 2016, compared to $325 thousand at December 31, 2015. Unrealized losses increased due to higher market rates which resulted in lower security prices since December 31, 2015. These investments are issued by a government or government sponsored agency and therefore, are backed by certain government guarantees, either direct or indirect. There has been no change in the credit quality, and the contractual cash flows are performing as expected.

Municipal bonds and notes. There were unrealized losses of $25.7 million on the Company’s investment in municipal bonds and notes at December 31, 2016, compared to $417 thousand at December 31, 2015. Unrealized losses increased due to higher market rates which resulted in lower security prices since December 31, 2015. The Company performs periodic credit reviews of the issuers and the securities are currently performing as expected.

CMBS. There were unrealized losses of $411 thousand on the Company’s investment in CMBS at December 31, 2016, compared to $2.7 million unrealized losses at December 31, 2015. Unrealized losses decreased due to lower market rates on mainly seasoned fixed rate conduit transactions which resulted in higher security prices since December 31, 2015. Internal and external metrics are considered when evaluating potential OTTI. Internal stress tests are performed on individual bonds to monitor potential losses under stress scenarios.

Sales of Available-for Sale Securities

The following table provides information on sales of available-for-sale securities:



	Years ended December 31,
(In thousands)	2016		2015		2014
Proceeds from sales	$	259,273	$	95,101	$	126,580

Gross realized gains on sales	$	2,891	$	1,029	$	7,268
Less: Gross realized losses on sales	2,477		420		1,769
Gain on sale of investment securities, net	$	414	$	609	$	5,499

Contractual Maturities

The amortized cost and fair value of debt securities by contractual maturity are set forth below:



	At December 31, 2016

	Available-for-Sale				Held-to-Maturity
(In thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	75,466	$	76,383	$	13,612	$	13,721
Due after one year through five years	21,781		22,190		17,313		17,611
Due after five through ten years	529,247		532,352		46,835		47,780
Due after ten years	2,389,269		2,360,166		4,082,898		4,046,013
Total debt securities	$	3,015,763	$	2,991,091	$	4,160,658	$	4,125,125

For the maturity schedule above, mortgage-backed securities and CLO, which are not due at a single maturity date, have been categorized based on the maturity date of the underlying collateral. Actual principal cash flows may differ from this maturity date presentation as borrowers have the right to prepay obligations with or without prepayment penalties. At December 31, 2016, the Company had a carrying value of $1.9 billion in callable securities in its CMBS, CLO, and municipal bond portfolios. The Company considers prepayment risk in the evaluation of its interest rate risk profile. These maturities do not reflect actual duration which are impacted by prepayments.

Securities with a carrying value totaling $2.5 billion at December 31, 2016 and $2.6 billion at December 31, 2015 were pledged to secure public funds, trust deposits, repurchase agreements, and for other purposes, as required or permitted by law.