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INVESTMENT SECURITIES
 12 Months Ended
Dec. 31, 2013
INVESTMENT SECURITIES  
INVESTMENT SECURITIES

NOTE 6—INVESTMENT SECURITIES

  • Securities Available-for-Sale

        The following tables present the amortized cost, gross unrealized gains and losses, and carrying value of securities available-for-sale as of the dates indicated:

 
   December 31, 2013  
Security Type
  Amortized
Cost		   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Carrying
Value		  
 
   (In thousands)
  

Residential mortgage-backed securities:

                          

Government agency and government-sponsored enterprise pass through securities

   $ 691,944   $ 18,012   $ (2,768 ) $ 707,188  

Government agency and government-sponsored enterprise collateralized mortgage obligations

     197,069     388     (4,584 )   192,873  

Covered private label collateralized mortgage obligations

     30,502     7,552     (150 )   37,904  

Municipal securities

     459,182     1,749     (24,273 )   436,658  

Corporate debt securities

     84,119     71     (1,483 )   82,707  

Government-sponsored enterprise debt securities

     10,046     —     (174 )   9,872  

Other securities

     27,654     2     (113 )   27,543  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total securities available-for-sale

   $ 1,500,516   $ 27,774   $ (33,545 ) $ 1,494,745  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   


 

 
   December 31, 2012  
Security Type
  Amortized
Cost		   Gross
Unrealized
Gains		   Gross
Unrealized
Losses		   Carrying
Value		  
 
   (In thousands)
  

Residential mortgage-backed securities:

                          

Government agency and government-sponsored enterprise pass through securities

   $ 774,677   $ 33,618   $ (453 ) $ 807,842  

Government agency and government-sponsored enterprise collateralized mortgage obligations

     99,956     1,870     (132 )   101,694  

Covered private label collateralized mortgage obligations

     36,078     8,729     (123 )   44,684  

Municipal securities

     339,547     10,445     (1,951 )   348,041  

Corporate debt securities

     42,014     432     (81 )   42,365  

Other securities

     6,389     4,370     —     10,759  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total securities available-for-sale

   $ 1,298,661   $ 59,464   $ (2,740 ) $ 1,355,385  
                   
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                   

        During 2013, 2012, and 2011, we made investment purchases of $550.2 million, $485.9 million, and $658.3 million, of investment securities available-for-sale, respectively.

        During 2013, we sold $12.4 million of corporate debt securities and $10.0 million in collateralized loan obligation securities for which we realized a gross gain of $409,000 and a gross loss of $272,000, respectively. The sale of the corporate debt securities was done as part of our portfolio risk management activities to reduce price volatility and duration. The sale of collateralized loan obligation securities was done in order to minimize our risk in holding these securities subject to the then proposed regulations referred to as the Volcker rule. During 2012, we sold $43.9 million of GSE pass through securities as part of our portfolio risk management activities and realized a $1.2 million gross gain. We also sold $45.6 million of the $48.9 million of investment securities obtained in the APB acquisition for no gain or loss. There were no sales of securities in 2011.

        At December 31, 2013, the fair value of residential mortgage-backed securities issued by the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") that were held in our portfolio was approximately $740.4 million. We do not own any equity securities issued by Fannie Mae or Freddie Mac. The covered private label collateralized mortgage obligations ("CMO's") were acquired in the FDIC-assisted acquisition of Affinity Bank in August 2009 and are covered by an FDIC loss sharing agreement. The loss sharing provisions of this agreement expire in the third quarter of 2014 for non-single family covered assets such as these private label CMO's. Other securities consist primarily of asset-backed securities. As of December 31, 2013 and 2012, securities available-for-sale with a carrying value of $208.3 million and $157.3 million, respectively, were pledged as security for borrowings, public deposits and other purposes as required by various statutes and agreements.

        Market valuations of our investment securities are provided by an independent third party. The fair values are determined by using several sources for valuing fixed income securities. Their techniques include pricing models that vary based on the type of asset being valued and incorporate available trade, bid and other market information. In accordance with the hierarchy established in ASC Topic 820, "Fair Value Measurement," the market valuation sources include observable market inputs for the majority of our securities and are therefore considered Level 2 inputs for purposes of determining the fair values. The valuation techniques for the covered private label CMOs are considered Level 3. See Note 14, Fair Value Measurements, for information on fair value measurements and methodology.

        The following tables present, for those securities that were in a gross unrealized loss position, the carrying values, which are the estimated fair values, and the gross unrealized losses on securities by length of time the securities were in an unrealized loss position as of the dates indicated:

 
   December 31, 2013  
 
   Less than 12 months   12 months or longer   Total  
Security Type
  Carrying
Value		   Gross
Unrealized
Losses		   Carrying
Value		   Gross
Unrealized
Losses		   Carrying
Value		   Gross
Unrealized
Losses		  
 
   (In thousands)
  

Residential mortgage-backed securities:

                                      

Government agency and government-sponsored enterprise pass through securities

   $ 148,662   $ (2,767 ) $ 32   $ (1 ) $ 148,694   $ (2,768 )

Government agency and government-sponsored enterprise collateralized mortgage obligations

     179,938     (4,486 )   4,383     (98 )   184,321     (4,584 )

Covered private label collateralized mortgage obligations

     1,640     (60 )   617     (90 )   2,257     (150 )

Municipal securities

     337,208     (24,273 )   —     —     337,208     (24,273 )

Corporate debt securities

     72,636     (1,483 )   —     —     72,636     (1,483 )

Government-sponsored enterprise debt securities

     9,872     (174 )   —     —     9,872     (174 )

Other securities

     23,969     (113 )   —     —     23,969     (113 )
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 773,925   $ (33,356 ) $ 5,032   $ (189 ) $ 778,957   $ (33,545 )
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                           


 

 
   December 31, 2012  
 
   Less than 12 months   12 months or longer   Total  
Security Type
  Carrying
Value		   Gross
Unrealized
Losses		   Carrying
Value		   Gross
Unrealized
Losses		   Carrying
Value		   Gross
Unrealized
Losses		  
 
   (In thousands)
  

Residential mortgage-backed securities:

                                      

Government agency and government-sponsored enterprise pass through securities

   $ 67,299   $ (452 ) $ 60   $ (1 ) $ 67,359   $ (453 )

Government agency and government-sponsored enterprise collateralized mortgage obligations

     18,317     (132 )   —     —     18,317     (132 )

Covered private label collateralized mortgage obligations

     —     —     1,692     (123 )   1,692     (123 )

Municipal securities

     90,303     (1,951 )   —     —     90,303     (1,951 )

Corporate debt securities

     16,819     (81 )   —     —     16,819     (81 )
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total

   $ 192,738   $ (2,616 ) $ 1,752   $ (124 ) $ 194,490   $ (2,740 )
                           
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                           

        We reviewed the securities that were in a continuous loss position less than 12 months and longer than 12 months at December 31, 2013, and concluded that their losses were a result of the level of market interest rates relative to the types of securities and pricing changes caused by shifting supply and demand dynamics and not a result of downgraded credit ratings or other indicators of deterioration of the underlying issuers' ability to repay. Accordingly, we determined that the securities were temporarily impaired and we did not recognize such impairment in the consolidated statements of earnings. Additionally, we have no plans to sell these securities and believe that it is more likely than not we would not be required to sell these securities before recovery of their amortized cost.

        During 2012, we determined that one covered private label CMO was impaired due to deteriorating cash flows and the depletion of the credit support from the subordinated classes of the securitization. We recorded an other-than-temporary impairment ("OTTI") loss of $1.1 million, which was entirely credit related, in the consolidated statements of earnings. This loss was offset by FDIC loss sharing income of $892,000, which represented the FDIC's 80% share of the loss. There were no OTTI losses recognized during 2013 and 2011.

        The contractual maturity distribution of our securities available-for-sale portfolio based on amortized cost and carrying value is shown as of the date below:

 
   December 31, 2013  
Maturity
  Amortized
Cost		   Carrying
Value		  
 
   (In thousands)
  

Due in one year or less

   $ 5,775   $ 5,792  

Due after one year through five years

     24,597     24,749  

Due after five years through ten years

     131,259     129,985  

Due after ten years

     1,338,885     1,334,219  
           
​ ​ ​ ​ ​ ​ ​ ​

Total securities available-for-sale

   $ 1,500,516   $ 1,494,745  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

        Mortgage-backed securities have contractual terms to maturity, but require periodic payments to reduce principal. In addition, expected maturities may differ from contractual maturities because obligors and/or issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

        The following table presents the composition of our interest income on investment securities for the years indicated:

 
   Year Ended December 31,  
 
   2013   2012   2011  

Securities Interest by Type:

                    

Taxable interest

  
$
23,542		  
$
29,652		  
$
33,390		  

Nontaxable interest

     11,777     5,559     1,222  

Dividend income

     1,604     446     173  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total interest income on investment securities

   $ 36,923   $ 35,657   $ 34,785  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

  • FHLB Stock

        At December 31, 2013, the Company had a $27.9 million investment in FHLB stock carried at cost. We evaluated the carrying value of our FHLB stock investment at December 31, 2013, and determined that it was not impaired. Our evaluation considered the long-term nature of the investment, the current financial and liquidity position of the FHLB, repurchase activity of excess stock by the FHLB at its carrying value, the return on the investment, and our intent and ability to hold this investment for a period of time sufficient to recover our recorded investment.