XML 74 R12.htm IDEA: XBRL DOCUMENT v2.4.0.8
Investments Investments (Notes)
 6 Months Ended
Jun. 30, 2014
Investments, Debt and Equity Securities [Abstract]  
Investment [Text Block]
Note 5. Investments     
Securities Available-for-Sale
The following table presents amortized cost, gross unrealized gains and losses, and carrying values of securities available-for-sale. As of June 30, 2014 and December 31, 2013, our investment securities, available-for-sale were as follows:
 
June 30, 2014
 
December 31, 2013
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
Amortized Cost
 
Gross Unrealized Gains
 
Gross Unrealized Losses
 
Fair Value
 
(In thousands)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government agency and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
government-sponsored enterprise
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
pass through securities
$
563,820

 
$
21,382

 
$
(445
)
 
$
584,757

 
$
691,944

 
$
18,012

 
$
(2,768
)
 
$
707,188

Government agency and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
government-sponsored enterprise
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
collateralized mortgage obligations
286,347

 
2,766

 
(1,509
)
 
287,604

 
197,069

 
388

 
(4,584
)
 
192,873

Covered private label collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
28,913

 
7,709

 
(100
)
 
36,522

 
30,502

 
7,552

 
(150
)
 
37,904

Other private label collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
14,287

 
9

 
(8
)
 
14,288

 
—

 
—

 
—

 
—

Municipal securities
453,890

 
9,286

 
(6,610
)
 
456,566

 
459,182

 
1,749

 
(24,273
)
 
436,658

Corporate debt securities
107,669

 
1,789

 
(67
)
 
109,391

 
84,119

 
71

 
(1,483
)
 
82,707

Government-sponsored enterprise debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
36,198

 
467

 
—

 
36,665

 
10,046

 
—

 
(174
)
 
9,872

Other securities
26,301

 
45

 
(24
)
 
26,322

 
27,654

 
2

 
(113
)
 
27,543

Total
$
1,517,425

 
$
43,453

 
$
(8,763
)
 
$
1,552,115

 
$
1,500,516

 
$
27,774

 
$
(33,545
)
 
$
1,494,745


The covered private label collateralized mortgage obligations (“CMO’s”) acquired in the FDIC‑assisted acquisition of Affinity Bank in August 2009 are covered by an FDIC loss sharing agreement. The loss sharing provisions for these private label CMO's expire in the third quarter of 2014. Other securities consist primarily of asset‑backed securities. See Note 11, Fair Value Measurements, for information on fair value measurements and methodology.
As of June 30, 2014, securities available‑for‑sale with a carrying value of $327.4 million were pledged as collateral for borrowings, public deposits and other purposes as required by various statutes and agreements.
During the three months ended June 30, 2014, we sold $797,000 in other securities for which we realized a gross gain of $89,000. In addition, we sold $323.6 million of the $383.7 million of securities obtained in the CapitalSource Inc. merger for no gain or loss and the proceeds were used to repay borrowings. During the three months ended March 31, 2014, we sold $137.3 million in GSE pass through securities for which we realized a gross gain $4.8 million. These securities were sold as part of our investment portfolio risk management activities. There were no securities sold during the three months ended June 30, 2013. During the six months ended June 30, 2013, we sold $12.4 million in corporate debt securities for which we realized a gross gain of $409,000.
Realized gains or losses resulting from the sale of securities are calculated using the specific identification method and included in gain on securities. During the three months ended June 30, 2014 and 2013, we had $13.3 million and $(27.9) million, respectively, of net unrealized after-tax gains (losses) as a component of accumulated other comprehensive income, net.
Unrealized Losses on Investment Securities
As of June 30, 2014 and December 31, 2013, the gross unrealized losses and fair values of investment securities that were in unrealized loss positions, for which other-than-temporary impairments have not been recognized in earnings, were as follows:
 
June 30, 2014
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
 
(In thousands)
Residential mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
Government agency and government-
 
 
 
 
 
 
 
 
 
 
 
sponsored enterprise pass through
 
 
 
 
 
 
 
 
 
 
 
securities
$
954

 
$
(2
)
 
$
42,325

 
$
(443
)
 
$
43,279

 
$
(445
)
Government agency and government-
 
 
 
 
 
 
 
 
 
 
 
sponsored enterprise collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
95,351

 
(374
)
 
42,971

 
(1,135
)
 
138,322

 
(1,509
)
Covered private label collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
—

 
—

 
1,088

 
(100
)
 
1,088

 
(100
)
Other private label collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
6,809

 
(8
)
 
—

 
—

 
6,809

 
(8
)
Municipal securities
9,655

 
(10
)
 
206,241

 
(6,600
)
 
215,896

 
(6,610
)
Corporate debt securities
22,219

 
(29
)
 
2,795

 
(38
)
 
25,014

 
(67
)
Government-sponsored enterprise debt
 
 
 
 
 
 
 
 
 
 
 
securities
—

 
—

 
—

 
—

 
—

 
—

Other securities
—

 
—

 
10,029

 
(24
)
 
10,029

 
(24
)
     Total
$
134,988

 
$
(423
)
 
$
305,449

 
$
(8,340
)
 
$
440,437

 
$
(8,763
)

 
December 31, 2013
 
Less Than 12 Months
 
12 Months or More
 
Total
 
Fair Value
 
Gross Unrealized Losses
 
Fair Value
 
Gross Unrealized Losses
 
Fair 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
)


We reviewed the securities that were in a continuous loss position less than 12 months and longer than 12 months at June 30, 2014, and concluded 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 the securities were temporarily impaired and we did not recognize such impairment in the condensed 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.
Contractual Maturities
The following table presents the contractual maturities of our available-for-sale securities portfolio based on amortized cost and carrying value as of the date indicated.
 
June 30, 2014
 
Amortized Cost
 
Estimated Fair Value
 
(In thousands)
Due in one year or less
$
2,803

 
$
2,804

Due after one year through five years
58,523

 
58,864

Due after five years through ten years
264,647

 
268,537

Due after ten years
1,191,452

 
1,221,910

Total securities available-for-sale
$
1,517,425

 
$
1,552,115


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.
FHLB Stock
At June 30, 2014, we had a $50.0 million investment in Federal Home Loan Bank of San Francisco ("FHLB SF") stock carried at cost. During the six months ended June 30, 2014, FHLB SF stock increased $22.0 million due primarily to the addition of FHLB SF stock from the CapitalSource Inc. merger. We evaluated the carrying value of our FHLB SF stock investment at June 30, 2014, 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 SF, repurchase activity of excess stock by the FHLB SF 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.
Interest Income on Investment Securities
The following table presents the composition of our interest income on investment securities:
 
Three Months Ended
 
Six Months Ended June 30,
 
June 30, 2014
 
March 31, 2014
 
June 30, 2013
 
2014
 
2013
 
(In thousands)
Taxable interest
$
7,668

 
$
6,920

 
$
5,388

 
$
14,584

 
$
10,951

Non-taxable interest
3,333

 
3,328

 
2,716

 
6,661

 
5,141

Dividend income
985

 
575

 
310

 
1,564

 
538

Total interest income on investment securities
$
11,986

 
$
10,823

 
$
8,414

 
$
22,809

 
$
16,630