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Investments Investments (Notes)
 9 Months Ended
Sep. 30, 2014
Investments, Debt and Equity Securities [Abstract]  
Investment
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 September 30, 2014 and December 31, 2013, our investment securities, available-for-sale were as follows:
 
September 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
$
537,969

 
$
17,917

 
$
(799
)
 
$
555,087

 
$
691,944

 
$
18,012

 
$
(2,768
)
 
$
707,188

Government agency and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
government-sponsored enterprise
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
collateralized mortgage obligations
280,820

 
1,456

 
(2,485
)
 
279,791

 
197,069

 
388

 
(4,584
)
 
192,873

Covered private label collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
27,830

 
7,568

 
(89
)
 
35,309

 
30,502

 
7,552

 
(150
)
 
37,904

Other private label collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
12,563

 
35

 
(5
)
 
12,593

 
—

 
—

 
—

 
—

Municipal securities
473,426

 
12,212

 
(3,211
)
 
482,427

 
459,182

 
1,749

 
(24,273
)
 
436,658

Corporate debt securities
110,032

 
2,139

 
(28
)
 
112,143

 
84,119

 
71

 
(1,483
)
 
82,707

Government-sponsored enterprise debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
36,214

 
168

 
—

 
36,382

 
10,046

 
—

 
(174
)
 
9,872

Other securities
26,044

 
33

 
(128
)
 
25,949

 
27,654

 
2

 
(113
)
 
27,543

Total
$
1,504,898

 
$
41,528

 
$
(6,745
)
 
$
1,539,681

 
$
1,500,516

 
$
27,774

 
$
(33,545
)
 
$
1,494,745



The covered private label collateralized mortgage obligations ("CMO's") were acquired in the FDIC-assisted acquisition of Affinity Bank in August 2009. The loss sharing provisions for these private label CMO's expired 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 September 30, 2014, securities available‑for‑sale with a carrying value of $294.6 million were pledged as collateral for borrowings, public deposits and other purposes as required by various statutes and agreements.
During the three months ended September 30, 2014 and 2013, we sold no securities. However, during the three months ended September 30, 2013, we recorded a $5.2 million non-taxable gain to recognize our previously-held equity interest in FCAL common stock at its fair market value as of the acquisition date.
During the nine months ended September 30, 2014, we sold $461.7 million of GSE pass through securities, other securities, and securities obtained in the CapitalSource Inc. merger, for which we realized gains of $4.9 million. During the nine months ended September 30, 2013, we sold $12.4 million in corporate debt securities for which we realized gains 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 September 30, 2014 and 2013, we had $0.7 million and $(0.7) 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 September 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:
 
September 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
$
38,316

 
$
(191
)
 
$
27,894

 
$
(608
)
 
$
66,210

 
$
(799
)
Government agency and government-
 
 
 
 
 
 
 
 
 
 
 
sponsored enterprise collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
159,329

 
(967
)
 
42,340

 
(1,518
)
 
201,669

 
(2,485
)
Covered private label collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
—

 
—

 
1,050

 
(89
)
 
1,050

 
(89
)
Other private label collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
893

 
(5
)
 
—

 
—

 
893

 
(5
)
Municipal securities
18,058

 
(75
)
 
133,602

 
(3,136
)
 
151,660

 
(3,211
)
Corporate debt securities
—

 
—

 
12,971

 
(28
)
 
12,971

 
(28
)
securities
—

 
—

 
—

 
—

 
—

 
—

Other securities
6,427

 
(108
)
 
10,030

 
(20
)
 
16,457

 
(128
)
     Total
$
223,023

 
$
(1,346
)
 
$
227,887

 
$
(5,399
)
 
$
450,910

 
$
(6,745
)

 
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 loss position at September 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.
 
September 30, 2014
 
Amortized Cost
 
Estimated Fair Value
 
(In thousands)
Due in one year or less
$
4,386

 
$
4,422

Due after one year through five years
85,057

 
85,209

Due after five years through ten years
249,748

 
252,685

Due after ten years
1,165,707

 
1,197,365

Total securities available-for-sale
$
1,504,898

 
$
1,539,681


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 September 30, 2014, we had a $45.6 million investment in Federal Home Loan Bank of San Francisco ("FHLB SF") stock carried at cost. During the nine months ended September 30, 2014, FHLB SF stock increased $17.7 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 September 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
 
Nine Months Ended
 
September 30,
 
June 30,
 
September 30,
 
September 30,
 
2014
 
2014
 
2013
 
2014
 
2013
 
(In thousands)
Taxable interest
$
7,850

 
$
7,668

 
$
6,028

 
$
22,438

 
$
16,979

Non-taxable interest
3,343

 
3,333

 
3,302

 
10,004

 
8,443

Dividend income
1,138

 
985

 
541

 
2,698

 
1,079

Total interest income on investment securities
$
12,331

 
$
11,986

 
$
9,871

 
$
35,140

 
$
26,501