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Investments
 12 Months Ended
Dec. 31, 2014
Investments, Debt and Equity Securities [Abstract]  
Investment
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 the dates indicated:
 
December 31, 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
$
515,902

 
$
20,142

 
$
(372
)
 
$
535,672

 
$
691,944

 
$
18,012

 
$
(2,768
)
 
$
707,188

Government agency and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
government-sponsored enterprise
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
collateralized mortgage obligations
275,513

 
3,513

 
(1,080
)
 
277,946

 
197,069

 
388

 
(4,584
)
 
192,873

Covered private label collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
26,889

 
7,153

 
(95
)
 
33,947

 
30,502

 
7,552

 
(150
)
 
37,904

Other private label collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
10,961

 
46

 
(93
)
 
10,914

 
—

 
—

 
—

 
—

Municipal securities
521,499

 
15,899

 
(1,282
)
 
536,116

 
459,182

 
1,749

 
(24,273
)
 
436,658

Corporate debt securities
110,074

 
597

 
(562
)
 
110,109

 
84,119

 
71

 
(1,483
)
 
82,707

Government-sponsored enterprise debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
36,232

 
525

 
—

 
36,757

 
10,046

 
—

 
(174
)
 
9,872

Other securities
25,801

 
33

 
(118
)
 
25,716

 
27,654

 
2

 
(113
)
 
27,543

Total
$
1,522,871

 
$
47,908

 
$
(3,602
)
 
$
1,567,177

 
$
1,500,516

 
$
27,774

 
$
(33,545
)
 
$
1,494,745


Other securities consist primarily of asset‑backed securities. See Note 14, Fair Value Measurements, for information on fair value measurements and methodology.
As of December 31, 2014, securities available‑for‑sale with a carrying value of $308.6 million were pledged as collateral for borrowings, public deposits and other purposes as required by various statutes and agreements.
During the year ended December 31, 2014, we sold $460.8 million of GSE pass-through securities and other securities for which we realized gains of $4.8 million. These securities were sold as part of our investment portfolio risk management activities. We also sold 322.7 million of the $382.8 million of securities obtained in the CapitalSource Inc. merger for no gain or loss. During the year ended December 31, 2013, we sold $12.4 million in corporate debt securities and $10.0 million in collateralized loan obligation securities for which we realized a gross gains 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 the year ended December 31, 2013, we also 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 year ended December 31, 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. 
During the years ended December 31, 2014, 2013 and 2012, we purchased $236.7 million, $550.2 million and $485.9 million in investment securities available-for-sale.
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 years ended December 31, 2014, 2013 and 2012 we had $32.6 million, $(30.9) million and $10.2 million of net unrealized after-tax gains (losses) as a component of accumulated other comprehensive income, net.
Unrealized Losses on Investment Securities
The following tables present the gross unrealized losses and fair values of securities available-for-sale that were in unrealized loss positions, for which other-than-temporary impairments have not been recognized in earnings, as of the dates indicated:
 
December 31, 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
$
10,711

 
$
(13
)
 
$
27,100

 
$
(359
)
 
$
37,811

 
$
(372
)
Government agency and government-
 
 
 
 
 
 
 
 
 
 
 
sponsored enterprise collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
23,908

 
(73
)
 
40,652

 
(1,007
)
 
64,560

 
(1,080
)
Covered private label collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
—

 
—

 
1,000

 
(95
)
 
1,000

 
(95
)
Other private label collateralized
 
 
 
 
 
 
 
 
 
 
 
mortgage obligations
1,618

 
(93
)
 
—

 
—

 
1,618

 
(93
)
Municipal securities
11,854

 
(66
)
 
84,822

 
(1,216
)
 
96,676

 
(1,282
)
Corporate debt securities
52,071

 
(547
)
 
10,131

 
(15
)
 
62,202

 
(562
)
Other securities
6,440

 
(90
)
 
10,019

 
(28
)
 
16,459

 
(118
)
     Total
$
106,602

 
$
(882
)
 
$
173,724

 
$
(2,720
)
 
$
280,326

 
$
(3,602
)

 
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 December 31, 2014 and 2013, 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 consolidated statements of earnings. We occasionally sell securities for risk management purposes to reduce risks related to price volatility and duration. We do not foresee having to sell these securities strictly for liquidity needs 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 ("OTTO") loss of $1.1 million, which was entirely credited 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 2014 and 2013.
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.
 
December 31, 2014
 
Amortized Cost
 
Estimated Fair Value
 
(In thousands)
Due in one year or less
$
4,567

 
$
4,596

Due after one year through five years
85,288

 
85,219

Due after five years through ten years
262,556

 
268,665

Due after ten years
1,170,460

 
1,208,697

Total securities available-for-sale
$
1,522,871

 
$
1,567,177


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 December 31, 2014, we had a $40.6 million investment in Federal Home Loan Bank of San Francisco ("FHLB") stock carried at cost. During the year ended December 31, 2014, FHLB stock increased $12.7 million due primarily to the addition of FHLB stock acquired in the CapitalSource Inc. merger. We evaluated the carrying value of our FHLB stock investment at December 31, 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, 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.
Interest Income on Investment Securities
The following table presents the composition of our interest income on investment securities for the years indicated:
 
Year Ended December 31,
 
2014
 
2013
 
2012
 
(In thousands)
Taxable interest
$
30,135

 
$
23,542

 
$
29,652

Non-taxable interest
13,597

 
11,777

 
5,559

Dividend income
3,613

 
1,604

 
446

Total interest income on investment securities
$
47,345

 
$
36,923

 
$
35,657