NOTE 5. INVESTMENT SECURITIES

Securities Available-for-Sale

The following table presents amortized cost, gross unrealized gains and losses, and fair values of securities available-for-sale as of the dates indicated:



	December 31, 2017									December 31, 2016
			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized			Fair		Amortized		Unrealized		Unrealized			Fair
Security Type	Cost		Gains		Losses			Value		Cost		Gains		Losses			Value
	(In thousands)
Residential MBS and CMOs:
Agency MBS	$	243,375	$	3,743	$	(844	)	$	246,274	$	499,185	$	6,222	$	(2,964	)	$	502,443
Agency CMOs	277,638		968		(2,897		)	275,709		145,258		1,528		(497		)	146,289
Private label CMOs	122,816		3,813		(642		)	125,987		122,707		4,199		(1,437		)	125,469
Municipal securities	1,627,707		53,700		(1,339		)	1,680,068		1,447,064		15,406		(6,011		)	1,456,459
Agency commercial MBS	1,169,969		2,758		(8,758		)	1,163,969		555,552		1,798		(9,658		)	547,692
Corporate debt securities	17,000		2,295		—			19,295		47,100		680		(271		)	47,509
Collateralized loan obligations	6,960		55		—			7,015		155,440		1,685		(238		)	156,887
SBA securities	160,214		695		(575		)	160,334		179,085		510		(750		)	178,845
Asset-backed and other securities	95,846		938		(1,004		)	95,780		62,264		358		(385		)	62,237
Total	$	3,721,525	$	68,965	$	(16,059	)	$	3,774,431	$	3,213,655	$	32,386	$	(22,211	)	$	3,223,830

See Note 12. Fair Value Measurements for information on fair value measurements and methodology.

As of December 31, 2017, securities available‑for‑sale with a fair value of $449.2 million were pledged as collateral for borrowings, public deposits and other purposes as required by various statutes and agreements.

Realized Gains and Losses on Securities Available-for-Sale

Realized gains or losses in the consolidated statements of earnings resulting from the sale of securities are calculated using the specific identification method and included in (loss) gain on sale of securities. During the year ended December 31, 2017, we sold $355.4 million of securities available-for-sale for a gross realized gain of $3.3 million and a gross realized loss of $3.8 million. We also sold $404.5 million of the $447.0 million of securities obtained in the CUB acquisition for no gain or loss as they were marked to fair value at the time of acquisition. During the year ended December 31, 2016, we sold $384.0 million of securities available-for-sale for a gross realized gain of $11.1 million and a gross realized loss of $1.6 million. During the year ended December 31, 2015, we sold $208.4 million of securities available-for-sale for a gross realized gain of $4.5 million and a gross realized loss of $0.7 million. We also sold $823.8 million of the $2.2 billion of securities obtained in the Square 1 acquisition for no gain or loss as they were marked to fair value at the time of acquisition.

Unrealized Losses on Securities Available-for-Sale

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, 2017
	Less Than 12 Months					12 Months or More					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Security Type	Value		Losses			Value		Losses			Value		Losses
	(In thousands)
Residential MBS and CMOs:
Agency MBS	$	44,795	$	(311	)	$	26,010	$	(533	)	$	70,805	$	(844	)
Agency CMOs	163,014		(2,452		)	20,928		(445		)	183,942		(2,897		)
Private label CMOs	50,521		(500		)	5,035		(142		)	55,556		(642		)
Municipal securities	67,936		(365		)	32,326		(974		)	100,262		(1,339		)
Agency commercial MBS	579,373		(3,777		)	129,060		(4,981		)	708,433		(8,758		)
SBA securities	74,904		(575		)	—		—			74,904		(575		)
Asset-backed and other securities	46,237		(948		)	10,473		(56		)	56,710		(1,004		)
Total	$	1,026,780	$	(8,928	)	$	223,832	$	(7,131	)	$	1,250,612	$	(16,059	)



	December 31, 2016
	Less Than 12 Months					12 Months or More					Total
			Gross					Gross					Gross
	Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Security Type	Value		Losses			Value		Losses			Value		Losses
	(In thousands)
Residential MBS and CMOs:
Agency MBS	$	149,281	$	(1,691	)	$	122,902	$	(1,273	)	$	272,183	$	(2,964	)
Agency CMOs	44,111		(416		)	25,316		(81		)	69,427		(497		)
Private label CMOs	49,067		(906		)	30,155		(531		)	79,222		(1,437		)
Municipal securities	644,424		(6,011		)	—		—			644,424		(6,011		)
Agency commercial MBS	349,550		(9,658		)	—		—			349,550		(9,658		)
Corporate debt securities	29,829		(271		)	—		—			29,829		(271		)
Collateralized loan obligations	12,450		(37		)	39,231		(201		)	51,681		(238		)
SBA securities	69,293		(407		)	39,024		(343		)	108,317		(750		)
Asset-backed and other securities	18,213		(309		)	7,851		(76		)	26,064		(385		)
Total	$	1,366,218	$	(19,706	)	$	264,479	$	(2,505	)	$	1,630,697	$	(22,211	)

We reviewed the securities that were in an unrealized loss position at December 31, 2017 and 2016, and concluded their unrealized 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. Although we periodically sell securities for portfolio management purposes, we do not foresee having to sell any temporarily impaired securities strictly for liquidity needs and believe that it is more likely than not we would not be required to sell any temporarily impaired securities before recovery of their amortized cost.

Contractual Maturities of Securities Available-for-Sale

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, 2017
	Amortized		Fair
Maturity	Cost		Value
	(In thousands)
Due in one year or less	$	14,398	$	15,091
Due after one year through five years	375,559		378,522
Due after five years through ten years	1,128,639		1,130,138
Due after ten years	2,202,929		2,250,680
Total securities available-for-sale	$	3,721,525	$	3,774,431

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

In connection with outstanding FHLB advances, the Bank owned FHLB stock carried at cost of $20.8 million and $21.9 million at December 31, 2017 and 2016. At December 31, 2017 and 2016, the Bank was required to own FHLB stock at least equal to 2.7% of outstanding FHLB advances. During the year ended December 31, 2017, FHLB stock decreased by $1.1 million due to $25.8 million in redemptions, offset partially by $12.8 million in purchases and $11.9 million acquired in the acquisition of CUB. We evaluated the carrying value of our FHLB stock investment at December 31, 2017, 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 from recurring dividends, 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,
	2017		2016		2015
	(In thousands)
Taxable interest	$	52,981	$	46,097	$	35,103
Non-taxable interest	43,355		41,885		25,219
Dividend income	1,866		2,575		4,046
Total interest income on investment securities	$	98,202	$	90,557	$	64,368