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Investment Securities
 12 Months Ended
Dec. 31, 2018
Investments, Debt and Equity Securities [Abstract]  
Investment Securities
Investment Securities
Investment securities include investment securities available for sale, marketable equity securities, and investment securities held to maturity. The investment securities portfolio consisted of the following at December 31, 2018 and 2017 (in thousands):
 
2018
 
Amortized Cost
 
Gross Unrealized
 
Carrying Value (1)
 
 
Gains
 
Losses
 
Investment securities available for sale:
 
 
 
 
 
 
 
U.S. Treasury securities
$
39,885

 
$
2

 
$
(14
)
 
$
39,873

U.S. Government agency and sponsored enterprise residential MBS
1,885,302

 
16,580

 
(4,408
)
 
1,897,474

U.S. Government agency and sponsored enterprise commercial MBS
374,569

 
1,293

 
(1,075
)
 
374,787

Private label residential MBS and CMOs
1,539,058

 
10,138

 
(14,998
)
 
1,534,198

Private label commercial MBS
1,486,835

 
5,021

 
(6,140
)
 
1,485,716

Single family rental real estate-backed securities
406,310

 
266

 
(4,118
)
 
402,458

Collateralized loan obligations
1,239,355

 
1,060

 
(5,217
)
 
1,235,198

Non-mortgage asset-backed securities
204,372

 
1,031

 
(1,336
)
 
204,067

State and municipal obligations
398,810

 
3,684

 
(4,065
)
 
398,429

SBA securities
514,765

 
6,502

 
(1,954
)
 
519,313

Other debt securities
1,393

 
3,453

 
—

 
4,846

 
8,090,654

 
$
49,030

 
$
(43,325
)
 
8,096,359

Marketable equity securities
60,519

 
 
 
 
 
60,519

Investment securities held to maturity
10,000

 
 
 
 
 
10,000

 
$
8,161,173

 
 
 
 
 
$
8,166,878

 
2017
 
Amortized Cost
 
Gross Unrealized
 
Carrying Value (1)
 
 
Gains
 
Losses
 
Investment securities available for sale:
 
 
 
 
 
 
 
U.S. Treasury securities
$
24,981

 
$
—

 
$
(28
)
 
$
24,953

U.S. Government agency and sponsored enterprise residential MBS
2,043,373

 
16,094

 
(1,440
)
 
2,058,027

U.S. Government agency and sponsored enterprise commercial MBS
233,522

 
1,330

 
(344
)
 
234,508

Private label residential MBS and CMOs
613,732

 
16,473

 
(1,958
)
 
628,247

Private label commercial MBS
1,033,022

 
13,651

 
(258
)
 
1,046,415

Single family rental real estate-backed securities
559,741

 
3,823

 
(858
)
 
562,706

Collateralized loan obligations
720,429

 
3,252

 
—

 
723,681

Non-mortgage asset-backed securities
119,939

 
1,808

 
—

 
121,747

Marketable equity securities
59,912

 
3,631

 
—

 
63,543

State and municipal obligations
640,511

 
17,606

 
(914
)
 
657,203

SBA securities
534,534

 
16,208

 
(60
)
 
550,682

Other debt securities
4,090

 
5,030

 
—

 
9,120

 
6,587,786

 
$
98,906

 
$
(5,860
)
 
6,680,832

Investment securities held to maturity
10,000

 
 
 
 
 
10,000

 
$
6,597,786

 


 


 
$
6,690,832

 
 
(1)
At fair value except for securities held to maturity.
Investment securities held to maturity at December 31, 2018 and 2017 consisted of one State of Israel bond with a carrying value of $10 million maturing in 2024.
At December 31, 2018, contractual maturities of investment securities available for sale, adjusted for anticipated prepayments of mortgage-backed and other pass-through securities, were as follows (in thousands):
 
Amortized Cost
 
Fair Value
Due in one year or less
$
939,802

 
$
942,507

Due after one year through five years
4,097,200

 
4,097,966

Due after five years through ten years
2,662,298

 
2,662,649

Due after ten years
391,354

 
393,237

 
$
8,090,654

 
$
8,096,359

Based on the Company’s assumptions, the estimated weighted average life of the investment portfolio as of December 31, 2018 was 4.5 years. The effective duration of the investment portfolio as of December 31, 2018 was 1.4 years. The model results are based on assumptions that may differ from actual results. 
The carrying value of securities pledged as collateral for FHLB advances, public deposits, interest rate swaps and to secure borrowing capacity at the FRB totaled $2.1 billion and $2.6 billion at December 31, 2018 and 2017, respectively.
The following table provides information about gains and losses on investment securities for the years ended December 31, 2018, 2017 and 2016 (in thousands):
 
2018
 
2017
 
2016
Proceeds from sale of investment securities available for sale
$
1,030,810

 
$
1,287,591

 
$
1,127,983

 
 
 
 
 
 
Gross realized gains:
 
 
 
 


Investment securities available for sale
$
8,616

 
$
37,530

 
$
14,924

Gross realized losses:
 
 
 
 


Investment securities available for sale
(2,514
)
 
(4,064
)
 
—

Net realized gain
6,102

 
33,466

 
14,924

 
 
 
 
 
 
Net unrealized losses on marketable equity securities recognized in earnings
(2,943
)
 
—

 
—

 
 
 
 
 
 
OTTI on investment securities available for sale
—

 
—

 
(463
)
 
 
 
 
 
 
Gain on investment securities, net
$
3,159

 
$
33,466

 
$
14,461


During the year ended December 31, 2016, OTTI was recognized on two positions in one private label commercial MBS. These positions were sold at a loss before the end of 2016.
The following tables present the aggregate fair value and the aggregate amount by which amortized cost exceeded fair value for investment securities available for sale in unrealized loss positions, aggregated by investment category and length of time that individual securities had been in continuous unrealized loss positions at December 31, 2018 and 2017 (in thousands):
 
2018
 
Less than 12 Months
 
12 Months or Greater
 
Total
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
U.S. Treasury securities
$
14,921

 
$
(14
)
 
$
—

 
$
—

 
$
14,921

 
$
(14
)
U.S. Government agency and sponsored enterprise residential MBS
450,666

 
(1,828
)
 
87,311

 
(2,580
)
 
537,977

 
(4,408
)
U.S. Government agency and sponsored enterprise commercial MBS
146,096

 
(352
)
 
25,815

 
(723
)
 
171,911

 
(1,075
)
Private label residential MBS and CMOs
759,921

 
(7,073
)
 
278,108

 
(7,925
)
 
1,038,029

 
(14,998
)
Private label commercial MBS
742,092

 
(5,371
)
 
39,531

 
(769
)
 
781,623

 
(6,140
)
Single family rental real estate-backed securities
234,305

 
(1,973
)
 
85,282

 
(2,145
)
 
319,587

 
(4,118
)
Collateralized loan obligations
749,047

 
(5,217
)
 
—

 
—

 
749,047

 
(5,217
)
Non-mortgage asset-backed securities
136,100

 
(1,336
)
 
—

 
—

 
136,100

 
(1,336
)
State and municipal obligations
208,971

 
(3,522
)
 
46,247

 
(543
)
 
255,218

 
(4,065
)
SBA securities
215,975

 
(1,391
)
 
31,481

 
(563
)
 
247,456

 
(1,954
)
 
$
3,658,094

 
$
(28,077
)
 
$
593,775

 
$
(15,248
)
 
$
4,251,869

 
$
(43,325
)
 
2017
 
Less than 12 Months
 
12 Months or Greater
 
Total
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
 
Fair Value
 
Unrealized Losses
U.S. Treasury securities
$
24,953

 
$
(28
)
 
$
—

 
$
—

 
$
24,953

 
$
(28
)
U.S. Government agency and sponsored enterprise residential MBS
471,120

 
(1,141
)
 
13,028

 
(299
)
 
484,148

 
(1,440
)
U.S. Government agency and sponsored enterprise commercial MBS
26,265

 
(344
)
 
—

 
—

 
26,265

 
(344
)
Private label residential MBS and CMOs
330,068

 
(1,858
)
 
5,083

 
(100
)
 
335,151

 
(1,958
)
Private label commercial MBS
81,322

 
(258
)
 
—

 
—

 
81,322

 
(258
)
Single family rental real estate-backed securities
94,750

 
(858
)
 
—

 
—

 
94,750

 
(858
)
State and municipal obligations
30,715

 
(49
)
 
60,982

 
(865
)
 
91,697

 
(914
)
SBA securities
21,300

 
(10
)
 
15,427

 
(50
)
 
36,727

 
(60
)
 
$
1,080,493

 
$
(4,546
)
 
$
94,520

 
$
(1,314
)
 
$
1,175,013

 
$
(5,860
)
The Company monitors its investment securities available for sale for OTTI on an individual security basis. No securities were determined to be other-than-temporarily impaired during the years ended December 31, 2018 or 2017. As discussed above, OTTI was recognized on two positions in one private label commercial MBS during the year ended December 31, 2016. The Company does not intend to sell securities that are in significant unrealized loss positions at December 31, 2018 and it is not more likely than not that the Company will be required to sell these securities before recovery of the amortized cost basis, which may be at maturity. At December 31, 2018, 218 securities were in unrealized loss positions. The amount of impairment related to 53 of these securities was considered insignificant both individually and in the aggregate, totaling approximately $596 thousand and no further analysis with respect to these securities was considered necessary. The basis for concluding that impairment of the remaining securities was not other-than-temporary is further described below
U.S. Government agency and sponsored enterprise residential and commercial MBS
At December 31, 2018, thirty-six U.S. Government agency and sponsored enterprise residential MBS and seven U.S. Government agency and sponsored enterprise commercial MBS were in unrealized loss positions. Impairment of these securities was primarily attributable to increases in market interest rates subsequent to the date of acquisition. The timely payment of principal and interest on these securities is explicitly or implicitly guaranteed by the U.S. Government. Given the expectation of timely payment of principal and interest the impairments were considered to be temporary.
Private label residential MBS and CMOs
At December 31, 2018, thirty-eight private label residential MBS and CMOs were in unrealized loss positions, primarily as a result of an increase in medium and long-term market interest rates subsequent to acquisition. These securities were assessed for OTTI using credit and prepayment behavioral models that incorporate CUSIP level constant default rates, voluntary prepayment rates and loss severity and delinquency assumptions. The results of these assessments were not indicative of credit losses related to any of these securities as of December 31, 2018. Given the expectation of timely recovery of outstanding principal the impairments were considered to be temporary.
Private label commercial MBS
At December 31, 2018, twenty-seven private label commercial MBS were in unrealized loss positions, primarily as a result of an increase in market interest rates. These securities were assessed for OTTI using credit and prepayment behavioral models incorporating assumptions consistent with the collateral characteristics of each security. The results of this analysis were not indicative of expected credit losses. Given the expectation of timely recovery of outstanding principal the impairments were considered to be temporary.
Single family rental real estate-backed securities
At December 31, 2018, thirteen single family rental real estate-backed securities were in unrealized loss positions. The unrealized losses were primarily due to increases in market interest rates since the purchase of the securities. Management's analysis of the credit characteristics, including loan-to-value and debt service coverage ratios, and levels of subordination for each of the securities is not indicative of projected credit losses. Given the absence of projected credit losses the impairments were considered to be temporary.
Collateralized loan obligations:
At December 31, 2018, eighteen collateralized loan obligations were in unrealized loss positions, primarily due to widening credit spreads. The amount of impairment of each of the individual securities was 3% or less of amortized cost. These securities were assessed for OTTI using credit and prepayment behavioral models incorporating assumptions consistent with the collateral characteristics of each security. The results of this analysis were not indicative of expected credit losses. Given the limited severity of impairment and the expectation of timely recovery of outstanding principal, the impairments were considered to be temporary.
Non-mortgage asset-backed securities
At December 31, 2018, six non-mortgage asset-backed securities were in unrealized loss positions, due primarily to increases in market interest rates subsequent to the date of acquisition. The amount of impairment each of the individual securities was less than 3% of amortized cost. These securities were assessed for OTTI using credit and prepayment behavioral models incorporating assumptions consistent with the collateral characteristics of each security. The results of this analysis were not indicative of expected credit losses. Given the limited severity of impairment and the expectation of timely recovery of outstanding principal, the impairments were considered to be temporary.
State and municipal obligations
At December 31, 2018, fourteen state and municipal obligations were in unrealized loss positions. The impairments are primarily attributable to increases in market interest rates and changes in statutory tax rates. All of the securities are rated investment grade by nationally recognized statistical ratings organizations. Management's evaluation of these securities for OTTI also encompassed the review of credit scores and analysis provided by a third party firm specializing in the analysis and credit review of municipal securities. Given the absence of expected credit losses, the impairments were considered to be temporary.
SBA Securities
At December 31, 2018, six SBA securities were in unrealized loss positions. The amount of impairment of each of these securities was 3% or less of amortized cost. These securities were purchased at a premium and the impairment was attributable primarily to increased prepayment speeds. The timely payment of principal and interest on these securities is guaranteed by this U.S. Government agency. Given the limited severity of impairment and the expectation of timely payment of principal and interest, the impairments were considered to be temporary.