Note 3. Investment Securities Held-to-Maturity


	June 30, 2017								December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
	(in thousands)
U.S. Government Sponsored Enterprises	$	134,378	$	931	$	287	$	135,022	$	148,326	$	1,066	$	527	$	148,865
SBA Backed Securities		54,427		3		779		53,651		46,140		—		1,088		45,052
U.S. Government Agency and Sponsored Enterprises Mortgage-Backed Securities		1,534,070		5,419		21,322		1,518,167		1,459,520		4,948		22,577		1,441,891

Total	$	1,722,875	$	6,353	$	22,388	$	1,706,840	$	1,653,986	$	6,014	$	24,192	$	1,635,808

Included in U.S. Government and Agency Securities are securities pledged to secure public deposits and repurchase agreements at fair value amounting to $1,268,349,000 and $1,147,207,000 at June 30, 2017 and December 31, 2016, respectively. Also included are securities pledged for borrowing at the Federal Home Loan Bank of Boston at fair value amounting to $305,269,000 and $424,353,000 at June 30, 2017 and December 31, 2016, respectively. There were no sales of held-to-maturity securities for the six months ended June 30, 2017. The Company realized gross gains of $12,000 from the proceeds of $192,000 from the sales of securities held-to-maturity for the six months ended June 30, 2016. The sales of securities held-to-maturity relate to certain mortgage backed securities for which the Company had previously collected a substantial portion of its principal investment.

At June 30, 2017 and December 31, 2016, all mortgage-backed securities are obligations of U.S. Government Agencies and Government Sponsored Enterprises. Debt securities of U.S. Government Sponsored Enterprises and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities primarily refer to debt securities of Fannie Mae and Freddie Mac.

The following table shows the maturity distribution of the Company’s securities held-to-maturity at June 30, 2017.


	Amortized Cost		Fair Value
	(in thousands)
Within one year	$	45,780	$	45,827
After one but within five years		1,224,104		1,213,863
After five but within ten years		449,698		444,027
More than ten years		3,293		3,123

Total	$	1,722,875	$	1,706,840

The weighted average remaining life of investment securities held-to-maturity at June 30, 2017 was 4.4 years. Included in the weighted average remaining life calculation at June 30, 2017 were $35,496,000 of U.S. Government Sponsored Enterprises obligations that are callable at the discretion of the issuer. The actual maturities, which were used in the table above, of mortgage-backed securities, will differ from the contractual maturities, due to the ability of the issuers to prepay underlying obligations.

As of June 30, 2017 and December 31, 2016, management concluded that the unrealized losses of its investment securities are temporary in nature since they are not related to the underlying credit quality of the issuers, and the Company does not intend to sell these debt securities and it is not likely that it will be required to sell these debt securities before the anticipated recovery of their remaining amortized costs. In making its other-than-temporary impairment evaluation, the Company considered the fact that the principal and interest on these securities are from issuers that are investment grade.

The unrealized loss on U.S. Government Sponsored Enterprises, SBA Backed Securities, and U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities related primarily to interest rates and not credit quality, and because the Company does not intend to sell any of these securities and it is not likely that it will be required to sell these securities before the anticipated recovery of the remaining amortized cost, the Company does not consider these investments to be other-than-temporarily impaired June 30, 2017 and December 31, 2016.

In evaluating the underlying credit quality of a security, management considers several factors such as the credit rating of the obligor and the issuer, if applicable. Internal reviews of issuer financial statements are performed as deemed necessary.

The following table shows the temporarily impaired securities of the Company’s held-to-maturity portfolio at June 30, 2017. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for 12 months or less and a continuous loss position for 12 months or longer. There are 190 and 22 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 393 holdings at June 30, 2017.

June 30, 2017

Less Than 12 Months

12 Months or Longer

Total

Temporarily Impaired Investments

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

Fair
Value

Unrealized
Losses

(in thousands)

U.S. Government Sponsored Enterprises

45,209

287

—

45,209

287

SBA Backed Securities

50,633

779

—

50,633

779

U.S. Government Agency and Sponsored Enterprise

Mortgage-Backed Securities

1,015,890

18,964

76,584

2,358

1,092,474

21,322

Total temporarily impaired securities

1,111,732

20,030

76,584

2,358

1,188,316

22,388

The following table shows the temporarily impaired securities of the Company’s held-to-maturity portfolio at December 31, 2016. This table shows the unrealized market loss of securities that have been in a continuous unrealized loss position for less than 12 months and a continuous loss position for 12 months or longer. There are 194 and 16 securities that are temporarily impaired for less than 12 months and for 12 months or longer, respectively, out of a total of 375 holdings at December 31, 2016.


	December 31, 2016
	Less Than 12 Months				12 Months or Longer				Total
Temporarily Impaired Investments	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
	(in thousands)
U.S. Government Sponsored Enterprises	$	59,219	$	527	$	—	$	—	$	59,219	$	527
SBA Backed Securities		45,052		1,088		—		—		45,052		1,088
U.S. Government Agency and Sponsored Enterprise Mortgage-Backed Securities		1,008,960		20,725		58,535		1,852		1,067,495		22,577

Total temporarily impaired securities	$	1,113,231	$	22,340	$	58,535	$	1,852	$	1,171,766	$	24,192