NOTE 7 —AVAILABLE-FOR-SALE INVESTMENT SECURITIES

The following tables present the amortized cost, gross unrealized gains, gross unrealized losses and fair value by major categories of available-for-sale investment securities:

($ in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
March 31, 2015
Available-for-sale investment securities:
U.S. Treasury securities	$	1,162,801	$	9,586	$	(161)	$	1,172,226
U.S. government agency and U.S. government sponsored enterprise debt securities	411,275		1,143		(452)		411,966
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	94,330		1,242		(337)		95,235
Residential mortgage-backed securities	717,693		11,274		(1,611)		727,356
Municipal securities	187,244		4,800		(798)		191,246
Other residential mortgage-backed securities:
Investment grade (1)	50,297		1,310		(106)		51,501
Corporate debt securities:
Investment grade (1)	141,140		—		(739)		140,401
Non-investment grade (1)	11,524		—		(2,023)		9,501
Other securities	41,543		436		(326)		41,653
Total available-for-sale investment securities	$	2,817,847	$	29,791	$	(6,553)	$	2,841,085
December 31, 2014
Available-for-sale investment securities:
U.S. Treasury securities	$	873,101	$	1,971	$	(1,637)	$	873,435
U.S. government agency and U.S. government sponsored enterprise debt securities	311,927		490		(1,393)		311,024
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	140,957		1,056		(593)		141,420
Residential mortgage-backed securities	785,412		9,754		(4,078)		791,088
Municipal securities	245,408		6,202		(1,162)		250,448
Other residential mortgage-backed securities:
Investment grade (1)	52,694		1,359		(135)		53,918
Other commercial mortgage-backed securities:
Investment grade (1)	34,000		53		—		34,053
Corporate debt securities:
Investment grade (1)	116,236		—		(1,054)		115,182
Non-investment grade (1)	17,881		—		(3,200)		14,681
Other securities	41,589		243		(716)		41,116
Total available-for-sale investment securities	$	2,619,205	$	21,128	$	(13,968)	$	2,626,365

(1)

Available-for-sale investment securities rated BBB- or higher by S&P or Baa3 or higher by Moody’s are considered investment grade. Conversely, available-for-sale investment securities rated lower than BBB- by S&P or lower than Baa3 by Moody’s are considered non-investment grade.

Realized Gains and Losses

The following table presents the proceeds, gross realized gains, and gross realized losses related to the sales of available-for-sale investment securities for the three months ended March 31, 2015 and 2014:


	Three Months Ended March 31,
($ in thousands)	2015		2014
Proceeds from sales	$	180,501	$	330,231
Gross realized gains	$	4,404	$	3,545
Gross realized losses	$	—	$	127	(1)
Related tax expense	$	1,850	$	1,436

(1)

The gross $127 thousand of losses resulted from the available-for-sale investment securities acquired from MetroCorp which were sold immediately after the acquisition closed.

Declines in the fair value of securities below their cost that are deemed to be an other-than-temporary impairment (“OTTI”) are recognized in earnings to the extent the impairment is related to credit losses. The following table presents a rollforward of the amounts related to the OTTI credit losses recognized in earnings for the three months ended March 31, 2015 and 2014:


	Three Months Ended March 31,
($ in thousands)	2015		2014
Beginning balance	$	112,338	$	115,511
Addition of OTTI that was not previously recognized	—		—
Additional increases to the amount related to the credit loss for which an OTTI was previously recognized	—		—
Reduction for securities sold	(5,650)		—
Ending balance	$	106,688	$	115,511

The Company believes that it is not more likely than not that the Company will be required to sell the securities above before recovery of their amortized cost basis. No OTTI credit losses were recognized for the three months ended March 31, 2015 and 2014. For the three months ended March 31, 2015, the Company realized a gain of $960 thousand from the sale of a non-investment grade corporate debt security with previously recognized OTTI credit losses of $5.7 million. There were no sale transactions related to non-investment grade investment securities with previously recognized OTTI credit losses for the three months ended March 31, 2014.

Unrealized Losses

The following tables present the Company’s investment portfolio’s gross unrealized losses and related fair values, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, as of March 31, 2015 and December 31, 2014:


	Less Than 12 Months				12 Months or More				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2015
Available-for-sale investment securities:
U.S. Treasury securities	$	61,684	$	(37)	$	50,860	$	(124)	$	112,544	$	(161)
U.S. government agency and U.S. government sponsored enterprise debt securities	144,114		(383)		24,927		(69)		169,041		(452)
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	14,119		(141)		13,541		(196)		27,660		(337)
Residential mortgage-backed securities	40,969		(97)		103,488		(1,514)		144,457		(1,611)
Municipal securities	26,905		(335)		15,783		(463)		42,688		(798)
Other residential mortgage-backed securities:
Investment grade	—		—		6,985		(106)		6,985		(106)
Corporate debt securities:
Investment grade	—		—		90,401		(739)		90,401		(739)
Non-investment grade	—		—		9,501		(2,023)		9,501		(2,023)
Other securities	8,674		(326)		—		—		8,674		(326)
Total available-for-sale investment securities	$	296,465	$	(1,319)	$	315,486	$	(5,234)	$	611,951	$	(6,553)





	Less Than 12 Months				12 Months or More				Total
($ in thousands)	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
December 31, 2014
Available-for-sale investment securities:
U.S. Treasury securities	$	170,260	$	(266)	$	163,800	$	(1,371)	$	334,060	$	(1,637)
U.S. government agency and U.S. government sponsored enterprise debt securities	69,438		(504)		124,104		(889)		193,542		(1,393)
U.S. government agency and U.S. government sponsored enterprise mortgage-backed securities:
Commercial mortgage-backed securities	45,405		(257)		16,169		(336)		61,574		(593)
Residential mortgage-backed securities	81,927		(270)		241,047		(3,808)		322,974		(4,078)
Municipal securities	6,391		(26)		61,107		(1,136)		67,498		(1,162)
Other residential mortgage-backed securities:
Investment grade	—		—		7,217		(135)		7,217		(135)
Corporate debt securities:
Investment grade	25,084		(12)		90,098		(1,042)		115,182		(1,054)
Non-investment grade	—		—		14,681		(3,200)		14,681		(3,200)
Other securities	15,885		(716)		—		—		15,885		(716)
Total available-for-sale investment securities	$	414,390	$	(2,051)	$	718,223	$	(11,917)	$	1,132,613	$	(13,968)

At each reporting date, the Company examines all individual securities that are in an unrealized loss position for OTTI. Specific investment related factors, such as the nature of the investments, the severity and duration of the loss, the probability of collecting all amounts due, the analysis of the issuers of the securities and whether there has been any cause for default on the securities and any change in the rating of the securities by various rating agencies, are examined to assess impairment. Additionally, the Company evaluates whether the creditworthiness of the issuer calls the realization of contractual cash flows into question. The Company takes into consideration the financial resources, intent and its overall ability to hold the securities and not be required to sell them until their fair values recover.

The majority of the total unrealized losses related to securities are related to non-investment grade corporate debt securities, residential agency mortgage-backed securities, and municipal securities. As of March 31, 2015, non-investment grade corporate debt securities, residential agency mortgage-backed securities, and municipal securities represented less than 1%, 26%, and 7%, respectively, of the total available-for-sale investment securities portfolio. As of December 31, 2014, non-investment grade corporate debt securities, residential agency mortgage-backed securities, and municipal securities represented 1%, 30%, and 10%, respectively, of the total available-for-sale investment securities portfolio. The unrealized losses on these securities were primarily attributed to yield curve movement, together with the widened liquidity spread and credit spread. The issuers of these securities have not, to the Company’s knowledge, established any cause for default on these securities. These securities have fluctuated in value since their purchase dates as market interest rates have fluctuated.

Management believes the impairments detailed in the tables of gross unrealized losses above are temporary and are not impaired due to reasons of credit quality. Accordingly, no impairment loss has been recorded in the Company’s consolidated statements of income for the three months ended March 31, 2015 and 2014.

Available-for-Sale Investment Securities Maturities

The following table presents the scheduled maturities of available-for-sale investment securities as of March 31, 2015:


($ in thousands)	Amortized Cost		Fair Value
Due within one year	$	435,764	$	434,493
Due after one year through five years	1,275,954		1,289,312
Due after five years through ten years	311,367		311,157
Due after ten years	794,762		806,123
Total available-for-sale investment securities	$	2,817,847	$	2,841,085

Actual maturities of mortgage-backed securities can differ from contractual maturities because borrowers have the right to prepay obligations. In addition, such factors as prepayments and interest rates may affect the yields on the carrying values of mortgage-backed securities.

Available-for-sale investment securities with a par value of $1.88 billion and $1.93 billion were pledged to secure public deposits, FHLB advances, repurchase agreements, the Federal Reserve Bank’s discount window, or for other purposes required or permitted by law as of March 31, 2015 and December 31, 2014, respectively.